The death of the Morris trust transaction(?)

Article Abstract:

The Taxpayer Relief Act of 1997 has a significant impact on Morris Trust transactions. In this type of deals, corporations use spinoffs as a component of bigger transactions with the ultimate goal of having the distributing corporation or the spin-off corporation be acquired by an unrelated party. Under the new rules, nontaxable treatment is now allowed in a transaction where there is no transfer of the control of the corporations. This is possible if the distributing corporation and all of its controlled corporations are segments of a sole affiliated group after the transaction. The rule also holds if shareholders with a majority interest in the distributing corporation or any controlled corporation prior to the corporation also hold a majority interest in the corporations following the transaction. Companies considering to use a spinoff in an acquisition should examine the implications of these rules.

Merger Regulation, Regulation, Licensing, and Inspection of Miscellaneous Commercial Sectors, Laws, regulations and rules, Acquisitions and mergers, Corporation law, Corporate divestiture, Divestiture

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Employer-provided educational assistance - revisited

Article Abstract:

Educational assistance is defined by Internal Revenue Code Sec. 127(c) as an employer's payments of costs accrued by or on behalf of an employee. It includes, but is not limited to, tuition, fees and other payments, books, and supplies and equipment. Sec. 1202 of the Small Business Job Protection Act upholds the Sec. 237 provision allowing a yearly exclusion from income of up to $5,250 in aggregated of benefits enjoyed by the employee. This tax break is effective retroactively to Jan. 1, 1995. Unfortunately, employees and employers may have paid excess federal, state, Medicare and Social Security taxes on the total educational assistance benefits contained in gross income in 1995. Moreover, certain employees may have given nondeductible contributions to their individual IRA accounts. Worse, they may have avoided making a contribution since it would have been nondeductible.

Employer-supported education, Employer supported education

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Doubling the corporate tax pleasure with certain charitable contributions

Article Abstract:

Tax deductions can function as effective tax deductible items for corporations. Either fair market value (FMV) or basis of property is used as the limiting factor in assessing the deductibility of donations. Section 170(e)(3)(A) if the Internal Revenue Code contains provisions which allow for increases in deductions of up to double the basis. Donations become particularly useful for corporations with excess inventory. The recipient of the donation should ensure, however, that the property's FMV is properly substantiated so as to avoid the possibility that the deduction is disallowed.

Methods, Corporate taxes, Tax deductions, Corporations, Charitable contributions, Charitable donations

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