Agreement to pay expenses does not offset payments
Article Abstract:
The case of Ballard, TCM 1992-217, illustrates the failure of a taxpayer's efforts to include debt and funeral expenses as reductions in the distribution the taxpayer received from the retirement plan of the deceased friend. The court ruled that the taxpayer's willingness to pay debt and funeral expenses would still not qualify as an investment based on the taxpayer's payment of said expenses subsequent to receiving the distribution. Since no transfer of interest to the taxpayer's annuity was effected when the paynents were made, the payments did not qualify as investments in the annuity contract of the decedent. The inclusion of investment allocated payments in the annuity contract as income resulted in the awarding of the distribution to the taxpayer prior to the date of effectivity of the annuity.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1992
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Tax-free exchanges allowed for annuity contracts
Article Abstract:
Revenue Ruling 92-43, IRB 1992-24, 85 permits the tax-free exchange of annuity contracts issued by different life insurance companies. The ruling applies even if the a series of payments from an old contract is used to finance the new contract. The Ruling addresses widespread concern over contracts issued by financially troubled insurance firms. According to Section 1035(a) there is no gain or loss when the exchange is between life insurance contracts, between endowment contracts or between annuity contracts. In addition, no gain or loss is recognized when the exchange is between a life insurance contract and an endowment or annuity contract, or between an endowment contract and an annuity contract. Requirements that should be met to qualify for the nonrecognition treatment are discussed.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1992
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Change in market conditions negatives recent appraisal
Article Abstract:
The Tax Court held in the 'Barudin' case that the value of the decedent's properties diminished below the fair market value in a year-old appraisal to take into consideration the deterioration in the real estate market and the intention of the largest tenant to transfer. Moreover, the court found that minority and lack of marketability discounts of 45% were applicable due to the fact that another controlled the partnership. By the date of the death of the decedent, the real estate market had changed considerably since the most previous appraisal as a result of a recession. Moreover, just before the death of the decedent, a university that took up 40% of the space informed its intention not to renew its lease.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1996
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