Alimony payments may be made in as few as three years and still be deductible
Article Abstract:
The Tax Reform Act of 1986 repeals the six-year alimony payment rules and imposes a new three-year recapture rule. The rule states that if the first-year alimony payments exceed the average payments for the second and third years by more than $15,000, the excess is recaptured in the income of the spouse who pays the alimony, beginning in the third year. The spouse who is receiving alimony and has previously included the excess amounts in income as alimony gets an offsetting deduction for the recaptured amount. The amount recaptured in the third year is the sum of the excess payments in the two previous years. Recapture is not required if alimony ceases before the end of the third year due to death or remarriage. Formulas for calculating alimony recapture are included.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1987
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Guidance provided on change from installment method
Article Abstract:
The IRS has issued guidelines on the accounting treatment of installment obligations under revolving credit plans and deferred intercompany transactions. Taxpayers that disposed of personal property under a revolving credit plan and reported gain from the disposition are treated as having changed to the accrual method. The requirements to qualify for a continued installment sale treatment are described.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1988
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