Borrowed funds do not always increase amounts at risk

Article Abstract:

Section 465 specifies at-risk rules that limit tax deductions for C corporations, shareholders of S corporations, partners, and trust or estate beneficiaries. Section 465(c)(1) provides the original rules for at-risk limitation of taxpayer activities while Section 465(c)(3) extends the applicability of the limitation to 'new' activities. Taxpayer activities are treated to at-risk rules individually. An aggregation of new activities is carried out when taxpayers are active participants in the management of these activities or when S corporations or partnerships perform the activities and allocable losses to active business participants reaches 65%. Since the new activities are yet to be specified under Section 465(c)(3), taxpayers can take advantage of the wider access afforded to many types of lenders while the IRS has yet to issue Section 465(c)(3) regulations.

Usage, Laws, regulations and rules, Debtor and creditor, Nonrecourse debt

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Minimizing taxes on retirement plan distributions

Article Abstract:

Taxpayers who are planning to retire and are considering withdrawing money from their qualified benefit plans should be informed regarding the possible penalties and tax consequences of such an action. Financial advisers should develop a method for retirement plan distributions for their clients that would maximize the latter's financial gains and, at the same time, minimize their penalties and taxes. Techniques in achieving this goal, particularly those regarding plan distributions and transition rules, are discussed.

Finance, Services, Financial planning, Financial planners, Qualified benefit plans

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