Employers can control tax effects of relocation plans
Article Abstract:
Employers will often provide relocation assistance to employees to make them more willing to move to a new location, either a direct reimbursement for a loss from the sale of an employee's domicile, or an indirect reimbursement through the device of purchasing the employees' domicile and selling it to a third party. The amount of compensation income to be included in the income of the employee differs for each approach. Direct reimbursements are relatively straightforward, with the employer calculating only the compensation expense. The employer deducts the sum of the reimbursement as a compensation expense, and the employee reports it as compensation income. In indirect reimbursement, the employer must calculate the compensation expense as well as possible capital losses on the subsequent sale to the third party. The employee recognizes income only to the extent that the employer paid over fair market value for the domicile.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1991
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DOL settlement doesn't preclude IRS penalties
Article Abstract:
The Tax Court has ruled that the IRS was not prevented from assessing excise penalties on disqualified persons involved in an employee benefit plan by an agreement between the Department of Labor (DOL) and the plan settling a dispute over prohibited loans. The DOL charged that the interest rates charged for loans from a medical group's profit-sharing plan violated pension law. In a letter confirming a settlement with the pension plan, DOL stated that its decision to settle would not be binding on any other agency. The IRS, which was conducting its own investigation, issued plan participants warnings that it intended to levy excise taxes, an action upheld by the Tax Court.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1991
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