Estates with tax shelter interests face new problems as a result of Tax Reform Act
Article Abstract:
The Tax Reform Act of 1986 complicates tax shelter ownership by an estate. Estate ownership can still be valuable, but fiduciaries that have such interests must properly allocate tax benefits and carefully assess the relative estate and income tax implications. The relative positions of the estate, the decedent, and beneficiaries all must be closely examined. Issues considered include: distributions to surviving spouse, naming the spouse as a successor in interest, exchange or sale at death, and post-death changes to partnership interest. Previously suspended passive activity losses can generally be applied to offset non-passive and passive income in the year of the decedent's demise.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1987
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How to make sure that payments to partners qualify for treatment as guaranteed payments
Article Abstract:
The tax results of payments to a partner and the deductibility of the payment are affected by whether or not the payment is guaranteed. Guaranteed payment is defined as payment made to a partner for services or for the use of capital. To qualify as a guaranteed payment, a payment must meet a two-part test: the payment must be made to the partner as a partner, and it must be made without regard to partnership income. Tax treatment of guaranteed payments and the timing consequences of payments are described.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1987
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Passive activity and consumer interest rules require new planning for vacation home owners
Article Abstract:
The Tax Reform Act of 1986 has increased the importance of tax planning for rental income and personal use of vacation homes. Section 469 provides that losses from passive activities can only be offset against income from passive activities. For the purposes of the new law, rental activity is considered a passive activity. The new passive activity rules overlap with qualified residence interest and consumer interest rules. Tax planning strategies are described.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1987
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- Abstracts: Key employees in group-term insurance plans adversely affected by Tax Reform Act. Equipment leasing limited partnerships continue to provide tax savings
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