Lottery winning installments are separate gains
Article Abstract:
The IRS ruled that the annual lottery payments of cash-method taxpayers were gained from wagering in every year received, based on TAM 9808002. In calculating the taxpayers allowable wagering losses per year, the IRS also ruled that their travel and other wagering-related expenses were nondeductible personal expenses. The case refers to a field service agent's argument that the subsequent annual lottery payments made to a couple who won the state lottery and were paid staggered amounts in 20-odd years were not wagering gains from which wagering losses could be offset. The annual lottery payments were reported by the couple in their annual gross wagering winnings, which they further showed as ordinary trade or business income. The couple also reported that costs related to travel, entertainment, business meeting, meal and legal expenses are incidental to their wagering.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1998
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Purchase options can turn leases into taxable sales
Article Abstract:
The IRS normally utilizes the substance-over-form argument in deciding over real or personal property lease arrangements, claiming that a lease is actually a sales transaction. However, when a lease agreement allows the purchase of the underlying property, the IRS has released a number of guidelines that will govern whether an arrangement was a lease or a sale. Revised Rule 55-540 advances several conditions that will decide whether a transaction must be taxed as a sale rather than as a lease. Under Revised Rule 68-590, on the other hand, a corporation is the owner of an industrial project for tax purposes when the project is under a 20-year lease from a government entity. Meanwhile, Revised Proclamation 75-21 presents a set of guidelines that will help taxpayers obtain a favorable advanced letter ruling.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1998
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