Options can defer income recognition and convert interest into capital gains
Article Abstract:
Rev. Rul. 58-234 defines an option as a right, usually assignable, to sell or buy property at a specified price on or before a stipulated date or within a specified period of time in the future, with the right granted by the writer; that is, the issuer or optioner, to the holder, or optionee, for a consideration that is usually cash. In order to qualify as an option contract, consideration for the option must be given and the owner of the property must be bound to deliver the property or interest. Many of the more pertinent rules relating to options and their use in real estate transactions are described, as are put and call options used in real estate transactions, like-kind exchanges, and converting interest income.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1986
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Requirements to obtain the lower head of household rates eased in several areas
Article Abstract:
The head of household rate schedule is the second lowest of the four for individuals, after the joint return and before single and married filing separately. The 1984 Deficit Reduction Act changed the rules for qualifying for head of household filing status in a way that makes it possible for more taxpayers to claim that status and to lower their overall Federal income tax liability. The four conditions that must be met to qualify for head-of-household status are marital status, maintenance of household, a person qualifying the taxpayer as head of household, and that person living in the taxpayer's household. Each of the four conditions is analyzed, and the effects of the new rules on taxpayers are discussed.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1986
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Recent changes make it easier to keep nonqualified plan benefits out of estate
Article Abstract:
Estate tax treatment of death benefits paid under nonqualified deferred compensation arrangements before 1983 were not as beneficial as estate tax treatment of payments from qualified retirement plans, but recent changes have made the distinction less clear. In many cases it would appear that the estate tax advantage has moved from the qualified to the nonqualified plans, but the current policies of the IRS may cause some problems. The different treatment of qualified and nonqualified plans are described, and several estate tax problems and the consequences for gift taxes are discussed.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1986
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