RA '87 takes on consolidated groups and corporate raiders, with some fine tuning
Article Abstract:
The Revenue Act of 1987 has made several changes in the taxation of corporations. The areas affected include: estimated taxes, the dividends-received deduction, net operating losses for worthless stock, built-in gains and losses, and consolidated groups. A non-deductible excise tax of 50 percent has been levied on gains realized from the receipt of 'greenmail' payments. Under the Revenue Act of 1987, corporations that liquidate an acquired target corporation into a mirror subsidiary of an acquiring corporation must recognize gain on the appreciation of the asset before the acquisition. 'Large' corporations and corporations that do not calculate their estimated payments based on the preceding year's tax liability will find it difficult to compute their estimated tax payments in a manner that avoids underpayment penalties for 1988 and beyond.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1988
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Changes in depreciation bring renewed importance to anti-churning rules
Article Abstract:
The Tax Reform Act of 1986 modifies the Accelerated Cost Recovery System (ACRS) established by the Economic Recovery Tax Act of 1981. The Modified Accelerated Cost Recovery System (MACRS) has lengthened the depreciable life of real property, and in some cases the depreciation for real property is more liberal under MACRS than it was under ACRS. To prevent property from being sold to obtain a fast write-off, the anti-churning rules established under ACRS have been retained and strengthened. The qualification rules for MACRS and the anti-avoidance rules under the new tax law are described.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1987
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New restrictions on use of net operating losses when there is a change in corporate ownership
Article Abstract:
The Tax Reform Act of 1986 reduces the value of net operating losses (NOLs) and may restrict the ability of corporations to use NOL carryovers in the event of a change in ownership. The definition and requirements for ownership shifts are discussed. In the event of a substantial shift in ownership, the loss carryover is limited to an amount equal to the value of the company's stock before the ownership change, multiplied by the long-term tax exempt rate.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1987
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