Steps that will maximize the dependent care credit
Article Abstract:
Taxpayers who belong to a household with at least one qualifying member can avail of child and dependent care credit under Section 21 of the IRC. The credit can be applied for the costs of caring for children under 13 years old or for physically or mentally handicapped spouses or dependents. The total amount of dependent care expenses that can qualify for the credit must not go beyond $2,400 annually for one qualifying taxpayer and $4,800 for households with two or more qualified members. To qualify for the credit, expenses must have been incurred while the taxpayers were trying to keep or seek paying jobs while caring for their dependents or paying for household services. Married taxpayers can only apply for the credit if they submit joint income tax returns. Provisions for divorced or separated taxpayers are also discussed.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1992
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Life benefits from insurance may be taxable
Article Abstract:
The accelerated death benefit (ADB) rider to life insurance policies allows policy holders to use 25% to 95% of the policy in a medical emergency. However, the death benefit may be advanced only if one of these four conditions is met: the diagnosis of a terminal disease, the diagnosis of a dreaded disease, permanent confinement to a long-term facility, and the necessity of long-term care in a nursing home. The ADB may be received in lump sum form, in installments, or when the expenses are incurred. The IRS has no specific provisions for ADBs, but there are certain sections in the Internal Revenue Code that can apply to such riders, including Sections 101 and 7702. Recommendations for avoiding possible tax obligations associated with the ADB rider are offered.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1992
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Strategies to maximize benefits in leveraged buyouts after TRA '86
Article Abstract:
Recent legislation significantly increases the tax costs of leveraged buyouts (LBOs) and related acquisitions and mergers. Practitioners must now carefully consider predicted future taxable income levels from ongoing operations in structuring an LBO. The tax ramifications of the asset sale method and the stock sale method of LBO are discussed, and alternative techniques, such as target break-up structures, leveraged recapitalizations, and leveraged employee stock ownership plans are also addressed. Financing issues which affect the LBO method utilized include: challenges to debt recharacterization; installment sale rules; limitations on interest expense deductions; and original issue discount rules.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1988
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