Final allocation regulations will require amendments to many partnership agreements
Article Abstract:
Revisions recently adopted of the Partnership Allocation Regulations proposed in 1983 to implement the substantial economic effect test become effective for partnership taxable years beginning on or after May 1, 1986. The revisions must be considered carefully for most partnership agreements providing for special allocations, as well as for most limited partnership agreements in which future losses are expected, regardless of whether the losses are specially allocated. Amendments to existing partnership agreements should be made only after the complexity of the new capital account rules are balanced against the importance of preserving agreed allocations, as well as the risk that examining agents may assert alternative allocations when the new rules are not adopted.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1986
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T & E expenses restricted by new law as are home office costs and many itemized deductions
Article Abstract:
Under the Tax Reform Act of 1986, employee business expenses must be individually itemized and must be equal to at least 2 percent of the taxpayer's adjusted gross income to be deductible. Travel and entertainment expenses fall within this expense category; their reporting and deductibility are discussed at length. Various provisions of the new tax law apply to meal expenses, entertainment expenses, and travel expenses, separately. The deduction of expenses related business usage of the home is subject to three limitations under the new law: (1) the work performed in the home must be at the convenience of the employer, (2) the work space must be the principal location of the business, and (3) the home office deduction cannot exceed the earnings from the home office.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1986
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Two decisions increase availability of deductions from use of a home office
Article Abstract:
Two cases in which home-based businesses' tax deductions were upheld are discussed: Feldman, 84 TC No. 1 and Weissman, 85-1 USTC 9106, 55 AFTR2d 85-539. In Feldman, a self-employed accountant was allowed to deduct rental payments made by him to his corporate self; the Internal Revenue Service contended (wrongfully) that the rental agreement was tax-motivated and constituted hidden income for the accountant. In the Weissman case, a university professor was allowed to deduct office space in his home devoted to research, despite the Internal Revenue Service's contention that his office on campus was actually where most of his research (and writing) took place.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1985
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