The line between the cash and accrual methods has narrowed, but the choices remain important

Article Abstract:

Taxpayers must choose an accounting method that clearly reflects income. Taxpayers using the cash accounting method must include all items of income actually or constructively received in the year in calculations of gross income. Cash-basis taxpayers generally deduct expenses in the tax year in which they are paid. This method requires income to be reported when received or when in the control of the taxpayer and expenses to be deducted when paid. Taxpayers using the accrual method generally report income in the year earned and debt or capitalized expenses in the year incurred. This method must be used where inventory is a substantial income-producing asset. Income includable in gross income is subject to an all-events test, and is to be included when the taxpayer receives the right to receive income. Income is reported when earned and expenses are deducted when incurred.

Methods, Tax accounting, Accrual basis accounting, Cash basis accounting

---

Option attribution rules are narrowed by Proposed Regs

Article Abstract:

New sets of Proposed Regulations covering net operating loss (NOL) carryforwards after an ownership change have been released by the IRS under Section 382. Proposed Regulations CO-18-90 will supersede existing option attribution rules. Under this proposal, an option will not be considered as exercised until it has been issued or transferred for an abusive principal prupose. Proposal CO-99-91 introduces changes to the regulations governing the segregation of 'public groups,' referring to shareholders with less than 5% of the firm's stock, after the issuance of stock. Proposal CO-49-88 set forth guidelines for the income and loss allocation for the year in which the shift in ownership of a corporation with an NOL carryforward has occurred.

Laws, regulations and rules, Stocks, United States. Internal Revenue Service, Carryforward losses, Carryover losses

---

Home office deduction has been narrowed, but is still available after the Tax Reform Act

Article Abstract:

The Tax Reform Act of 1986 eliminates many of the tax benefits of maintaining a home office. Taxpayers can no longer achieve any deductions by renting portions of their homes to their employers. A home office can still be used to shift income from a closely held corporation to an individual, which results in a lower tax rate. A home office can also be used to generate passive income. The cost of maintaining offices rented to a taxpayer's employer can no longer be deducted, but rentals to charitable or non-profit organizations still enjoy tax benefits.

Taxation, Offices, Close corporations, Closely held corporations

Similar abstracts:

• Abstracts: The relationship between corporate entrepreneurship and strategic management. Entrepreneurship and paths to business ownership
• Abstracts: Consolidation software: it's more than just a new method to get through another closing cycle. The audit role in international control
• Abstracts: The Scottish financial sector in the single market. Untie the watch dogs. Banking supervision
• Abstracts: The responsibility of the board is indivisible. Should the chairman also be the CEO? Extracting the message from the medium
• Abstracts: 'Late' statement on accumulations still can be effective. Bargain purchase can't be changed to a stock redemption

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.