UNICAP rules are complicated, but opportunities exist
Article Abstract:
Final Regulations regarding the implementation of the uniform capitalization (UNICAP) rules contained in Sec. 263A offer opportunities for tax planning. These regulations provide that the extent of the application of the UNICAP rules should be based on the activity of the taxpayer. Thus, there are different application rules for intangible property producers, service providers and resellers. However, there are two basic steps that taxpayers must follow regardless of their activity. These are the identification of Sec. 263A costs that are correctly allocable to production or resale activities and the allocation of these costs to the proper units produced or acquired for resale. Allocation of mixed service costs among their capitalizable and deductible elements can be performed through direct reallocation, step-allocation, simplified service cost approach or other reasonable methods.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1995
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Educational incentives produce tax complexity
Article Abstract:
The Taxpayer Relief Act of 1997 (TRA '97) offers incentives intended to encourage Americans to pursue and save for higher education. Sec 25A introduces two new tax credits, the Hope Scholarship Credit and the Lifetime Learning Credit, while Sec 530 creates the tax-advantageous investment vehicle known as education individual retirement accounts. Other educational incentives available under TRA include the favorable tax treatment of Qualified State Tuition Programs and the changes made to student loan provisions, particularly in the areas of interest expense and debt forgiveness. The IRS issued Notice 97-60 to clarify these educational incentive provisions. However, compliance may still be difficult for taxpayers because of the restrictions on the incentives offered and the people who can avail of them.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1997
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New LIFO discontinuance rules issued by IRS
Article Abstract:
The IRS has provided new rules for discontinuing and re-adopting the last-in-first out (LIFO) inventory method. Any change to or from LIFO requires the permission of the IRS. LIFO generally cannot be re-adopted for a period of ten years once it has been discontinued. Consent to discontinue LIFO is usually given automatically by the IRS, except in the case of taxpayers currently being audited or investigated by the IRS.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1988
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