IRS rules favorably on s.401(k) "wrap-around" plan

Article Abstract:

This article concerns the IRS ruling in Private Letter Ruling 199924067 which allowed an employer to use an IRC section 401(k) wrap-around plan designed to allow maximum income deferral for executive employees who also participated in an unqualified plan. The ruling increases confidence in the use of such arrangements, since the IRS has rarely issued favorable rulings in this area.

Planning, Salary reduction savings plans, 401K plans, Deferred compensation

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Convertible bonds and related employee loans taxed as nonstatutory options

Article Abstract:

This article concerns Private Letter Rulings 199931044 and 199931022 where the IRS determined that the tax treatment of convertible bonds issued by an employer to executives concurrently with loans to pay for the bonds, were taxable as IRC section 83 nonstatutory stock options.

Tax Law, Employee stock options, Convertible bonds, Employee loans

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Tax Court finds no business justification for broad-based leveraged COLI program

Article Abstract:

The Tax Court in Winn-Dixie Stores v. Commissioner found that a corporate-owned life insurance program (COLI) was a sham and denied the taxpayer interest deductions claimed on the leveraged program.

Tax Evasion & Penalties, Usage, Interest deductions, Life insurance, Tax evasion, Tax penalties

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