New entity raises issue for the IRS; liability limits

Article Abstract:

The limited liability company is permitted by law in 18 states, a number which may rise to 40 by the end of 1993. This entity provides a corporate form not constrained by S corporation limitations and receiving the same federal income tax treatment as a partnership. Limited liability companies are taxed as partnerships even though they need not have a general partner, which can be an advantage in a capital-intensive industry with great risk of liability. Remaining uncertainties include the extraterritorial recognition of these companies and state taxation in jurisdictions lacking laws regarding them.

Management, Limited liability companies

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Euro portends unknown U.S. tax consequences; until the IRS issues guidelines, U.S. multinationals will have to contend with some uncertainty

Article Abstract:

The conversion to the Euro in the European Union portends unknown tax consequences for U.S. multinationals. IRS Announcement 98-18 dealt with two key issues, the first, whether the conversion constitutes a change of functional currency and, if so, whether the current tax rules are sufficient to cover the situation. The second was whether the conversion constitutes a realization event for financial instruments denominated in a legacy currency. Another issue is whether the costs incurred in preparing for the conversion are a current deduction or whether they must be capitalized.

United States, Euro (Currency), European Union

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'Burn-out' can topple a shelter; investors lose

Article Abstract:

The Tax Reform Act of 1986 and the collapse of the real estate market did away with real property investment as a tax shelter. In the 1991 cases of Echols and Citron, investors were allowed to abandon property and even obtain final tax deductions for ordinary losses, but most investors will not be so fortunate. In spite of arguments that debt income cannot be canceled when the reduction of a non-recourse debt does not increase the debtor's net worth, the IRS is not convinced.

Laws, regulations and rules, Real estate investment, Real estate investments, Tax shelters

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