The shrinking influence of Thor Power Tool Co
Article Abstract:
Accountants and their manufacturing and retailing clients have steadily eroded the influence of the landmark 1979 Supreme Court decision on 'Thor Power Tool Co v. Commissioner' regarding excess inventory writedowns. For their part, manufacturers have avoided the application of the 'Thor Power' ruling to pools of rotable spare parts by assigning these pools as depreciable assets. On the other hand, retailers resort to 'cycle-count' inventories to negate the effectivity of 'Thor Power' to estimates of shrinkage. In addition, the Internal Revenue Code Sec 471(b) through the Taxpayer Relief Act of 1997 indicates that the techniques employed by taxpayers relying on inventory shrinkage estimates do not automatically result in failure to clearly report income. All these developments have chipped away at the potency of the once-powerful 'Thor Power' decision.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1998
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Fringe benefits - qualified dining facilities
Article Abstract:
Section 132 of the Internal Revenue Code allows employers who provide employees with a qualified dining facility to exclude from their employees' incomes the value of meals or the subsidized portion of meals if certain conditions are met. The first is that the qualified dining facility must be operated by the employer and that meals are served during or immediately before or after working hours. The second is that the revenues for the dining facility must be greater than the direct costs. The dining facility must also comply with the nondiscrimination requirement of Section 132 which states that highly compensated employees can only exclude dining facility benefits from their income if the benefits are extended to other employees or to a group of employees that does not discriminate.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1998
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Be specific: calculate your gains carefully
Article Abstract:
The Tax Relief Act of 1997 provides measures on the computation of capital gains or losses resulting from the sale of shares. These measures translate to incentives for investors who hold their shares of stock or mutual funds for more than 18 months. Gains will only be taxed at a 20% rate for shares in the 28% rate or higher bracket, and at 10% for those in the 15% rate. Two methods can be utilized to determine the cost of shares, namely the specific ID and the first-in, first-out (FIFO) methods. Unlike the FIFO method, the specific ID can be used to exercise control over taxable income and income tax liability. Taxpayers can minimize their tax burden by selling shares held for more than 18 months and by offsetting those sold with a gain held less than 12 months.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1998
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