Disguised sale rules eased by final Regulations
Article Abstract:
The IRS has recently issued final Regulations under Section 7079(a) addressing the transfer of property between partners and partnerships. Regulation 1.707-3(a) recognizes a sale or an exchange of property when a partner, acting in a nonpartner capacity, transfers ownership of a particular property to the partnership and receives compensation for it. Such property transfers, however, will be treated partly as a disguised sale and partly as a contribution if the partner who transfers property to the partnership receives consideration that is less than the fair market value of the property. Any transaction characterized as a sale is considered a sale for all tax purposes. Regulation 1.707-3(b)(1) contains conditions that must be met before any transfer of property between partners and the partnership can be treated as a disguised sale. Potential relief opportunities for such transactions are discussed.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1992
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Accrual taxpayers face tough economic performance rules
Article Abstract:
The IRS has set out the requirements for all accrual-method taxpayers to satisfy an economic performance requirement. The final Regulations issued by the IRS are contained in Section 461(h) which specifies an economic performance requirement as a prerequisite for the tax deductability of expenses that conform to the all-events test. Relief opportunities are provided for accrual taxpayers through Revenue Procedures 92-28 and 92-29. Revenue Procedure 92-29 provides an alternative method that can be used in sales loss/gain determinations based on rules for economic performance. The option to carry out or rescind an election for real property taxes for a specific period is provided by Revenue Procedure 92-28. Another relief opportunities to the economic performance rules is through the adoption of the recurring-item exception specified in Section 461(h)(3).
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1992
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Employers of domestics face many filing and withholding rules
Article Abstract:
Taxpayers who hire domestic workers need to be aware of the tax consequences of being household employers. In general, taxpayers who hire such workers are not subject to employment taxes. However, they are subject to a number of onerous tax filing and withholding requirements. To determine what tax regulations they are subject to, household employers must first ascertain whether the domestic worker they have hired is classified as an employee or as an independent contractor. This can be determined using a set of 20 factors that the IRS uses to classify the status of workers. Furthermore, household employers have to ascertain what regulations pertaining to the hiring of domestic workers they need to comply with. This is particularly important since failure to comply can result in the imposition of heavy IRS and INS penalties on the taxpayer.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1993
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