New rules require more interest to be capitalized

Article Abstract:

The capitalization of interest acquired for the production of certain property into that property's cost basis is mandated under Sec 263A(f) of the Tax Reform Act of 1986. Governed by this regulation are real property, including land and their attached natural products, buildings and their structural components, and such property as swimming pools, roads and fences. Also subject to Sec 263A(f) are designated tangible personal property, including long-lived property built for personal use, two-year property, and one-year property with a production cost exceeding $1 million. Notice 88-99 and Proposed Regulations (IA-120-86), both issued by the IRS, provide further guidance in complying with Sec 263A(f).

Finance, taxation, & monetary policy, Real estate, Real property, Personal property

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Bankruptcy order could disqualify plan

Article Abstract:

The IRS has ruled in Letter Ruling 9109051 that pension plans that comply with a bankruptcy order to turn over the account balance of a fully vested plan participant would violate the Internal Revenue Code's Section 401(a)(13) anti-assignment provisions. The violation of the Code's anti-assignment provisions would put a qualified plan in jeopardy of disqualification. The IRS has stated that, if a debtor received a loan and hardship withdrawal under amended terms, and if checks were issued that were payable to the debtor but remitted to the bankruptcy trustee and endorsed by the debtor, such an arrangement would not constitute a violation of the anti-assignment provisions.

Methods, Taxation, Tax accounting, Bankruptcy law, Qualified benefit plans

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