Constructive Dividends to U.S. Parent in Non-Arm's Length Transactions: Rollover of Short Term Obligations as Investment in U.S. Property-Technical Advice on Memorandum
Brother and sister type foreign subsidiaries of a United States parent firm were active in different intercompany dealings wherein a loan situation was functional but no interest payments were made. Inadequate rental payments for tankers also were deemed to amount to a constructive dividend for the parent firm. Sections 61 and 301 of the Internal Revenue Code as well as the findings of constructive dividends in Sammons v. U.S., 433 F.2d 728 were dispositive. The economic benefit argument was not considered to be the major issue. A first-in, first- out payment plan made by a parent firm who paid a controlled foreign corporation's liabilities was not favored by the Internal Revenue Service (IRS).
Publication Name: Tax Management International Journal
The growth of long-term care insurance
Long-term care insurance (LTC) is only a decade old but will become increasingly important due to an aging US population and escalating public costs for chronic medical conditions. Many early policies covered only non-hospital care during recovery from an acute condition, but LTC policies now offer the only coverage for chronic conditions except that provided by public welfare programs, paying for nursing-home or at-home care. Assessing cognitive impairments is a particular challenge for issuers of these policies.
Publication Name: Journal of the American Society of CLU & ChFC
Timing deductions around a short year
Tax planning in a short tax year can include timing of deductions and payments. Corporations may wish to time deductions so that they fall in years other than the short year. Cash-method taxpayers can certainly time deductions in this manner, as can accrual-method corporations who plan carefully and observe the deduction rules.
Publication Name: Journal of Corporate Taxation
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