Planning for Educational Benefits after the Greensboro Case
Article Abstract:
Educational benefits enjoy increasing popularity as fringe benefits because of the escalation of the expense of higher education. Various approaches to the provision of these benefits include education benefit trusts (EBT). EBT usage is attended by two tax concerns: employers deductions as contribution to welfare plans or as deferred compensation to be deducted later; and if the taxation of benefits should be delegated to the employee or dependent. The case of the Greensboro Pathology Association speaks to the first consideration, and represents the first big decision in favor of the tax payer in many years. The history of legal decisions on these points includes a review of the following court cases: Educo, Inc., Armantrout et al. Citrus Orthopedic Group, Inc., and Grant-Jacoby, Inc. These cases all named the commissioner as respondent. They are distinguished as to facts and treatment. In Greensboro, employee status became a dispositive issue. A dichotomy of treatment for benefits, including dismissal wages, unemployment benefits, guaranteed annual wages, vacations, sickness and accident plans, hospitalization and medical, recreational and welfare plans, stock bonus, pension, annuity, and profit sharing is featured.
Publication Name: Tax Management Compensation Planning Journal
Subject: Law
ISSN: 0747-8607
Year: 1983
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Nonstatutory Fringe Benefits; Proposed Legislation
Article Abstract:
The bills which have recently been put to Congress as permanent replacements for the scheduling of fringe benefits include: the Permanent Tax Treatment of Fringe Benefits Act of 1983, and the Fringe Benefits Tax Act of 1983. The first bill has four classes of fringe benefits to be excluded from income. Tax exemption for some tuition reduction plans are given, and cafeteria plans will change as to statutory non-taxable benefits. The second bill features more positive treatment of fringe benefits than the first bill, because it omits three kinds of fringe benefits from income. Tuition breaks are excluded from income. The Internal Revenue Code of 1954 spoke of gross income as that which was all income from whatever sources. Practically speaking the Supreme Court's economic benefit test has not been adhered to. Some tax treatment of economic benefits has been handled by statute. The growth of fringes not covered by statute has caused some erosion in the tax base, so that the Treasury requested new rules for taxable compensation in 1975. The two new bills before Congress are analyzed in detail.
Publication Name: Tax Management Compensation Planning Journal
Subject: Law
ISSN: 0747-8607
Year: 1983
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Excluding Qualified Defined Benefit Plan Insured Incidental Death Benefits from the Participant's Gross Estate - Minority and Non-Stockholders
Article Abstract:
The question of whether an insured incidental pre- retirement death benefit of qualified death benefit pension plans can be omitted from gross estates of deceased insured participants, excluding the provisions of Internal Revenue Code (IRC) Section 2039(g) is analyzed. Exclusion may be called for when there is a corporate employer without a majority stockholder, which is a common event in service companies. Relevant plan design is often complicated, and implementation is not easy. Too many theoreticians have regarded the limit of the section as impermeable. The structure of the section as well as its historical background is analyzed. Estate tax avoidance issues are considered. The irrevocable designation of a beneficiary of such a plan is reviewed. Consideration is given to preliminary observations, the anti-alienation rule, tracing the death benefit and reversionary interests. The Dimock decision is reviewed in detail.
Publication Name: Tax Management Compensation Planning Journal
Subject: Law
ISSN: 0747-8607
Year: 1983
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