Prop. Regs. explain S corporation passthrough rules
Article Abstract:
The IRS has introduced proposed regulations on S corporation passthrough rules, limitations on losses and deductions, stock basis adjustments, and distributions. Proposed Regulation 1.1366-1(a)(2)(viii) describes tax-exempt income as income that can be permanently excluded from the gross income, including certain life insurance earnings and interest on state and local bonds. Proposed Regulation 1.1366-1(b) holds that the character of a corporate passthrough item is ordinarily ascertained at the corporate level. However, exceptions are possible for property held by the shareholder that would generate noncapital gain or capital loss and that is contributed to an S corporation. Proposed regulations on loss and deduction limitations, gifts of loss stock, item allocation, personal losses, special rules, family groups, basis adjustments and order of adjustments are discussed.
Publication Name: Practical Tax Strategies
Subject: Law
ISSN: 0040-0165
Year: 1998
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Prop. regs. explain when distribution of controlled stock is tax free
Article Abstract:
The IRS has issued proposed regulations that clarify when the nonrecognition provisions of Section 355 cannot be applied to the disposition of a subsidiary in a sale-like transaction. The proposed regulations grant relief to taxpayers with respect to certain types of distributions of controlled stock. The regulations, which cover transactions structured as spin-offs, split-offs and split-ups, offer details of various scenarios that can be adapted to structure transactions to fit the provisions of Section 355(a). The regulations also allow transactions that would normally be subject to Section 355 to be exempted if they do not violate the intent of Section 355(d). Tax planners are advised to seek a private letter ruling to avoid the pitfalls of interpreting some unclear provisions of Section 355(d).
Publication Name: Practical Tax Strategies
Subject: Law
ISSN: 0040-0165
Year: 1999
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Only sales by - not to - farmers qualify for installment sale exemption
Article Abstract:
The IRS has issued an advisory that clarifies the use of the installment sale exception. After reviewing the case of a farm equipment manufacturer that had offered installment terms to its customers, the IRS concluded that the manufacturer could not report its income under the installment method. It based its decision on a reading of the provisions of Section 453(b)(2) and noted that it specified that the installment sale should not include any type of dealer disposition as defined in Section 453(l)(1).
Publication Name: Practical Tax Strategies
Subject: Law
ISSN: 0040-0165
Year: 1999
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