Replacement cost does not count as actual cost
Article Abstract:
The Tax Court has issued a ruling in a case involving a truck dealer's use of replacement cost in the valuing of its parts inventory. In 'Mountain State Ford Truck Sales Inc,' the court ruled in favor of the IRS, noting that the truck dealer's application of replacement cost did not accurately reflect the dealer's true income. Citing Section 472(b), the court ruled that the taxpayer should have used actual cost instead of replacement cost when using the LIFO method for computing the value of its parts inventory.
Publication Name: Practical Tax Strategies
Subject: Law
ISSN: 0040-0165
Year: 1999
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Employment agreement makes advance commissions loans
Article Abstract:
The Tax Court has issued a ruling in a case involving advance commissions given to a marketing director by an insurance broker. Noting that the advance commissions were loans, the court ruled that the director was correct in classifying the commission payments as nontaxable loans. It based its ruling on a clause in the taxpayer's employment agreement with the insurance broker and on his record of repaying previous advance commissions given as loans.
Publication Name: Practical Tax Strategies
Subject: Law
ISSN: 0040-0165
Year: 1999
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Loan from pension plan prohibited even if treated as distribution
Article Abstract:
The Tax Court has issued a ruling in a case involving a loan from a qualified pension plan to the plan's sole shareholder. In 'Medina,' the court ruled that the loan was a prohibited transaction even though the loan had previously been treated as a distribution under Section 72(p). The court based its ruling on its interpretation of Section 4975 and ruled that the taxpayer was liable for both levels of excise tax specified by Section 4975.
Publication Name: Practical Tax Strategies
Subject: Law
ISSN: 0040-0165
Year: 1999
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