Gain on contributions of partial interests and encumbered property can be avoided

Article Abstract:

The Tax Reform Act of 1986 reduced the tax benefits of donating property to charities. Tax payers donating encumbered property or fractional interest in property are faced with additional tax problems reducing their tax benefits. Gifts of encumbered property by direct transfer resulting in a reduction of the share of the transferor's liability share or gifts of corporate stock to a charity to avoid transferring liabilities are treated partially as a gift and as a sale resulting in gain recognition from the liability relief. Limited partnership transfers can be used to avoid a transfer of the tax basis in the property, avoiding the tax problems of direct transfers and gifts of corporate stock, and allowing the taxpayer to double the net tax benefit of the gift.

Laws, regulations and rules, Gift tax

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Accelerated recognition of gain can be avoided for some 'dispositions' of installment notes

Article Abstract:

Property sold via the installment technique does not always have to recognize the balance of the gain for some disposition-type transactions. The article covers the effects of changes in terms, pledges, transfers in trust, security and escrows, and related-party sales. The disposition of the installment obligation is always widespread and requires that the holder seek alternatives to the planned transaction that will result in protection from unexpected taxes.

Finance, taxation, & monetary policy, Accounting and auditing, Accountants, Property taxes, Property tax

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Many accounting practices will have to be changed as a result of the Tax Reform Act

Article Abstract:

The Tax Reform Act of 1986 changes a number of established accounting practices. The use of the cash accounting method is restricted. The bad debt reserve is eliminated. The tax benefits of installment sales have been limited. Deductions for vacation pay accruals have been reduced. The exclusion from gross income for the discharge of indebtedness has been repealed. Each of these changes, their effects, and ways to plan for them are discussed.

Accounting, Practice

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