IRS imposes unexpected tax on split-dollar insurance

Article Abstract:

The IRS unexpectedly released a memorandum that causes major confusion regarding the tax treatment of split-dollar life insurance. According to its Tax Advice Memorandum (TAM) 9604001, the insured taxpayer under Sections 61 and 83 must include in income each year that a split-dollar scheme is effective any cash surrender value build-up surpassing the amount returnable to the employer when the arrangement is discontinued. This interpretation is not in harmony with the provisions of Revenue Ruling 64-328 as revised by Revenue Ruling 66-110 and the rules under Section 83. It erroneously applies SEction 83 to flout the accepted principle of not taxing inside a build-up Before TAM 9604001, the term cost of life insurance was the sole amount acceptable in the gross income of the taxpayer.

Taxation, Split-dollar life insurance, Split dollar life insurance

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The IRS adds another level of complexity to the AMT - with some unexpected results

Article Abstract:

Two IRS rulings made in May 1993 increase the complexity of alternative minimum tax (AMT) computation because they require the calculation of AMT adjusted gross income (AGI) for tax deductions. The rulings determined that charitable and depletion deduction limitations should be calculated based on the AMT AGI rather than the normal AGI. This complicates AMT computation and, while it is beneficial to taxpayers requesting deductions that are limited to AGI, it harms taxpayers who are deducting expenses such as medical costs which are limited to what exceeds a percentage of AGI.

Laws, regulations and rules, Minimum tax

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Identifying unexpected accruals: A comparison of current approaches

Article Abstract:

Accuracy associated with accrual prediction models is examined.

Models, Accrual basis accounting

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