Liquidation of subsidiary opens up tax advantages

Article Abstract:

Two Revenue Rulings in which corporate liquidations of subsidiaries led to favorable tax determinations are discussed. In one, the personal holding company liquidated into the parent corporation was allowed to claim a tax deduction for the amount of earnings distributed to the parent company, as a paid dividend deduction. In the second ruling, the liquidation of all subsidiary operations by the parent into a partnership allowed the companies involved to avoid recapture of investment tax credits previously claimed by the subsidiary companies.

Subsidiary corporations, Subsidiaries, Liquidation

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Impending marriage of a client calls for a review of the tax consequences

Article Abstract:

Though the bulk of tax planning for a personal relationship will focus on divorce, marriage is a crucial area for tax considerations. As second and third marriages become more common, the importance of taxation will increase. The tax consequences of most marriages will include the kind of returns being filed in order to prevent the loss of deductions and exemptions for the handling of residence sales. Tax planning techniques available to tax clients who are planning to wed are discussed.

Economic aspects, Marriage, Married people

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How taxpayers can avoid imposition of the substantial understatement penalty

Article Abstract:

The Tax Reform Act of 1986 has changed Section 6661, the standard that taxpayers must use to avoid the payment of substantial underpayment penalties, from 'a reasonable basis' to one requiring substantial authority. A detailed disclosure is also required of the relevant facts relating to the understated items. Guidelines are given for avoiding understatement penalties.

Planning, Income tax, Estate planning

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