Regulations on original issue discount contain unexpected provisions affecting indebtedness

Article Abstract:

Rules affecting the taxation of and accounting for original issue discount (OID) and imputed interest rules are discussed in relation to the Deficit Reduction Act of 1984 and the impending tax reforms being considered by the Senate Finance Committee. The discussion includes Internal Revenue Service regulations for: calculating OID and imputed interest; taxation of short-period interest on debts outstanding; de minimis OID; installment obligations and taxation of applicable interest rates; accounting for variable interest rates; allowable interest deductions; tax benefit rules; unique applications and reserved issues.

Interest deductions, Discount (Finance), Interest, Interest (Finance)

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Opportunities, alternatives and issues under the uniform capitalization regulations

Article Abstract:

New uniform capitalization regulations issued by the Treasury Department are discussed. The rules concern the capitalization of direct costs and some of the indirect costs that are incurred in either the production or acquisition of real or personal property. Compliance with the uniform capitalization provisions consists of three steps: identifying additional capitalizable costs, computing the inventoriable parts of general and administrative costs, and allocating additional Section 263 costs to ending inventory. The provisions are discussed as they apply to manufacturers, retailers, and service costs.

United States. Department of the Treasury, Market capitalization

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Stock surrender does not result in immediate loss deduction, says S. Ct

Article Abstract:

The Supreme Court ruled recently that an immediate loss cannot be deducted for shareholders who surrender part of their stock to the corporation but retain control of the stock. The Court did not address the question of deductions in situations where control is not retained. When a shareholder conveys property to a corporation and gets nothing in return, neither the shareholder nor the corporation recognizes a gain or a loss. The Court's ruling is analyzed and the possibilities for remaining deductions law are discussed.

Cases, Tax accounting, United States. Supreme Court, Stock transfer

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