Retirement plan rules supersede premarital contract

Article Abstract:

Prenuptial agreements enable individuals about to get married to specify rights and obligations that take effect after they marry, divorce or become widowed. If properly prepared, this contract can be a valuable estate planning tool, particularly when the married couple has children from previous marriages. It should be noted that a premarital agreement is only enforceable if it complies with the entitlements mandated by the Employment Retirement Income Security Act of 1974 or the Retirement Equity Act of 1984. It is also helpful to keep in mind that such a prenuptial contract, by itself, is an insufficient estate planning technique when the plan involves a waiver of spousal retirement benefits. Sec. 417(a)(2) states that only the spouse participating in the plan can consent to a waiver of benefits. A premarital waiver is not recognized because prospective spouses are not entitled to spousal benefits. A post-marriage follow-up should be conducted.

Methods, Interpretation and construction, Estate planning, Retirement benefits, Prenuptial agreements

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Simplified methods for uniform capitalization to be expanded by IRS

Article Abstract:

The IRS is clarifying areas of confusion regarding requirements for capitalization of inventory, and is introducing several new methods. More latitude is to be allowed in using the simplified production method, and a labor-based, simplified service cost method is to be available for use with each trade or business. Forthcoming regulations will allow an alternative simplified resale method, and will address such issues as the three-year average method of last-in-first-out revaluation, the $10 million gross receipts test for controlled groups, and treatment of dual-function facilities. The IRS is also detailing procedures for taxpayers who want to change accounting methods.

Inventory control, United States. Internal Revenue Service

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Retailers, etc., have various options to comply with tough new uniform capitalization rules

Article Abstract:

Section 263A of the Internal Revenue Code requires large retailers to capitalize indirect costs of inventory as well as direct costs. This results in more recordkeeping requirements, and creates an acceleration of tax payments which can be recouped by retailers only when inventory levels decline. The types of costs that must be capitalized under Section 263A are discussed, and methods by which they may be allocated are described and illustrated. Retailers should carefully consider their methods of allocation in order to reduce the tax burden resulting from Section 263A.

Taxation, Retail industry, Retail trade

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