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The line between the cash and accrual methods has narrowed, but the choices remain important

Article Abstract:

Taxpayers must choose an accounting method that clearly reflects income. Taxpayers using the cash accounting method must include all items of income actually or constructively received in the year in calculations of gross income. Cash-basis taxpayers generally deduct expenses in the tax year in which they are paid. This method requires income to be reported when received or when in the control of the taxpayer and expenses to be deducted when paid. Taxpayers using the accrual method generally report income in the year earned and debt or capitalized expenses in the year incurred. This method must be used where inventory is a substantial income-producing asset. Income includable in gross income is subject to an all-events test, and is to be included when the taxpayer receives the right to receive income. Income is reported when earned and expenses are deducted when incurred.

Author: Poswolsky, Melvyn
Publisher: Warren, Gorham & Lamont, Inc.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1990
Methods, Tax accounting, Accrual basis accounting, Cash basis accounting

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Option attribution rules are narrowed by Proposed Regs

Article Abstract:

New sets of Proposed Regulations covering net operating loss (NOL) carryforwards after an ownership change have been released by the IRS under Section 382. Proposed Regulations CO-18-90 will supersede existing option attribution rules. Under this proposal, an option will not be considered as exercised until it has been issued or transferred for an abusive principal prupose. Proposal CO-99-91 introduces changes to the regulations governing the segregation of 'public groups,' referring to shareholders with less than 5% of the firm's stock, after the issuance of stock. Proposal CO-49-88 set forth guidelines for the income and loss allocation for the year in which the shift in ownership of a corporation with an NOL carryforward has occurred.

Publisher: Warren, Gorham & Lamont, Inc.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1993
Laws, regulations and rules, Stocks, United States. Internal Revenue Service, Carryforward losses, Carryover losses

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Home office deduction has been narrowed, but is still available after the Tax Reform Act

Article Abstract:

The Tax Reform Act of 1986 eliminates many of the tax benefits of maintaining a home office. Taxpayers can no longer achieve any deductions by renting portions of their homes to their employers. A home office can still be used to shift income from a closely held corporation to an individual, which results in a lower tax rate. A home office can also be used to generate passive income. The cost of maintaining offices rented to a taxpayer's employer can no longer be deducted, but rentals to charitable or non-profit organizations still enjoy tax benefits.

Author: Godick, Neil B., Godick, Gene S.
Publisher: Warren, Gorham & Lamont, Inc.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1987
Taxation, Offices, Close corporations, Closely held corporations

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