The Tax Adviser

FEATURED ARTICLES Recent developments in estate planning: Part 2. This second of a two-part article discusses regulations on calculating the basic exclusion amount once the higher estate tax exemption expires after 2025, as well as several court cases and IRS private letter rulings.

Actived: Thursday Nov 26, 2020


Accounting for Customer Loyalty Programs: Opportunities

The types of programs that are likely not to qualify in the retail context are those that provide customers cents-off coupons (i.e., a coupon issued for less than the value of the item for which it can be redeemed and that cannot be accumulated with other coupons toward the purchase of an item), even if the coupons are issued to a customer when

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Customer Reward Programs: Deducting Fulfillment Costs

Regs. Sec. 1.451-4 provides a narrow exception to the economic performance rules that allows accrual-basis taxpayers who issue premium coupons (or trading stamps) to deduct the estimated fulfillment cost of the coupons (or stamps) at the time they are issued.

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IRS finds future costs of fuel rewards are subtracted from

Method of accounting for premium coupons and trading stamps. Under an accrual method of accounting, Sec. 461 and the regulations thereunder provide that a liability is generally taken into account in the tax year in which all the events have occurred that establish the fact of the liability, the amount of the liability can be determined with reasonable accuracy, and economic performance has

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IRS guidance offers useful reminders about employee

Background. Sec. 132(a)(2) allows employers to provide a qualified employee discount that is excludable from an employee's taxable income. A qualified employee discount is defined under Sec. 132(c) as a discount with respect to qualified property or services that:. In the case of property, does not exceed the gross profit percentage of the price at which the property is offered to customers; or

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IRS issues Q&A guidance on Sec. 965 transition tax issues

On Dec. 12, 2018, the IRS released a new set of questions and answers (available at that provides guidance on Sec. 965 reporting and payment requirements for 2018 tax returns, including obligations resulting from amounts included in income for the 2017 tax year.. The newly released questions and answers provide updates and clarifications to the procedures for not only making the

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Revisiting at-risk rules for partnerships

The at-risk rules of Sec. 465 originated with the enactment of the Tax Reform Act of 1976, P.L. 94-455.It was a time of 70% tax rates, when tax shelters were aggressively marketed to manipulate taxable income. Originally, the rules applied only to certain narrowly defined types of activities, but subsequent amendments expanded their scope to cover all trades or businesses and other income

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Deducting Losses on Worthless Investment Securities

Sec. 165(g)(2) defines a security as any of the following: a share of stock in a corporation; a right to subscribe for, or receive, a share of stock in a corporation; or a bond, debenture, note, or certificate, or other evidence of indebtedness issued by a corporation or by a government or political subdivision thereof, with interest coupons or

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Losses Related to an Insolvent Corporation

The definition of a “security” in Sec. 165(g)(2) includes a share of stock in a corporation; a right to subscribe for, or to receive, a share of stock in a corporation; or a debt instrument issued by a corporation with interest coupons or in registered form. Sec. 165(g)(3) provides an exception for a taxpayer’s capital loss if the

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Taxation of Worthless and Abandoned Partnership Interests

If Sec. 165(g) applies, Sec. 165(a) does not. A security for Sec. 165(g) purposes includes corporate stock and stock options as well as corporate or government debt that is registered or has interest coupons. 6 The securities at issue met this definition. Gold Kist did not apply Sec. 165(g) because the securities were not worthless as evidenced

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IRS Issues Guidance on Treatment of Gift Cards

Tax Accounting. In recent years, the sale of gift cards, as well as the issuance of gifts cards to customers in exchange for returned merchandise, has become a widespread business practice in consumer markets industries, especially the retail industry.

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