DOCSLIB.ORG

2015 Publication

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
2015 Publication Userid: CPM Schema: tipx Leadpct: 100% Pt. size: 8 Draft Ok to Print AH XSL/XML Fileid: … tions/P525/2015/A/XML/Cycle02/source (Init. & Date) _______ Page 1 of 40 13:37 - 13-Jan-2016 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Publication 525 Cat. No. 15047D Contents Future Developments ............ 1 Department of the Taxable and What's New .................. 1 Treasury Internal Reminders ................... 2 Revenue Nontaxable Service Introduction .................. 2 Income Employee Compensation .......... 3 Special Rules for Certain Employees ............... 14 For use in preparing Business and Investment Income .... 16 2015 Returns Sickness and Injury Benefits ....... 17 Miscellaneous Income ........... 20 Repayments ................. 34 How To Get Tax Help ........... 35 Index ..................... 36 Future Developments For the latest information about developments related to Publication 525, such as legislation enacted after it was published, go to www.irs.gov/pub525. What's New Health flexible spending arrangements (health FSAs) under cafeteria plans. For plan year 2015, health FSAs are subject to a $2,550 limit on salary reduction contributions. Achieving a Better Life Experience (ABLE) account. This is a new type of savings account for individuals with disabilities and their families. For 2015, you can contribute up to $14,000. Distributions are tax-free if used to pay the ben- eficiary's qualified disability expenses. See Pub. 907 for more information. Public safety officers. Certain amounts you receive under federal or state law due to a death or disability of a public safety officer in the line of duty may be excluded from gross in- come. See section 104(a)(6) for more informa- tion. Certain amounts received by wrongfully in­ carcerated individuals. Certain amounts you receive due to a wrongful incarceration may be excluded from gross income. See section 139F for more information. Note. This new law was enacted December 18, 2015 as part of P.L. 114-113 and applies to all tax years. Generally, you have 1 year from its enactment to claim a credit or refund if you in- cluded such amounts in gross income in previ- ous years, even if that claim is otherwise not al- Get forms and other information faster and easier at: lowed by law. • IRS.gov (English) • IRS.gov/Korean (한국어) • IRS.gov/Spanish (Español) • IRS.gov/Russian (Pусский) • IRS.gov/Chinese (中文 ) • IRS.gov/Vietnamese (TiếngViệt) Jan 13, 2016 Page 2 of 40 Fileid: … tions/P525/2015/A/XML/Cycle02/source 13:37 - 13-Jan-2016 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. sources outside the United States (foreign in- tax year, and you otherwise could not get the come) on your tax return unless it is exempt by funds before the end of the year, you include Reminders U.S. law. This is true whether you reside inside the amount in your income for the next tax year. Qualified Medicaid waiver payments. Cer- or outside the United States and whether or not Assignment of income. Income received tain payments you receive for providing care for you receive a Form W-2, Wage and Tax State- by an agent for you is income you constructively an eligible individual in your home under a ment, or Form 1099 from the foreign payer. This received in the year the agent received it. If you state's Medicaid waiver program, are not inclu- applies to earned income (such as wages and agree by contract that a third party is to receive ded in your income. These payments may be tips) as well as unearned income (such as inter- income for you, you must include the amount in excluded from your income whether or not you est, dividends, capital gains, pensions, rents, your income when the third party receives it. are related to the eligible individual receiving and royalties). care. If you reside outside the United States, you Example. You and your employer agree Virtual Currency. For federal tax purposes, may be able to exclude part or all of your for- that part of your salary is to be paid directly to virtual currency is treated as property. Bitcoin is eign source earned income. For details, see one of your creditors. You must include that an example of virtual currency. Transactions Pub. 54, Tax Guide for U.S. Citizens and Resi- amount in your income when your creditor re- using virtual currency (such as Bitcoin) must be dent Aliens Abroad. ceives it. reported in U.S. dollars. Disaster mitigation payments. You can ex- The fair market value of virtual currency clude from income grants you use to mitigate Prepaid income. In most cases, prepaid in- (such as Bitcoin) paid as wages is subject to (reduce the severity of) potential damage from come, such as compensation for future serv- federal income tax withholding, FICA tax, FUTA future natural disasters that are paid to you ices, is included in your income in the year you tax and must be reported on Form W-2. Notice through state and local governments. For more receive it. However, if you use an accrual 2014-21, 2014-16 I.R.B. 938 describes how vir- information, see Disaster mitigation payments method of accounting, you can defer prepaid in- tual currency is treated for federal tax purposes under Welfare and Other Public Assistance come you receive for services to be performed and is available at www.irs.gov/irb/ Benefits, later. before the end of the next tax year. In this case, 2014–16_IRB/ar12.html. Qualified joint venture. A qualified joint ven- you include the payment in your income as you Additional Medicare Tax. In addition to the ture conducted by you and your spouse may earn it by performing the services. 1.45% Medicare tax, a 0.9% Additional Medi- not be treated as a partnership if you file a joint care Tax applies to Medicare wages, railroad return for the tax year. See Partnership Income Comments and suggestions. We welcome retirement (RRTA) compensation, and self-em- under Business and Investment Income, later. your comments about this publication and your ployment income that are more than: Photographs of missing children. The Inter- suggestions for future editions. $125,000 if married filing separately, nal Revenue Service is a proud partner with the You can send us comments from www.irs.gov/formspubs. Click on “More Infor- $250,000 if married filing jointly, or National Center for Missing and Exploited Chil- dren. Photographs of missing children selected mation” and then on “Give us feedback.” $200,000 if single, head of household, or by the Center may appear in this publication on Or you can write to: qualifying widow(er). pages that otherwise would be blank. You can For more information, see Form 8959 and its in- help bring these children home by looking at the Internal Revenue Service structions. photographs and calling 1-800-THE-LOST Tax Forms and Publications Net Investment Income Tax (NIIT). The NIIT (1-800-843-5678) if you recognize a child. 1111 Constitution Ave. NW, IR-6526 applies at a rate of 3.8% to certain net invest- Washington, DC 20224 ment income of individuals, estates and trusts Introduction that have income above the threshold amounts. We respond to many letters by telephone. Individuals will owe the tax if they have net in- You can receive income in the form of money, Therefore, it would be helpful if you would in- vestment income and also have modified adjus- property, or services. This publication dis- clude your daytime phone number, including ted gross income over the following thresholds cusses many kinds of income and explains the area code, in your correspondence. for their filing status: Married filing jointly, whether they are taxable or nontaxable. It in- Although we cannot respond individually to $250,000; Married filing separately, $125,000; cludes discussions on employee wages and each comment received, we do appreciate your Single, $200,000; Head of household (with fringe benefits, and income from bartering, part- feedback and will consider your comments as qualifying person), $200,000; Qualifying nerships, S corporations, and royalties. It also we revise our tax products. widow(er) with dependent child, $250,000. For includes information on disability pensions, life more information, see Form 8960 and its in- insurance proceeds, and welfare and other Ordering forms and publications. Visit structions. public assistance benefits. Check the index for www.irs.gov/formspubs to download forms and publications. Otherwise, you can go to Terrorist attacks. You can exclude from in- the location of a specific subject. www.irs.gov/orderforms to order current and come certain disaster assistance, disability, and In most cases, an amount included in your prior-year forms and instructions. Your order death payments received as a result of a terro- income is taxable unless it is specifically ex- should arrive within 10 business days. rist or military action. For more information, see empted by law. Income that is taxable must be Sickness and Injury Benefits, later, and Pub. reported on your return and is subject to tax. In- Tax questions. If you have a tax question 3920, Tax Relief for Victims of Terrorist Attacks. come that is nontaxable may have to be shown not answered by this publication, check on your tax return but is not taxable. Gulf oil spill. You are required to include in IRS.gov and How To Get Tax Help at the end of this publication. your gross income payments you received for Constructively received income. You are lost wages, lost business income, or lost profits. generally taxed on income that is available to See Gulf oil spill under Other Income, later.
Load more

Recommended publications
  • Publication 538, Accounting Periods and Methods
    Userid: CPM Schema: tipx Leadpct: 100% Pt. size: 10 Draft Ok to Print AH XSL/XML Fileid: … ons/P538/201901/A/XML/Cycle04/source (Init. & Date) _______ Page 1 of 21 15:46 - 28-Feb-2019 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Department of the Treasury Contents Internal Revenue Service Future Developments ....................... 1 Publication 538 Introduction .............................. 1 (Rev. January 2019) Photographs of Missing Children .............. 2 Cat. No. 15068G Accounting Periods ........................ 2 Calendar Year .......................... 2 Fiscal Year ............................. 3 Accounting Short Tax Year .......................... 3 Improper Tax Year ....................... 4 Periods and Change in Tax Year ...................... 4 Individuals ............................. 4 Partnerships, S Corporations, and Personal Methods Service Corporations (PSCs) .............. 5 Corporations (Other Than S Corporations and PSCs) .............................. 7 Accounting Methods ....................... 8 Cash Method ........................... 8 Accrual Method ........................ 10 Inventories ............................ 13 Change in Accounting Method .............. 18 How To Get Tax Help ...................... 19 Future Developments For the latest information about developments related to Pub. 538, such as legislation enacted after it was published, go to IRS.gov/Pub538. What’s New Small business taxpayers. Effective for tax years beginning
    [Show full text]
  • Tax Planning with Life Insurance William L
    College of William & Mary Law School William & Mary Law School Scholarship Repository William & Mary Annual Tax Conference Conferences, Events, and Lectures 1987 Tax Planning with Life Insurance William L. Haas Repository Citation Haas, William L., "Tax Planning with Life Insurance" (1987). William & Mary Annual Tax Conference. 574. https://scholarship.law.wm.edu/tax/574 Copyright c 1987 by the authors. This article is brought to you by the William & Mary Law School Scholarship Repository. https://scholarship.law.wm.edu/tax 1986 TAX REFORM - THE AFTERMATH WEALTH TRANSFER TAX PLANNING WITH LIFE INSURANCE By: William L. Haas Tax and Investment Group 33 Bedford Street Lexington, MA 02173 617 861-9720 The Tax Reform Act of 1986 maintains the importance of insurance for risk protection and it enhances it's value for savings, investment, and tax purposes. 1. Tax reform as it relates to the insurance company and product had been significantly addressed by TEFRA in 1982 and DEFRA in 1984. The industry was able to escape the most threatening reform proposals suggested for 1986 legislation. a. The most important proposal threatening the industry was to impose a tax on inside build up of cash values. This proposal was defeated. But changes in the area are still anticipated. b. The most threatening proposal which was enacted was probably the limitation on interest deduction for financing insurance. 2. The 1986 legislation adversely affected products which directly or indirectly competed in markets where the insurance product is now anitipated to make major inroads. a. Traditional tax shelters offering current deductions appear a thing of the passt.
    [Show full text]
  • Constructive Receipt of Income Neil Harl Iowa State University, [email protected]
    Volume 8 | Number 2 Article 1 1-17-1996 Constructive Receipt of Income Neil Harl Iowa State University, [email protected] Follow this and additional works at: http://lib.dr.iastate.edu/aglawdigest Part of the Agricultural and Resource Economics Commons, Agricultural Economics Commons, Agriculture Law Commons, and the Public Economics Commons Recommended Citation Harl, Neil (1996) "Constructive Receipt of Income," Agricultural Law Digest: Vol. 8 : No. 2 , Article 1. Available at: http://lib.dr.iastate.edu/aglawdigest/vol8/iss2/1 This Article is brought to you for free and open access by the Journals at Iowa State University Digital Repository. It has been accepted for inclusion in Agricultural Law Digest by an authorized editor of Iowa State University Digital Repository. For more information, please contact [email protected]. Agricultural Law Digest An Agricultural Law Press Publication Volume 8, No. 2 January 17, 1997 Editor: Robert P. Achenbach, Jr. Contributing Editor Dr. Neil E. Harl, Esq. ISSN 1051-2780 CONSTRUCTIVE RECEIPT OF INCOME — by Neil E. Harl* The doctrine of constructive receipt of income is taxpayer’s attorney requested that the checks be reissued to repeatedly litigated in large part because there is no bright reflect payment in the later year. The ruling held that the line test for when the concept applies.1 Yet the doctrine is amounts were not deemed constructively received in the immensely important to farmers and ranchers on the cash earlier year. The ruling noted that the mere fact that a check method of accounting.2 is issued in one year and received in another does not make the check taxable in the year issued.
    [Show full text]
  • Us Preimmigration Tax Planning
    US PREIMMIGRATION TAX PLANNING - 12th Annual International Estate Planning Institute March 10, 2016 SUMMER AYERS LEPREE, ESQ. Summer A. LePree, Esq., Partner, Bilzin Sumberg Baena Price & Axelrod, LLP, 1450 Brickell Avenue, Suite 2300, Miami, FL 33137. Telephone: 305-350-7274. E-mail address: [email protected] Summer Ayers LePree is a Partner in Bilzin Sumberg's Tax Group, where she focuses her practice on international taxation. She has extensive experience advising clients on international restructurings, treaty planning techniques, and other international and domestic corporate and partnership tax matters, as well as significant experience with international tax planning and structuring for high net worth private clients, including pre-immigration planning, expatriation, and US income and transfer tax aspects of foreign trusts and estates. Summer has represented clients before the Unites States Tax Court, the Internal Revenue Service, and the United States Treasury. Summer is a frequent speaker and author on various topics in international tax law. She also lectures regularly for the New York University Summer Institute in International Taxation and Federal Tax Institute and sits on panels for various industry organizations, including the American Bar Association and the International Bar Association. Summer was selected by the Daily Business Review for the esteemed 2015 "On the Rise" award, an honor that only 40 South Florida Lawyers under the age of 40 were selected to receive. In addition, Summer was recognized in the 2016 edition of Best Lawyers in America, in the field of Tax Law. She also currently serves as the Vice Chairperson of the United States Activities of Foreigners and Tax Treaties Committee.
    [Show full text]
  • Recent Federal Income Tax Developments Ira B
    College of William & Mary Law School William & Mary Law School Scholarship Repository William & Mary Annual Tax Conference Conferences, Events, and Lectures 1999 Recent Federal Income Tax Developments Ira B. Shepard Repository Citation Shepard, Ira B., "Recent Federal Income Tax Developments" (1999). William & Mary Annual Tax Conference. 374. https://scholarship.law.wm.edu/tax/374 Copyright c 1999 by the authors. This article is brought to you by the William & Mary Law School Scholarship Repository. https://scholarship.law.wm.edu/tax RECENT FEDERAL INCOME TAX DEVELOPMENTS By Ira B. Shepard Professor of Law University of Houston Law Center Houston, Texas 77204 Tele: 713-743-2246 Fax: 713-743-2131 e-mail: ishepardpuh.edu Tennessee Tax Institute December 2, 1999 1. ACCOUNTING A. Accounting Methods 1. TAM 9848001 (7/16/98). Dentist custom-ordered crowns, bridges and dentures from independent laboratories for individual patients. Therefore, he does purchase and sell merchandise inventory. The TAM stated that neither a small year-end inventory nor custom-ordering was sufficient to prevent the accrual method from being required. Nevertheless, the dentist was not required to maintain inventories because the production, purchase or sale of merchandise was not a significant income- producing factor under Reg. § 1.471-1. 2. Updated procedures for taxpayers to obtain automatic consent to change accounting methods. Rev. Proc. 98-60, 1998-51 I.R.B. 16 (12/10/98), clarifying, modifying, amplifyin and superseding Rev. Proc. 97-37, 1997-2 C.B. 455. Updates the procedures by which a taxpayer may obtain automatic consent to change the methods of accounting set forth in the procedure.
    [Show full text]
  • Nonqualified Deferred Compensation Plans: a Review and Critique," William Mitchell Law Review: Vol
    William Mitchell Law Review Volume 17 | Issue 1 Article 13 1991 Nonqualified efeD rred Compensation Plans: A Review and Critique Carter G. Bishop Marian McMahon Durkin Follow this and additional works at: http://open.mitchellhamline.edu/wmlr Recommended Citation Bishop, Carter G. and Durkin, Marian McMahon (1991) "Nonqualified Deferred Compensation Plans: A Review and Critique," William Mitchell Law Review: Vol. 17: Iss. 1, Article 13. Available at: http://open.mitchellhamline.edu/wmlr/vol17/iss1/13 This Article is brought to you for free and open access by the Law Reviews and Journals at Mitchell Hamline Open Access. It has been accepted for inclusion in William Mitchell Law Review by an authorized administrator of Mitchell Hamline Open Access. For more information, please contact [email protected]. © Mitchell Hamline School of Law Bishop and Durkin: Nonqualified Deferred Compensation Plans: A Review and Critique NONQUALIFIED DEFERRED COMPENSATION PLANS: A REVIEW AND CRITIQUE CARTER G. BISHOPt MARIAN MCMAHON DURKINtt We live in the great world as well as in the little. We belong to groups that extend beyond particular places and we speak a language ... that aspires to universality. If it is to perform its expressive function, our theory must help us grasp this transcendent aspect of our experience.' The tax treatment of nonqualfied deferred compensation plans (NQDCPs) encourages the deferral of the payment of personal service income beyond the economic performance of the services, the natural mar- ket datefor payment. The current use of such plans is premised upon an exemption from a complex series of Department of Labor unfunded plan rules (ERISA2 funding, anti-discrimination and reporting standards) and avoidance of the common law income tax doctrines of constructive receipt and economic benefit.
    [Show full text]
  • Equitable Recoupment: Revisiting an Old and Inconsistent Remedy
    Fordham Law Review Volume 65 Issue 2 Article 11 1996 Equitable Recoupment: Revisiting an Old and Inconsistent Remedy Camilla E. Watson Follow this and additional works at: https://ir.lawnet.fordham.edu/flr Part of the Law Commons Recommended Citation Camilla E. Watson, Equitable Recoupment: Revisiting an Old and Inconsistent Remedy , 65 Fordham L. Rev. 691 (1996). Available at: https://ir.lawnet.fordham.edu/flr/vol65/iss2/11 This Article is brought to you for free and open access by FLASH: The Fordham Law Archive of Scholarship and History. It has been accepted for inclusion in Fordham Law Review by an authorized editor of FLASH: The Fordham Law Archive of Scholarship and History. For more information, please contact [email protected]. Equitable Recoupment: Revisiting an Old and Inconsistent Remedy Cover Page Footnote Associate Professor, University of Georgia School of Law. I wish to thank Brookes Billman, Walter Hellerstein, Margaret V. Sachs, and Alan Watson for their helpful comments on an earlier draft of this Article. I also wish to thank Patricia Bryant and David Gunderson for their research assistance. This article is available in Fordham Law Review: https://ir.lawnet.fordham.edu/flr/vol65/iss2/11 EQUITABLE RECOUPMENT: REVISITING AN OLD AND INCONSISTENT REMEDY Camilla E. Watson* TABLE OF CONTENTS INTRODUCTION ................................................. 692 I. RELATED EQUITABLE REMEDIES AND THEIR USE IN FEDERAL TAX LITIGATION ............................. 699 A. Estoppel and Quasi-Estoppel........................ 700 B. Equitable Tolling .................................... 708 C. Election ............................................. 708 D. Duty of Consistency................................. 710 II. RECOUPMENT AND SETOFF ............................. 713 A . Setoff ............................................... 714 B. The Equitable Recoupment Decisions of the Supreme Court .....................................
    [Show full text]
  • Attorneys Audit Technique Guide
    Attorneys Audit Technique Guide NOTE: This document is not an official pronouncement of the law or the position of the Service and cannot be used, cited, or relied upon as such. This guide is current through the publication date. Since changes may have occurred after the publication date that would affect the accuracy of this document, no guarantees are made concerning the technical accuracy after the publication date. Revision Date - March 2011 Table of Contents Chapter 1 - Overview of Attorney Returns ......................................................................... 3 Introduction ..................................................................................................................... 3 RecordKeeping ............................................................................................................... 4 Bank Accounts ................................................................................................................ 5 General Trust Account ................................................................................................ 6 Segregated Trust Account ........................................................................................... 6 Other Revenue Sources ................................................................................................... 7 Client-Related Expenses ................................................................................................. 7 Attorney-Client Privilege ...............................................................................................
    [Show full text]
  • AALU's Washington Report
    AALU's Washington Report Premier analysis of federal legislative and regulatory developments for the nation's 2000 most advanced life insurance planners, focusing on business, estate, qualified and nonqualified retirement planning. Counsel AALU Buchanan Ingersoll PC Federal Policy Group Executive Vice President 2901 Telestar Court Gerald H. Sherman Ken Kies David J. Stertzer Falls Church, VA 22042 Stuart M. Lewis Patrick J. Raffaniello Director of Government Affairs Phone: (703) 641-9400 Deborah M. Beers Timothy Hanford Fax: (703) 641-9885 Norma Sharara Jim Carlisle Tom Korb www.aalu.org PricewaterhouseCoopers Ricchetti Inc. Assoc. Dir. of Gov. Affairs William Archer Steve Ricchetti Marc R. Cadin Donald Carlson Jeff Ricchetti AALU Bulletin No: 04-133 October 8, 2004 Subject: Analysis of Deferred Compensation Provisions in the American Jobs Creation Act of 2004 Major References: Section 885, American Jobs Creation Act of 2004 Prior AALU Washington Reports: 04-128, 04-127; 04-126; 04-118; 04-94 MDRT Information Retrieval Index Nos.: 2400.00; 7400.023 One of the most significant aspects of the tax bill currently being finalized by Congress is the dramatic rewrite of the tax rules applicable to nonqualified deferred compensation arrangements. These rules can be expected to affect every deferred compensation plan in the United States, whether elective or nonelective, whether established through formal plan structures or simple board resolutions, and whether applied to a group of employees or to a single executive. Because of the short timeframe in which employers must react and adapt to these new rules, it is imperative that prompt and careful consideration be given to these new deferred compensation rules and to their consequences.
    [Show full text]
  • Taxation Section: Michigan Tax Lawyer Winter 1996
    Volume XXII, Issue 1 First Quarter 1996 >.._//, TABLE OF CONTENTS CHAIRPERSON'S LETTER TO TAXATION SECTION MEMBERS 2 REPORTS FROM THE COMMITTEES Corporation Committee 5 Employee Benefits Committee 6 Estates & Trusts Committee 6 International Tax Law Committee 7 Partnership Committee 8 Practice & Procedure Committee 8 State & Local Committee 10 FEATURE ARTICLES The Implied Covenant Not To Compete- An IRS Red Herring? By: Robert L. Cohen & Robert A. Bryant 12 General Considerations of Nonqualified Deferred Compensation Arrangements By: Bryan I. Pukoff 19 STATE AND LOCAL TAX UPDATE Recent Cases 26 SHORT SUBJECTS Book Review 29 Shortcuts 30 SECTION NEWS Calendar of Seminars & Events 32 MICHIGAN TAX LAWYER The Michigan Tax Lawyer is a quarterly publication of the Taxation Section of the State Bar of Michigan that is designed to be a practical and useful resource for the tax practitioner. Features include concise reports in a uniform format from the Section's committees, practitioner articles with the "how to" approach, news of events and of other Section members, and "Short Subjects" providing helpful practice information. Input from members of the Taxation Section is most welcome. Our publication is aimed toward involving you in Section activities and assisting you in your practice. If you have suggestions or an article you wish to have considered for publication, please contact Joseph A Bonventre, Esq. at 1600 First Federal Building, Detroit, Michigan 48226-1962, (313) 965-8300. JOSEPH A. BONVENTRE Editor Publication Committee ERIC T. WEISS WILLIAM E. SIDER State Bar of Michigan Taxation Section Council CAROL J. KARR STEPHEN M. FELDMAN GEORGE W. GREGORY Chairperson Vice Chairperson Secretary-Treasurer REGINALD J.
    [Show full text]
  • Schedularity in U.S. Taxation, Its Effect on Tax Distribution, Comparison with Sweden
    Saint Louis University School of Law Scholarship Commons All Faculty Scholarship 2012 Schedularity in U.S. Taxation, Its Effect on Tax Distribution, Comparison with Sweden Henry Ordower Follow this and additional works at: https://scholarship.law.slu.edu/faculty Part of the Comparative and Foreign Law Commons, and the Tax Law Commons No. 2012-31 Schedularity in U.S. Taxation, its Effect on Tax Distribution, Comparison with Sweden Henry Ordower ElectronicElectronic copy copy available available at: http://ssrn.com/abstract=2182871 Discussion Draft Schedularity in U.S. Taxation, its Effect on Tax Distribution, Comparison with Sweden A condensed version of this paper on U.S. schedularity only will appear in 108 Northwestern University Law Review, in its "100 Years under the Income Tax" Symposium By Henry Ordower, Professor of Law Saint Louis University School of Law The United States uses a global model as the basis for its federal income tax system. 1 Characteristic of global systems is the Internal Revenue Code’s definition of gross income. 2 The definition includes “all income from whatever source derived” and combines income from all sources under that single rubric of gross income. 3 Taxable income 4 upon which the Code imposes the income tax 5 also appears to combine deductions without regard to their source although the Code distinguishes business deductions 6 from all other deductions. 7 Several economically developed countries, including Sweden, 8 Germany, and Canada, however, employ a schedular model of taxation. Schedular models classify income and related expenses by schedular class and may compute tax separately for each class.
    [Show full text]
  • Evaluating the Consumption Tax Proposals: Changes in the Taxation of Interspousal Transactions, Use of Trusts, and Revising the Meaning of "Tax Planning"
    Evaluating the Consumption Tax Proposals: Changes in the Taxation of Interspousal Transactions, Use of Trusts, and Revising the Meaning of "Tax Planning" LESTER B. SNYDER* & ROGER J. HIGGINS** TABLE OF CONTENTS I. INTRODUCTION . 1486 II. DIVORCE AND REDEMPTION {OF STOCK, THAT IS) . • . 1490 A. Fact Pattern . 1490 B. Current Tax Law . 1491 1. Ninth Circuit . 1494 2. Tax Court . 1494 3. Assessing the Argument . 1495 C. Flat Tax, H.R. 2060 . 1499 1. Simplification . 1499 2. Wages Versus Investment Income . 1500 3. Business Expenses and Borrowing . 1502 4. The Divorce and Beyond: New Tax Planning Opportunities . 1503 D. USA Tax, S. 722 . 1505 * Professor of Law, University of San Diego School of Law. ** J.D. University of San Diego School of Law, 1996. The Authors wish to thank Alan Schenk for his advice. We also thank Amy K. F. Cramer for her helpful research assistance, and Bruce Boetter for his editorial help. 1485 1. Simplification . 1505 2. The Definitional Problem in the USA Tax and the Fallacy of Tax Equivalency ...................... 1506 3. Divorce and the Return of "Form is Substance" ....... 1508 4. Sale of the Business and Tax Planning Under the USA Tax ............................. ·...... 1511 Ill. THE USE OF TRUSTS: EXPLORING ALIMONY AND DEFERRED COMPENSATION .................... : ........ 1511 A. Taxation of Trusts Under Current Tax Law .............. 1512 B. Alimony Trusts .................................. 1513 1. Fact Pattern ................................. 1513 2. Results Under Current Tax Law ................... 1514 3. Results Under the Flat Tax ...................... 1517 4. Results Under the USA Tax ........... ,......... , .. 1519 C. Deferred Compensation Trusts: (The "Non-Qualified" Type) .. 1526 1. Fact Pattern ................................. 1526 2. Results Under Current Tax Law .....
    [Show full text]