Gross Income

IC-DISC Offers Tax Advantages for Closely Held Export Companies

For a closely held U.S. company engaged in export sales, an IC-DISC offers opportunities to both reduce the amount of revenue subject to the ordinary income tax rate and provide financial compensation to employees, shareholders, or other stakeholders.

Accounting for Government Grants

Letter Ruling 201003005 concludes that (1) nonreimbursable payments from the government to a corporate taxpayer to construct a plant are nonshareholder contributions to the capital of the taxpayer under Sec. 118(a) and are excluded from the taxpayer’s gross income under Sec. 61, and (2) the basis of the plant’s capital assets acquired by the taxpayer with the money contributed by the government is reduced according to Sec. 362(c).

Tax Planning for Troubled Debt

Today’s volatile real estate environment presents interesting opportunities for investors and developers to alter the terms of their debts in ways that may pay off if they can retain control of their projects.

Should a Company Elect to Defer Cancellation of Debt?

The American Recovery and Reinvestment Act of 2009 provides certain business debtors with a cancellation of debt (COD) income deferral election under new Sec. 108(i) for reacquisitions by the debtor or by certain related parties of applicable debt instruments after December 31, 2008, and before January 1, 2011.

Discharge of Indebtedness: Conversion vs. Contribution of Indebtedness

In an effort to de-leverage, more and more creditors, particularly those also holding an equity position, are willing to accept repayment for less than the face amount of the debt. Apart from settling the debt in cash for less than its face value, there are other methods debtors and creditors may use to modify, reduce, or even eliminate debt.

Corporate Cancellation of Debt Relief

Editor: Frank J. O’Connell Jr., CPA, Esq. The recent economic downturn coupled with the tightening of the credit market has forced many financially distressed corporations to renegotiate the terms of their maturing debt obligations. As little as 12 months ago, these companies would have been able to refinance their maturing

Uncertainty Governs Advance Trade Discounts

This article discusses conflicting court opinions and IRS guidance on advance trade discounts and the merits of treating them as purchase price adjustments instead of income or loans.

Third Circuit Holds That Advance Payments of Trade Discounts Are Income on Receipt

Karns Prime & Fancy Food, Ltd. (Karns), is a Pennsylvania corporation that operates grocery stores in the Harrisburg, Pennsylvania,area. In 1998,Karns’s management determined that the company required $1.5 million for capital improvements to its stores. Karns approached its primary supplier, Super Rite, Inc., about borrowing funds from it to make

Newsletter Articles

50th ANNIVERSARY

50 years of The Tax Adviser

The January 2020 issue marks the 50th anniversary of The Tax Adviser, which was first published in January 1970. Over the coming year, we will be looking back at early issues of the magazine, highlighting interesting tidbits.

PRACTICE MANAGEMENT

2019 tax software survey

This annual survey shows how CPAs rate the tax preparation software they used during last tax season and how it handled the recent tax law changes.