Article Abstract:
According to the Tax Reform Act of 1986 and IRS Notice 87-16, an employee's gross income and status as an active participant in a qualified benefit plan must be taken into account when determining deductible IRA (individual retirement account) contributions. An individual can make a deductible contribution to an IRA of $2,000 or 100 percent of compensation (whichever is less), only if the individual is not an active participant in a retirement arrangement. The plans included under 'retirement arrangements' include: 401(a) qualified plans, 403(a) annuity plans; government plans, except for 457 deferred compensation plans; 403(b) annuity contracts; 408(k) simplified employee pensions; and 501(c)(18) trusts which meet creation date and vesting restrictions.
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Article Abstract:
The IRS has issued a new list of class lives of assets used in business and manufacturing. Depreciation rate tables and the applicable periods under the modified accelerated cost recovery system (MACRS) have also been issued. Asset class lives determine the MACRS recovery period. Certain types of property have been assigned recovery periods without regard to class life. An alternative depreciation system has been created which is mandatory for certain types property such as property financed by tax-exempt bonds and property used primarily outside the US. Examples of depreciation under the new procedures are provided.
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Article Abstract:
The IRS has issued Temporary Regulations regarding asset-allocation provisions of the Tax Reform Act of 1986. The asset transfers affected by the rule are those which constitute a trade or business in which the transferee's basis is determined by the price paid. The allocation of assets under the residual method, reporting requirements, and special rules regarding partnerships are discussed.
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