faqs.org » Abstracts Index » Abstracts » Business

Correcting estate tax liability leads to adjustments of installment payments

Article Abstract:

Tax accountants dealing in estates should be aware of the regulations governing the payment of estate taxes. If the value of a closely held business in decedent's estate accounts for more than 35% of the total adjusted estate then the executor may elect to pay all or part of the tax in ten equal installments. The estate will only have to pay annual interest payments during the first five years of the attributable tax. The tax accrues at the rate of four percent during the deferred period. Additionally, the IRS determined that interest on underpayment should accrue at the prevailing rate from the date it should have been paid, and overpayments will be credited to unpaid installments.

Analysis, Tax accounting, Accounting and auditing, Transfer taxes

---

TAMRA continues the assault on installment reporting, but leaves choices

Article Abstract:

RA '87 and the Technical and Miscellaneous Revenue Act of 1988 (TAMRA) limit the tax benefits of installment sales: dealers and sellers of publicly traded securities can no longer use the installment sale methods, interest charges are payable to the IRS when the total amount of installment sales in any taxable year exceeds $5 million, and the pledge of an installment note as collateral for a loan triggers immediate income recognition. The effects of tax reform on installment sales are discussed, and examples are presented. Taxpayers adversely affected by these changes may find that alternatives such as like-kind exchanges, leasing, or merely refinancing may be worthwhile.

Installment contracts

---

How installment disallowance rules work

Article Abstract:

Proportionate disallowance rules still apply to certain dispositions made in taxable years beginning before 1988, and require that gain be recognized when the holder of an installment obligation uses it as loan collateral. Explanations of covered transactions, average debt, aggregation rules, election out, and effective dates under Temporary Regulations are presented.

Management, Finance, Corporations, Corporate finance

Some parts © 2012 Advameg, Inc.