Article Abstract:
The main tax advantage of real estate investment trusts (REITs) is that they allow widely-held entities to own real estate and pass income to the owners without taxes being incurred by the entity. REITs can also benefit investors by providing more liquidity than direct real estate investments, and greater diversity than real estate limited partnerships. REITs may be classified by the life of the entities investment or by the types of investment made by the entity. The Tax Reform Act of 1986 changed a number of the ownership and asset requirements that an entity must meet in order to qualify for REIT status. REITs are generally taxed as corporations, but distributions made to the shareholders by the REIT may be deducted from the entities' taxable income, which effectively eliminates much of the tax a REIT would otherwise pay. Factors to be considered when evaluating an REIT for investment purposes are discussed.
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Article Abstract:
Tax rules regarding the use of Keogh plans are discussed, particularly the changes in plan rules made by the Tax Reform Act of 1986. Plans qualifying for contribution deductions and income deferral must be in writing and be communicated to employees, maintained for exclusive employee benefit, and set up to prevent the diversion of plan assets for purposes other than providing benefits to plan participants. A Keogh plan must also meet participation, nondiscrimination and vesting requirements in order to qualify. There are some special rules pertaining to plans in which the sum of the account balances for all 'key employee' participants exceeds 60 percent of the account balances for all employees. Keogh plans offer tax-advantages to self-employed individuals and partners in firms.
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Article Abstract:
A major estate asset is the closely-held business, and it can be crucial to a practical and profitable estate plan. If planned and administered effectively, the plan will make possible tax, family, and business goals. The recapitalization technique is designed to allow for a effective business transition, and produce income to the owner.
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