Executive's Tax & Management Report articles from July 2002

Executive's Tax & Management Report archives from July 2002

Watch out for IRA traps.(rules governing individual retirement account deductions)(Brief Article)
July 7, 2002... The 2001 Tax Relief Act hikes the annual limit on IRA contributions--from $2,000 in 2001 to $3,000 in 2002, $4000 in 2005, and $5,000 in 2008. But the Tax Relief Act did not simplify the complicated rules governing IRA contributions. Taxpayers...

Tax fact.(over 230 million tax returns will be filed in 2002)(Brief Article)(Statistical Data Included)
July 7, 2002... More than 230 million tax returns will be filed in calendar year 2002. The IRS expects that figure to increase gradually to 254.5 million returns in 2008.

When the IRS gives you a refund by mistake.(Brief Article)(Statistical Data Included)
July 7, 2002... If the IRS issues you a refund check by mistake, you are, of course, required to return it. But did you know you may also owe interest to the IRS? The tax code states that an erroneous refund "shall bear interest from the date of the payment of...

Tax question.(question and answer on taxation of Roth individual retirement account)
July 7, 2002... Q I opened a Roth IRA in 1999, and I'm considering withdrawing some of those funds. But I've heard that I might have to pay taxes on the withdrawal since the account has been open for less than five years. Is that true? A Not necessarily....

Avoid dividend label on loan repayments. (Closely Held Businesses).(Statistical Data Included)
July 7, 2002... Jo Marie Payton advanced more than $600,000 to her corporation over the years. When the corporation picked up the tab for some of Payton's personal expenses, she simply treated the payments as repayments on her loans to the corporation. So when...

Divorced business owners get a break. (Divorce And Taxes).
July 7, 2002... A divorce can be an expensive proposition, causing some business owners to tap their businesses for funds to settle up with their ex-spouses. For example, the owner of a closely held corporation may transfer shares of stock to his or her...

IRS offers advice to newlyweds. (Family Tax Angles).(Brief Article)
July 7, 2002... The IRS recently offered some tax advice to newly married couples. The IRS said that "a few, simple steps can help keep tax issues from interrupting newlywedded bliss" [IR 2002-74]: * Use the correct name. The IRS pointed out that taxpayers...

Unanswered question about entertainment deductions. (Travel And Entertainment Expenses).
July 7, 2002... One Tax Court judge referred to the tax rules for business entertainment as "fuzzy at best." In particular, he was referring to the distinction between an entertainment "activity" and an entertainment "facility." One set of rules governs...

Executive's briefcase.(survey finds that companies offer a variety of work/life benefits)(Brief Article)(Panel Discussion)(Statistical Data Included)
July 7, 2002... Work/life benefits remain a steady offering despite recession. Despite a continuing economic recession nationwide, a recent study found that most companies are continuing to offer a variety of work/life benefits. Many experts predicted...

Trends in executive compensation. (Compensation & Benefits).(Brief Article)(Panel Discussion)(Statistical Data Included)
July 7, 2002... In a year marked by economic turmoil, terrorist attacks, and corporate scandal, U.S. corporations took some unusual steps in compensating their top executives, according to the 2001 CEO Compensation Survey conducted by Mercer Human Resource...

Stock options: what's all the fuss about?
July 21, 2002... Despite the current stock market doldrums, stock options will certainly continue to be a favored form of employee compensation--for a number of reasons. For example, for start-up companies, stock options can be used to attract talented...

Lottery winners lose in court.(Brief Article)
July 21, 2002... Michael and Janet Maginnis recently found out that you cannot hit the jackpot every time. When they won the Oregon State Lottery, they received five annual payments. Then the couple sold their right to the remaining 15 annual payments for a...

Short sellers get short end of the stick. (Tax Angles For Investors).(Brief Article)
July 21, 2002... Sometimes when dealing with the IRS, it's a case of "heads--the IRS wins, tails--you lose." For example, consider a recent IRS ruling regarding short sales on the stock market. When a short sale straddles two tax years and you end up with a...

How to settle a tax dispute--fast. (Dealing With The IRS).(Brief Article)
July 21, 2002... The IRS has announced that small business and self-employed taxpayers can now resolve tax disputes through fast-track mediation. Disputes will be resolved through the new expedited process within 40 days compared to several months through the...

New-look education savings accounts may be disappointing. (Education Expenses).(Brief Article)
July 21, 2002... After several years of effort, proponents of expanded educational savings accounts (ESAs) were finally successful in 2001. The 2001 Tax Relief Act provided that ESAs could be used to pay for elementary and secondary school expenses as well as...

Tax question.(special provisions for claiming a loss )(Brief Article)
July 21, 2002... Q My home was seriously damaged by flooding last year. Are there special provisions for claiming a loss since my home is located in a declared disaster area? A Casualty losses are generally deductible only in the year the casualty...

New regulations issued on unique depreciation method. (Business Expenses).(Brief Article)
July 21, 2002... The IRS recently issued proposed regulations governing the use of the income forecast method of depreciation [Prop. Reg. 1.167(n)]. This is an alternative to the regular Modified Accelerated Cost Recovery System that you are familiar with....

Stocks down? Consider a Roth IRA. (Retirement Planning).
July 21, 2002... If your traditional IRA has lost some of its value as a result of recent stock market declines, now may be the time to consider converting it to a Roth IRA to turn your paper losses into a long-term tax savings. The Roth IRA may be a more...

Are all charitable gifts deductible? (Personal Taxes).(Brief Article)
July 21, 2002... You want to make a gift to a charity and you want to get the most bang for your buck on your tax return. But is any donation to a charity considered tax deductible? No, there are several types of donations that don't qualify: []...

IRS focuses on partners and S corporation owners. (Executive's Briefcase).(effort to encourage individual taxpayers to properly report income and losses passed through from partnership and S corporations )(Brief Article)
July 21, 2002... The IRS has launched a new compliance effort to encourage individual taxpayers to properly report income and losses passed through from partnership and S corporations [IR-2002-83]. According to the IRS, some partners and S corporation owners...

Employees wary of "use it or lose it" rule. (Executive's Briefcase).(flexible spending accounts)(Brief Article)
July 21, 2002... Although the majority of companies offer flexible spending accounts (FSAs), most employees don't participate in them. FSAs allow employees to set aside money from each paycheck to pay for out-of-pocket health care costs. Eighty percent of...

Innovative companies outpace competitors. (Executive's Briefcase).(Brief Article)
July 21, 2002... Seventy-seven percent of CEOs of the country's fastest-growing companies say that innovation--more than any other attribute--gives them a distinct advantage over their toughest competitors. In the next year, those executives anticipate 30...

Retirement plan settlement rollover denied. (Compensation & Benefits).(Brief Article)
July 21, 2002... As a general rule, a lump-sum payout from a defined benefit pension plan is subject to tax. However, if a plan payout qualifies as an eligible rollover distribution, a retiree can avoid tax by rolling the distribution over into another plan or...