receipts that do not exceed 5000000 permits the use of the cash method of

Receipts that do not exceed 5000000 permits the use

This preview shows page 15 - 17 out of 21 pages.

receipts that do not exceed $5,000,000 permits the use of the cash method of accounting [§448(b)].e.Corporate tax rates. The corporate tax rate structure, including the phaseout provisions,definitely favors corporations with lower taxable incomes. See the corporate tax rates on theinside of the back cover of the text.SOCIAL CONSIDERATIONS 56.Some provisions of the tax law are designed to promote certain socially desirable goals. Examples.a.Excluding from income the value of accident and health plansfinanced by employers.b.Excluding form income the value of group term life insurancecoverage for employees, paidfor by employers. c.Excluding form income contributions to and the earnings of private-sector pension plans.d.Deduction for charitable contributions.e.The credit for child and disabled dependent care.f.Various tax credits, deductions, and exclusions to encourage additional education.
g.The disallowance for certain expenditures that are contrary to public policy. h.The earned income creditprovides relief for low income taxpayers.EQUITY CONSIDERATIONS57.Multiple Taxation. In connection with alleviating the effect of multiple taxation, the text discussesthe deduction allowed for state and local income taxes and the deduction/credit alternative permittedin the case of foreign income taxes. Other possibilitiesare summarized below: 58.Wherewithal to Pay Concept: Application. With regard to the wherewithal to pay concept(recognizing the inequity of taxing a transaction when the taxpayer lacks the means with which topay the tax), the text illustrates its application with an involuntary conversion situation. By andlarge, most wherewithal-to-pay provisionsin the tax law do not permanently avoid gain or lossrecognition but operate on a deferral principle(e.g., like-kind exchanges and involuntaryconversions). Because of the basis carryover rules, gain or loss recognition merely is postponed tosome further disposition that does not meet the requirements of a nontaxable exchange (Chapter 7).a.Involuntary conversion. If all of the proceeds from an involuntary conversion are investedwithin the required statutory time period in property that is similar or related in service oruse, none of the realized gain is recognized.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture