Lease Purchase Tax Ruling

Purchase of underlying property didn’t prevent deduction for lease termination payment. The Court of Appeals for the Sixth Circuit has allowed a party that exercised an option to buy property that it was leasing to deduct a portion of the amount tendered in the transaction as a lease termination payment. In so doing, it rejected…

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Why A Partner Can Receive More Taxable Income Than Cash

(and Vice Versa) I get asked relatively often why, in a given year, a partner may be taxed on more partnership income than was distributed to him or her from the partnership in which he or she is a partner. The answers lies in the way partnerships and partners are taxed. Unlike a regular corporation,…

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Real Estate Tax Tips and 1031 Exchange

Thinking of buying or selling rental property? Here are some things to thing about first. If you are selling a piece of rental property to buy another, you may be able to take advantage of the tax free exchange, often called a 1031 exchange, and defer your capital gains income taxes.

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Rental Property Depreciation Tips

If you are depreciating residential or nonresidential rental property over a 27.5-year or 39-year period, some items of property that are, seemingly, “part of the building” can, nevertheless, be depreciated over a period far shorter than 27.5 or 39 years. Generally, the speedier depreciation is available for items that service the machinery or equipment used…

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Maximize Depreciation Deductions for Business Owned Real Estate

When buying business real estate – for your own occupancy or for rental to others – you should take steps that maximize the income tax depreciation deductions that you can claim for the property. Here are a few suggestions. Separating improvements from land. Not all of the cost of acquiring real estate is depreciable. Specifically,…

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Texas Franchise Tax Overview

The Texas Comptroller of Public Accounts has updated the franchise tax overview publication to reflect 2013 legislative and inflation-adjustment changes. The tax rate for report year 2014 is 0.975% for most taxable entities, and 0.4875% for entities primarily engaged in retail or wholesale trade. Taxable entities with annualized total revenue below the no-tax-due threshold of…

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Texas Franchise Tax

Certified Rehabilitation of Certified Historic Structures Credit The Texas Attorney General has clarified the following issues relating to the certified rehabilitation of certified historic structures credit: (1) the credit is not operative until the 2015 tax year and cannot be applied in years prior to 2015; (2) an entity whose qualifying structure is placed in…

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Depreciation Rules for Qualified Leasehold Improvements

Favorable Depreciation Rules for Qualified Leasehold Improvements Placed In Service in 2013 There are special rules which are a dramatic departure from the general rule that deductions for the cost of non-residential buildings, or improvements to the buildings, are allowed over a 39-year period. Whether you are a landlord or a tenant, some of the…

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Regulations for Manufacturers

IRS Chief Counsel Advice concluded that a manufacturer need NOT capitalize, under Reg. 1.263(a)-4, payments to retail sellers to construct and maintain a dedicated sales area for its products. The payments did not create or enhance a separate and distinct intangible asset within the meaning of Reg. 1.263(a)-4(b)(3) because the manufacturer’s rights “had no value…

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Deducting and Capitalizing Business Expenses Under Final Regs

There is an important development that will affect every business. The IRS has issued long-awaited regulations (“regs”) on the tax treatment of amounts paid to acquire, produce, or improve tangible property. The regs explain when those payments can be deducted, which confers an immediate tax benefit, and when they must be capitalized. These final regs…

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