| Partnership Allocation of Foreign Tax Credits |
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| Under the Internal Revenue Code's partnership rules, the partners are generally allowed to decide among themselves how the partnership items will be allocated. The Code provides that a partner's distributive share of income, gain, loss, deduction, or credit shall be determined by the partnership agreement unless there are provisions to the contrary. However, this flexibility is not unlimited. A partner's distributive share in partnership items is determined in accordance with the partner's interest in the partnership only if the allocation under the agreement does not have substantial economic effect on the partner as defined by the Code. Thus, the partnership allocations must either have substantial economic effect or must be in accordance with the partner's interest in the partnership. More... |
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| Taxation of Legal Damages |
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| When a taxpayer receives an award as the result of a settlement or judgment resulting from a legal action, the question arises as to whether any or all of the award is subject to taxation. The answer depends on what type of damages or losses the award is supposed to replace. More... |
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| Worthless Securities |
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| If a taxpayer who is not a securities dealer has invested in stocks, stock rights, or bonds that became worthless, he may be entitled to a tax break in the form of a deduction. The loss is only deductible in the year that the stock became worthless, and there is no deduction available for partially worthless stock. Congress has recognized that it is often difficult to determine exactly when a security became worthless. Thus, a taxpayer is permitted to file an amended return for the year in which the deduction should have been taken within the later of seven years from the date of the original return or two years from the date the tax was paid. If the taxpayer errs and takes the loss before the stock has become completely worthless, he can correct the error by amending the original return to eliminate the deduction and by claiming it in the proper year. More... |
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| Veterans' Organizations Exempt under IRC 501c19 |
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| Prior to the enactment of Internal Revenue Code Section 501(c)(19) in 1972, war veterans' organizations were grouped together with all other veterans' organizations and recognized as tax-exempt under the social welfare and social club sections of the Code. Under the original version of the statute, an organization formed under Section 501(c)(19) could carry on programs involving Americanism, youth activities, community activities, and educational programs on issues of national security and foreign affairs. In addition, veterans' organizations could receive exempt income by providing certain insurance benefits for members or their dependents. More... |
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| Energy Conservation Subsidies |
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| If you received subsidies from a public utility for the purchase or installation of an energy conservation measure in your residence, you are not required to include the amount of the subsidy in your gross income when preparing your federal income tax return. The subsidy may be provided to you either directly or indirectly by the utility in order to qualify for this exclusion from income. More... |
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