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Tax capital accounts are partners' "Outside Basis" (however, unlike outside basis, the partnership's recourse and nonrecourse liabilities are not included in partners' tax-basis capital accounts) and under Section 722 are initially determined by reference to the partner's contributed cash amount and the adjusted basis of the contributed property.
Commissioner v. Tufts, 461 U.S. 300 (1983), was a unanimous decision by the United States Supreme Court, which held that when a taxpayer sells or disposes of property encumbered by a nonrecourse obligation exceeding the fair market value of the property sold, the Commissioner of Internal Revenue may require him to include in the “amount realized” the outstanding amount of the obligation ...
Tax basis of property received by a U.S. person by gift is the donor's tax basis of the property. If the fair market value of the property exceeded this tax basis and the donor paid gift tax, the tax basis is increased by the gift tax. This adjustment applies only if the recipient sells the property at a gain. [8]
When it comes to a company's taxes, there are two important categories to understand: assets and liabilities. Tax liability is anything that a person or company owes taxes on, such as income or ...
Tax liability is the total amount of tax debt a business entity or an individual owes to a local, state or federal taxing authority. If the tax withholdings or payments made on your behalf are ...
Recourse debt or recourse loan is a debt that is backed by both collateral from the debtor, and by personal liability of the debtor. [2] This type of debt allows the lender to collect from the debtor and the debtor's assets in the case of default, in addition to foreclosing on a particular property or asset as with a home loan or auto loan.
If the property has a value lower than its basis, then in the case of recourse debt you could get a capital loss and COD ordinary income on the same transaction, netting to the same dollar figure as with nonrecourse debt but potentially much worse for the taxpayer: The taxpayer would not only be burdened with ordinary rather than potentially ...
Tax credits, meanwhile, reduce what you owe in taxes on a dollar-for-dollar basis. For instance, if you owe $1,000 in taxes and qualify for a $1,000 tax credit, the credit can wipe out what you owe.