Masonry Magazine June 1971 Page. 21
Taxes
(Continued from page 17)
EMPLOYEE PLANS
The Internal Revenue Code specifies two requirements that are necessary for a pension, profit-sharing and stock bonus plan to be qualified. One requirement concerns the percentage of employees who must be covered by such a plan and the other insists that the plan not discriminate in favor of employees who are officers, shareholders, etc.
The IRS has recently issued a Ruling that provides that these coverage requirements of the Code are satisfied for an entire taxable year if such requirements are met on at least one day in each quarter of the taxable year. Rev. Rul. 71-192.
CHARITABLE CONTRIBUTIONS
Here's what happened to one taxpayer when he and his wife claimed certain charitable deductions on their 1967 income tax return. The couple had claimed the following charitable deductions: CARE $345. American Red Cross $210, Church $270, UGF $65, Christmas Seals $25.
When the taxpayer's return was reviewed by the Commissioner, only $15 for Christmas seals was allowed as a deduction. Unfortunately, this taxpayer did not keep complete or accurate records. However, they would not stop there and they brought their case before the Tax Court.
The Court applied the "Cohan" rule and determined that the taxpayers were entitled to the following charitable deductions for 1967: CARE $250, American Red Cross $150, Church $200, UGF $25, and the $15 previously allowed by the Commissioner for Christmas seals. Donelan, Jr. v. Com'r, TC Memo 1971-66.
LOW-INCOME HOUSING
In order to increase the availability of and to improve the condition of existing rental dwellings, The Tax Reform Act of 1969 carried in it certain tax breaks for improvements made to low-income housing. Capital expenditures that are for the rehabilitation of low-income rental housing may be depreciated over a 60-month period-if done after July 24, 1969 and before 1975. However, the law provides that two conditions must be met: (1) Any expenditure made must exceed $3000 per unit over a period of two consecutive years and (2) No expenditure may exceed $15,000 per unit in a building. Thus, the law grants the tax break but only if there is a minimum spent and with a maximum allowed.
DISTRIBUTION
The law allows an employee to take a long term capital gain on certain distributions from an employee trust if the distributions are paid "to the distributee...on account of the employee's death or other separation from service."
Recently a case arose in Texas, a community property state, in which a divorcee claimed this long-term capital gain. Her former husband had worked for some 23 years for Sears-Roebuck. He had accumulated an interest in a qualified profit-sharing pension fund. In a community property state such as Texas this interest was part of the community and the wife was entitled to one-half of it. Thus, as a consequence of the divorce the wife withdrew her (Continued on page 26)
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masonry • June, 1971
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