Masonry Magazine October 1972 Page. 26
Taxes
(Continued from page 25).
SMALL BUSINESSES
The Commissioner of Internal Revenue, Johnnie Walters, recently expressed his desire to see that the burden of paper work placed on small businesses be eased.
The Commissioner put it this way: "The increasing governmental paper work burden is indeed a matter of general concern. It is a matter of particular concern to the IRS which is necessarily implicated in a substantial part of the overall burden. From the imposition of a few excise taxes in colonial times, the federal tax system has extended to the income tax in 1913, to Social Security taxes in 1936, to the withholding of income taxes in 1943, and to a new tax deposit system in 1967.
"During the same period, taxation by state and local governments has tended to overlap the federal system. Thus the growth of the paper work burden in the area of tax administration is undeniable. Its impact on small business and taxpayers generally is certainly of the greatest importance."
LIFE INSURANCE
Where the proceeds of a life insurance contract are paid because of the death of the insured, such proceeds are not taxable in the hands of the beneficiary. This is true, you will recall, whether the beneficiary is an individual or whether he is a partnership or a corporate entity. So long as the proceeds are paid "by reason of the death" they need not be solely from life insurance contracts. The exemption from taxation also applies to death benefits paid under contracts such as workmen's compensation, endowment contracts, or accident and health insurance contracts.
How are proceeds from an insurance contract taxed when a taxpayer surrenders his life insurance contract? It seems that only that portion of the proceeds that exceed the cost of the contract become taxable income to the taxpayer. However, in order for this to be true, the insured must be the one who receives the proceeds when the contract is surrendered.
JOINT ECONOMIC COMMITTEE
Taxes should not be raised, was the opinion of the Joint Economic Committee, when there is heavy unemployment. The committee did, however, make it clear that it would only be a pretense to think that additional taxes will not be needed and recommended that definite plans should be made in 1973 for such increases.
EMPLOYEE PLANS
The IRS has issued a ruling that may be intended to calm the frustrations of employer-taxpayers who cannot get approval of their profit-sharing or pension plans from the IRS.
The failure of a pension plan, etc. to meet the requirements of the IRS in the year it is established does not, of itself, prevent the trust from qualifying in some year when, by amendments, it does meet the requirements of that section. It would not matter, the IRS further pointed out, if the contributions made to the trust in the year it is (Continued on page 30)
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WESTERN
masonry
October, 1972