Final regs. on allocating depreciation recapture among partners.The IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. has issued final regulations on the allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of depreciation recapture depreciation recapture See recapture of depreciation. among partners. These regulations adopt with revisions the proposed regulations published on Dec. 12, 1996. Under Regs. Sec. 1.1245-1(e)(2)(i), a partner's share of depreciation recapture is the lesser of (1) the partner's share of total gain arising from the disposition of the property (gain limitation) or (2) the partner's share of depreciation or amortization from the property. When gain limitation prevents allocation to a partner, the depreciation recapture is allocated among those partners whose shares of total gain on the disposition of the property exceed their shares of depreciation or amortization from the property. The amount of unallocated depreciation each partner receives corresponds to the partner's relative share of the total gain on the property's disposition. In addition, the final regulations provide special rules for determining a partner's share of depreciation or amortization from contributed property subject to Sec. 704(c). Under Regs. Sec. 1.1245-1(e)(2)(ii)(C)(1),a contributing partner's share of depreciation or amortization includes depreciation or amortization allowed or allowable before contribution. Finally, Regs. Sec. 1. 1245-1(e)(2)(ii)(C)(2) provides that curative curative /cur·a·tive/ (kur´ah-tiv) tending to overcome disease and promote recovery. cu·ra·tive adj. 1. Serving or tending to cure. 2. and remedial REMEDIAL. That which affords a remedy; as, a remedial statute, or one which is made to supply some defects or abridge some superfluities of the common law. 1 131. Com. 86. The term remedial statute is also applied to those acts which give a new remedy. Esp. Pen. Act. 1. allocations generally reduce the contributing partner's share of depreciation or amortization and increase the noncontributing partners' shares of depreciation or amortization. In response to comments, the regulations clarify that curative and remedial allocations can reduce the contributing partner's share of depreciation or amortization to (but not below) zero. Once the contributing partner's share of depreciation or amortization reaches zero, the curative or remedial allocations do not affect the contributing partner's share of depreciation or amortization. They do, however, affect the noncontributing partners' shares of depreciation or amortization. Other revisions clarify that the final regulations affect only depreciation recapture is allocated, not how it is computed. The regulations recognize that curative allocations may cause the total of the partners' shares of depreciation to exceed the amount of depreciation recapture recognized at the partnership level. In that case, Regs. Sec. 1.1245-1(e)(2)(i) specifies that the partnership's depreciation recapture of contributed property is to be allocated among the partners according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. their relative shares of the property's depreciation or amortization. A partner's share of depreciation recapture cannot, however, exceed that partner's share of the total gain arising from the property's disposition. Finally, a revision to Example 2 of Regs. Sec. 1.1245-1(e)(2)(iii) provides a more thorough demonstration of how recapture recapture n. in income tax, the requirement that the taxpayer pay the amount of tax savings from past years due to accelerated depreciation or deferred capital gains upon sale of property. (See: income tax) RECAPTURE, war. is allocated when a partner's share of depreciation recapture is capped by the partner's share of gain from the disposition of the property. The IRS notes that one suggestion to permit, rather than require, partnerships to allocate To reserve a resource such as memory or disk. See memory allocation. depreciation recapture according to the partners' shares of gain from the disposition of the property was rejected. The suggestion was not adopted, because matching depreciation recapture allocations to depreciation allocations most appropriately carries out the underlying policies of Sec. 1245. The final regulations are generally effective Aug. 20, 1997, and are generally applicable to properties contributed to a partnership and to restatements pursuant to Regs. Sec. 1.704-1(b)(2)(iv)(f) on or after Dec. 21, 1993. From James Debree, CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. , Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. , Cal. |
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