Close enough to zero. Monday Map: Corporate Income Tax Revenue as a Percentage of All State/Local Tax Revenue (Nick Kasprak, Tax Policy Blog):
IRS Field Attorney Advice: Bank must capitalize indirect costs of holding ”OREO” property under inventory capitalizetion rules. From FAA 20123201F (my emphasis)
Section 263A applies to property that is acquired for resale. If § 263A applies, the taxpayer must capitalize both the direct costs of acquiring the property and the property’s allocable share of indirect costs.
In this case, X clearly acquires OREO in foreclosure (or in lieu of foreclosure) with an intent to resell the property. Bank regulators restrict the holding period for OREO and expect banks to exercise good faith efforts to sell the property. As required by applicable state and federal policies and regulations, it is our understanding that X advertises its OREO properties for sale, including those properties which it rents out. X’s Year6 Annual Report confirms that assets acquired through (or in lieu of) foreclosure are held for sale. In addition, OREO is acquired and held in the ordinary course of X’s trade or business. X’s Year6 Annual Report acknowledges as much when it states that X may foreclose on and take title to properties securing loans “during the ordinary course of business.” X engages in OREO transactions with frequency, regularity, and according to an “OREO disposition strategy.” (Year6 Annual Report, p.17). Thus, the OREO held by X constitutes property held by the taxpayer primarily for sale to customers in the ordinary course of its trade or business.
“OREO” is “other real estate owned,” for you non-bankers. Bankers don’t care to hold much of that.
Joseph Henchman, Nebraska Governor Withdraws Tax Reform Proposal; Legislature Look to Commission to Develop Alternatives (Tax Policy Blog). But they aren’t giving up on tax reform. So should Iowa. The Quick and Dirty Iowa Tax Reform Plan is tanned, rested and ready!
Paul Neiffer, Must Have W2 Wages to Deduct DPAD. A hidden tax trap for the Schedule F farmer.
Great minds think alike:
TaxProf, 3d Circuit Denies CARDS Tax Shelter. Another turn-of-the-century tax shelter fails.
Elaine Maag, Education Tax Credits Rival Pell Grant Program in Size: Reforms Proposed (TaxVox). The more you subsidize it, the more it costs.
Jeremy Scott, Taxing the Rich, Thenardier-Style (Tax.com):
But the influence of Les Miserables doesn’t just extend to the silver screen and stage. President Obama seems to be taking tax policy advice from the musical’s comical antagonist, Thenardier.
Well, that would explain many things.
Trish McIntire, Referrals – A Double Edged Sword.
Peter Reilly, What Were They Thinking ? Another example of the unwisdom of failing to remit payroll taxes.
Linda Beale, Private equity and real estate managers get a “costly and unjust [tax] perk”. Not really, but some people really hate carried interests.
Put the champaign back on ice. The Income Tax is NOT Turning 100 – Yet. (Joseph Thorndike, Tax.com).
One less metal home in town. Demise of Another Lustron House. (IowaBiz.com) These are funky steel houses, not mobile homes. They don’t build ‘em like that anymore.