Exclusion Percentage

Exclusion Percentage

The exclusion percentage is used to compute the excludable amount of a pension under the general rule. This percentage is determined by dividing the taxpayer's total contribution by the expected return.
References in periodicals archive ?
1202 exclusion percentage will fall to 50%, and an alternative minimum tax (AMT) preference will further erode the exclusion's advantages.
27, 2010, the exclusion percentage is 75%, and for qualifying stock acquired after Sept.
1, 2011, the exclusion percentage increased to 100%.
1202 gain must be reported as such on the taxpayer's return by reporting 100% of the gain and then excluding the appropriate exclusion percentage at the time of the gain (50% for stock acquired before February 18,2009, or after December 31, 2011; 60% for stock in certain empowerment zone businesses; 75% for qualified small business stock acquired after February 17, 2009, and before September 28, 2010; and 100% if the stock was acquired after September 27, 2010, and before January 1, 2012, and was held for more than five years).
If a corporation ceases to be a qualifying business after the five-year holding period, the higher exclusion percentage applies only to gain accrued to the date the corporation was no longer a qualifying business.
However, the AICPA is concerned about provisions (1) used to calculate the exclusion percentage for lifetime annuity payments; (2) allowing additional nonelective contributions or midyear changes in savings incentive match plans for employees (SIMPLEs); (3) permitting reverse-match salary reduction contributions to simple employee plans (SEPs); and (4) requiring a quarterly notice to qualified plan participants and beneficiaries.
However, the ruling's approach leaves room for mismatching, because it determines the PTE exclusion percentage at the time of the redemption distribution, rather than at the time the earnings were originally included in the U.
Due to the various effective dates and exclusion percentages, it is imperative to track original issue dates of the stock, as well as to understand which stock transactions constitute a new issue.