For the year at issue, 2007, Pennsylvania limited the NLC deduction to the greater of 12.5% of the taxpayer s taxable income or $3 million.Due to that NLC deduction cap, Nextel, which had $45 million of taxable income in 2007, and approximately $150 million of available NLCs, was only allowed to claim $5.6 million of such losses (12.5% of $45 million of taxable income).
Nextel argued that the NLC deduction limitation effectively resulted in disparate treatment of taxpayers, based solely on the size of the business as determined by taxable income. As a result, Nextel contended the NLC deduction limitations created an unconstitutional progressive CNI tax structure, where smaller taxpayers pay a lower effective tax rate than larger, similarly situated taxpayers.
3 This income measure is the sum of all positive and potentially taxable incomes reported on form 1040 before the netting out of any negative income items, such as partnership losses.
The relationship of taxable income to the marginal tax rate has important implications for both the revenue consequences of tax policy and the deadweight loss of the income tax.(1) Not surprisingly, then, Feldstein's (1995b) analysis of the 1986 tax reform, in which he concluded that taxable income is highly responsive to changes in the marginal tax rate, has been closely examined and subjected to certain criticisms, which are summarized in Slemrod (1995b), Auten and Carroll (1995), and Goolsbee (1998).
Trusts now face a regular tax rate of 36% for taxable income over $5,500 and 39.6% for taxable income over $7,500.(3) Taxpayers who in the past have used trusts as a vehicle to spread AMT adjustments and preferences among several taxpaying entities may find this strategy significantly less beneficial.
179 expensing election may also be taken for AMT and adjusted current earnings (ACE) purposes, this should reduce the AMT exposure for small businesses with some capital expenditures (less than $217,500) and taxable income for the year.
In addition to reducing AGI, review your itemized deductions to slash taxable income
For property purchased from a financial institution that acquired the property by foreclosure or that was held by the financial institution at the time it entered into receivership, mortgage payments may, in certain situations, now be based on the revenue, income or profits derived from the real estate activity without being treated as unrelated business taxable income
An increase in the corporate tax rate from 34% to 36% for companies with taxable income over $10 million is slated to raise some $30.5 billion over the six-year period.
That writeup, in turn, will be accompanied by a charge to earnings generally equal to 2% of taxable income. By the same token, companies with deferred tax assets (mainly banks and companies with tax loss carryforwards) will enjoy a corresponding credit to income because they will be able to write up their deferred tax assets to reflect the new 36% rate.
6, 1986, it is a tax preference item includible in computing alternative minimum taxable income
179 made by the Technical and Miscellaneous Revenue Act of 1988 (TAMRA) and the Tax Reform Act of 1986 (TRA), provide guidance on the dollar and taxable income
limits affecting Sec.