The rules also contain a tax benefit rule
, whereby the amount of an erroneous item allocated to a requesting spouse may be increased or decreased depending upon the tax benefit to each spouse.
41) The Board agreed with Collins's argument, (42) but the Court of Appeals for the Eighth Circuit reversed on the ground that the tax benefit rule
was an uncodified equitable doctrine.
995, 999 (1967) (noting that the tax benefit rule
Future recoveries will result in additional deductions or in gross income under the tax benefit rule
One common source that is frequently overlooked by tax advisors, and more often misunderstood, is the application of the tax benefit rule
(IRC section 111) to state and local tax refunds.
Moreover, the tax benefit rule
does not require the refund be taken into income because the amount refunded was never deducted under California law.
Explain how the Department applies the tax benefit rule
in the following situation:
If the insurance reimbursement is more than was expected, the excess may have to be reported as income under the tax benefit rule
However, a policy dividend can be included in income in full under the tax benefit rule
They argued that following the tax benefit rule
, the refunds were not includible in income because under New York law the credits were labeled as overpayments of state income tax, and they had not taken a deduction for state income tax paid in the preceding year on their income tax return for any of the years.
Under the tax benefit rule
, some or all of an employer's deductions in an earlier year may have to be included in income in a later year if an event occurs that is fundamentally inconsistent with the premise on which the deduction was based.
Shorter represents a line of cases which indicate that New York tax law adheres to the tax benefit rule