reglab/statecodes huggingface dataset:
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-306 - COMPENSATION AND BENEFITS FROM MILITARY SERVICE › Rule 1.26-51-306(a)(4) - Combat Pay

Current through Register Vol. 49, No. 6, June, 2024
For enlisted personnel, gross income shall not include
					 compensation received while on active service in a combat zone or while
					 hospitalized as a result of serving in a combat zone. IRC Sec. 112(a). With
					 respect to commissioned officers, gross income shall not include *compensation
					 received while on active service in a combat zone or while hospitalized as a
					 result of serving in a combat zone. IRC Sec. 112(b).
*The amount of compensation for a commissioned officer that
					 is excludable from gross income is limited to the "maximum enlisted amount."
					 The term "maximum enlisted amount" is defined as the highest rate of basic pay
					 payable during the period of combat zone service to any enlisted member of the
					 U.S. Armed Forces at the highest pay grade applicable to enlisted
					 members.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-306 - COMPENSATION AND BENEFITS FROM MILITARY SERVICE › Rule 2.26-51-306 - Service Allowances

Current through Register Vol. 49, No. 6, June, 2024
Service allowances
shall include, but not be
					 limited to, the following: veteran's benefits; medical benefits; disability
					 benefits; professional education; moving and storage; group-term life
					 insurance; survivor and retirement protection plan premiums; subsistence;
					 uniform; housing; overseas cost-of-living; evacuation; family separation
					 allowances; death gratuities; interment (burial) allowance; various travel
					 allowances; dependent benefits; and, when provided in connection with a
permanent
change of station, allowances for dislocation, temporary
					 lodging and move-in housing.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-306 - COMPENSATION AND BENEFITS FROM MILITARY SERVICE › Rule 3.26-51-306 - United States Armed Services Defined

Current through Register Vol. 49, No. 6, June, 2024
United States armed services shall include the following;
					 Army; Navy; Air Force; Marine Corps; Coast Guard; National Guard; Reserve
					 units; and U.S. Public Health Service.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-307 - RETIREMENT PLANS AND DISABILITY BENEFITS › Rule 1.26-51-307 - Retirement or Disability Benefits

Current through Register Vol. 49, No. 6, June, 2024
The first $6,000.00 of retirement or disability benefits
					 received by a resident of Arkansas from an in-state or out-of-state retirement
					 plan or program will be exempt from Arkansas income tax if:
(a) the retirement plan or program is
				  directly related to either public or private employment;
b) the Arkansas resident is the employee or
				  former employee owner of the plan or the employee or former employee's spouse.
Plans or programs that could fall within the scope of this
					 exemption are: pension plans; profit sharing plans; stock bonus plans; employee
					 stock ownership plans (ESOPs); annuity plans; thrift and savings plans; cash or
					 deferred arrangements (CODAs, also known as 401(k) plans); and simplified
					 employee pension (SEP) plans. An individual retirement account (IRA) will fall
					 outside the scope of this exemption unless it is established by an employer as
					 a SEP.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-307 - RETIREMENT PLANS AND DISABILITY BENEFITS › Rule 2.26-51-307 - Premature Distribution

Current through Register Vol. 49, No. 6, June, 2024
A
premature distribution
taken by an Arkansas
					 resident from a retirement plan or program that meets all of the criteria set
					 forth above would qualify for the exemption.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-307 - RETIREMENT PLANS AND DISABILITY BENEFITS › Rule 3.26-51-307 - Divorce

Current through Register Vol. 49, No. 6, June, 2024
A taxpayer's interest in an ex-spouse's employment-related
					 retirement plan or program acquired through a divorce is eligible for this
					 exemption only if the interest was awarded pursuant to a qualified domestic
					 relations order (QDRO). IRC Sec. 402(e)(1)(A) requires that an alternate payee
					 (i.e. taxpayer), who is a former spouse of a retirement plan participant, be
					 treated just like the participant with respect to any payments made to the
					 alternate payee
under a QDRO
. Note that Arkansas has adopted
					 Sections 72, 219, 401-404, 406-416 inclusive, and 457 of the Internal Revenue
					 Code of 1986.
Example:
1. Mary was divorced from James by a Decree
				  dated May 4, 1993.
2. As a part of
				  the property settlement contained in the Decree, Mary was awarded an interest
				  in James' 401(k) retirement plan pursuant to a qualified domestic relations
				  order (IRC Sec. 414(p)).
3. Mary
				  received $7,000.00 from James' 401(k) retirement plan in 1994.
4. Although Mary would report $7,000.00 in
				  the gross income section of her Arkansas individual income tax return for 1994,
				  she would be entitled to the $6,000.00 exemption and would pay income tax only
				  on the $1,000.00 balance of the distribution.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-307 - RETIREMENT PLANS AND DISABILITY BENEFITS › Rule 4.26-51-307 - Military Related Benefits

Current through Register Vol. 49, No. 6, June, 2024
Only the first $6,000.00 of military retirement pay based
					 on length of service is exempt from Arkansas income tax. However, pursuant to
					 IRC Sec. 104(a)(4), the full amount of a military disability pension (with no
					 $6,000.00 cap) is exempt from Arkansas income tax so long as the pension is for
					 personal injuries or sickness resulting from active service in the armed
					 forces. Likewise, military retirement pay,
to the extent
that it
					 is based upon a military related disability, would be exempt above and beyond
					 the first $6,000.00 received.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-401 - TAX YEAR - ACCOUNTING METHOD › Rule 1.26-51-401(a) - Method of Accounting

Current through Register Vol. 49, No. 6, June, 2024
It is recognized that no uniform method of accounting can
					 be prescribed for all taxpayers, and the law contemplates that each taxpayer
					 shall adopt such forms and systems of accounting as are in his judgment best
					 suited to his purpose. Arkansas taxpayers must use the same accounting method
					 as that used for federal income tax purposes.
Each taxpayer is required by law to make an income tax
					 return reflecting his true and correct income. Therefore, adequate accounting
					 records and source documents must be retained to justify that the filed income
					 tax returns are a true and correct accounting of the taxpayers transactions for
					 each tax year. As a general rule, the accounting records and source documents
					 should be retained for a minimum of six (6) years.
The essential elements are as follows:
(1) In all cases in which the production,
				  purchase or sale of merchandise of any kind is an income-producing factor,
				  inventories of the merchandise on hand (including finished goods, work in
				  process, raw materials, and supplies) should be taken at the beginning and end
				  of the year and used in computing the net income for the tax year.
(2) Expenditures made during the tax year
				  should be properly classified as between capital and expense; that is to say,
				  expenditures for items of plant, equipment, etc., which have a useful life
				  extending substantially beyond the tax year should be charged to a capital
				  account and not to an expense account; and
(3) In any case in which the cost of capital
				  assets is being recovered through deductions for wear and tear, depletion or
				  obsolescence, any expenditure (other than ordinary repairs) made to restore the
				  property or prolong its useful life should be added to the property account or
				  charged against the appropriate reserve and not to current expenses.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-401 - TAX YEAR - ACCOUNTING METHOD › Rule 2.26-51-401(a) - Method of Accounting

Current through Register Vol. 49, No. 6, June, 2024
Approved standard methods of accounting will ordinarily be
					 regarded as clearly reflecting income. A method of accounting will not,
					 however, be regarded as clearly reflecting income unless all items of gross
					 income and all deductions are treated with reasonable consistency. All items of
					 gross income subject to taxation shall be included in the gross income for the
					 tax year in which they are received by the taxpayer, and deductions taken
					 accordingly, unless in order to clearly reflect income such amounts are to be
					 properly accounted for as of a different period. Refer to 1.
					 26-51-403(b).
					 For instance, in a case where it is necessary to use an inventory, no other
					 accounting method in regard to purchases and sales will correctly reflect
					 income except the accrual method. A taxpayer is deemed to have received items
					 of gross income which have been credited to or set apart for him without
					 restriction. On the other hand, appreciation in value of property is not an
					 accrual of income to a taxpayer prior to the realization of such appreciation
					 through sale or conversion of the property.
The true income, computed under the Income Tax Act of 1929,
					 and where the taxpayer keeps books of account, in accordance with the method of
					 accounting regularly employed in keeping such books (provided the method so
					 used is properly applicable in determining the net income of the taxpayer for
					 purposes of taxation) shall in all cases be entered on the income tax
					 return.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-401 - TAX YEAR - ACCOUNTING METHOD › Rule 1.26-51-401(b) - Change in Method of Accounting

Current through Register Vol. 49, No. 6, June, 2024
If for any reason the basis of reporting income subject to
					 tax is changed, the taxpayer shall attach to his income tax return a copy of
					 the Internal Revenue Service certification or approval of the change in
					 accounting method.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-402 - TAX YEAR - BASIS FOR DETERMINING LIABILITY › Rule 1.26-51-402(a) - Tax Year - Calendar vs Fiscal Year

Current through Register Vol. 49, No. 6, June, 2024
Taxable income is computed on the basis of a period of time
					 called a tax year. A tax year generally is the annual period on the basis of
					 which the taxpayer regularly computes income in keeping its books and records.
					 The annual period is usually a calendar year or a fiscal year. A calendar year
					 is a period of twelve (12) months ending on December 31. A fiscal year is a
					 period of Twelve (12) months ending on the last day of any month other than
					 December.
A taxpayer must calculate income using the same tax year as
					 that used on the federal income tax return. A change of the tax year must be
					 approved by the Internal Revenue Service and a copy of the approval letter must
					 be attached to the Arkansas income tax return
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-403 - INCOME GENERALLY › Rule 1.26-51-403(b) - Income Generally

Current through Register Vol. 49, No. 6, June, 2024
Each year's return should be completed in itself and
					 taxpayer's are expected to make every reasonable effort to ascertain the facts
					 necessary to make a correct return. The expenses of one year can not be used to
					 reduce the income of a subsequent year. A taxpayer has the right to deduct all
					 authorized allowances, and it follows that if he does not within any year
					 deduct certain of his expenses, losses, interest, taxes or other charges, he
					 can not deduct them from the income of the next or any succeeding year. It is
					 recognized, however, that particularly in a going business of any magnitude,
					 there are certain overlapping items of both income and deductions, and so long
					 as these overlapping items do not materially distort the income they may be
					 included in the year in which the taxpayer, pursuant to a consistent policy,
					 takes them into his accounts. Judgements[sic] or other binding adjudications,
					 such as decisions of referees and boards of review under workman's compensation
					 laws, on account of damages for patent infringement, personal injuries, or
					 other causes, are deductible from gross income when the claim is so adjudicated
					 or paid, unless taken under other methods of accounting which clearly reflects,
					 the correct deduction, less any amount of such damages as may have been
					 compensated for by insurance or otherwise. If, subsequent to its occurrence,
					 however, a taxpayer first ascertains the amount of a loss sustained during a
					 prior taxable year which has not been deducted from gross income, he may render
					 an amended return for such preceding taxable year including such amount of loss
					 in the deductions from gross income and may file a claim for refund of the
					 excess tax paid by reason of the failure to deduct such loss on the original
					 return. A loss from theft or embezzlement occurring in one year and discovered
					 in another year is ordinarily deductible for the year in which
					 sustained.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-403 - INCOME GENERALLY › Rule 2.26-51-403(b) - Long-Term Intergenerational Trusts

Current through Register Vol. 49, No. 6, June, 2024
A long-term intergenerational trust is a trust established
					 for an individual under the age of 18. The purpose of the trust is to provide
					 tax-deferred growth of funds for the minor's retirement. The trustee must be a
					 resident of Arkansas and cannot distribute any of the trust's funds to the
					 beneficiary until the beneficiary reaches the age of 55. Up to $4,000.00 per
					 year can be contributed to the trust.
CONTRIBUTIONS
Contributions to the trust are taken as an adjustment (that
					 is, subtracted) from the contributor's gross income for purposes of calculating
					 the contributor's adjusted gross income.
EARNINGS
Income tax on trust earnings is deferred until such time
					 that the earnings are distributed to the trust's beneficiaries.
DISTRIBUTIONS
*All distributions from the trust, whether principal,
					 earnings or a combination thereof, are taxable to the beneficiary who receives
					 them. Prior to August 1, 1997, distributions of trust principal were not
					 taxable, while distributions of trust earnings were taxable.
*All distributions from long-term intergenerational
					 security trusts are taxable pursuant to ACA
					 28-72-505(a)(1).
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 1.26-51-404(a)(1) - Classes of Income

Current through Register Vol. 49, No. 6, June, 2024
The tax imposed by the Income Tax Act is upon net income.
					 In the computation of the tax, various classes of income must be
					 considered.
(a) Income, meaning all
				  wealth which flows into the taxpayer other than a mere return of capital,
				  includes the forms of income specifically described as gains and profits
				  including gains derived from the sale or other disposition of capital assets.
				  Many factors must be taken into consideration in accurately determining income,
				  among which are inventories, accounts receivable, property exhaustion and
				  accounts payable for expenses incurred.
(b) Gross income is all wealth other than a
				  return of capital received during a tax year less income which is, by statutory
				  provisions or otherwise, exempt from the tax imposed by the Act.
(c) Net income is gross income less statutory
				  deductions. The statutory deductions are in general, though not exclusively,
				  expenditures other than capital expenditures connected with the production of
				  income.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 2.26-51-404(a)(1) - Income Credited to an Account

Current through Register Vol. 49, No. 6, June, 2024
Income which is credited to the account of or set apart
					 for a taxpayer and which may be drawn upon by him at any time is subject to tax
					 for the year during which so credited or set apart, although not then actually
					 reduced to possession. To constitute receipt in such a case the income must be
					 credited or set apart to the taxpayer without any substantial limitation or
					 restriction as to the time or manner of payment or condition upon which payment
					 is to be made, and must be made available to him so that it may be drawn at any
					 time, and its receipt brought within his own control and disposition. A book
					 entry, if made, should indicate an absolute transfer from one account to
					 another. Where a corporation contingently credits its employees with bonus
					 stock, but the stock is not available to such employees until some future date,
					 the mere crediting on the books of the corporation does not constitute
					 receipt.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 3.26-51-404(a)(1) - Gross Income - Manufacturing, Merchandising and Mining

Current through Register Vol. 49, No. 6, June, 2024
In the case of a manufacturing, merchandising or mining
					 business, "gross income" means the total sales less the cost of goods sold,
					 plus any income from investments and from incidental or outside operations or
					 sources. In determining the gross income, subtractions should not be made for
					 depreciation, depletion, selling expenses, losses or for items not ordinarily
					 allowable in computing the cost of goods sold.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 4.26-51-404(a)(1) - Gross Income - Independent Contractor

Current through Register Vol. 49, No. 6, June, 2024
The profit of an independent contractor from a contract
					 with the United States Government must be included in gross
					 income.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 5.26-51-404(a)(1) - Services Paid For With Other Than Money

Current through Register Vol. 49, No. 6, June, 2024
Where services are paid for with something other than
					 money, the fair market value for the item taken in payment is the amount to be
					 included as income. If the services were rendered at the stipulated prices, in
					 the absence of evidence to the contrary, such price will be presumed to be the
					 fair value of the compensation received.
Compensation paid an employee of a corporation in its stock
					 is to be treated as if the corporation sold the stock for its market value and
					 paid the employee in cash. When living quarters are furnished the employees for
					 the convenience of the employer, the ratable value need not be added to the
					 cash compensation of the employee; but where a person receives as compensation
					 for services rendered a salary and in addition thereto living quarters, the
					 value to such person of the quarters furnished constitutes income subject to
					 tax.
Premiums paid by an employer on policies of group life
					 insurance covering the life of its employees, beneficiaries of which are
					 designated by the employees, are not taxable to the extent that these premiums
					 cover the first $50,000.00 worth of coverage. premiums paid by an employer to
					 purchase group life insurance in excess of $50,000.00 are reportable as excess
					 compensation to the covered employee with the exception of:
(1) the employee is disabled,
(2) the employer is directly or indirectly
				  the beneficiary, or
(3) a
				  charitable organization is the sole beneficiary.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 6.26-51-404(a)(1) - Notes of Indebtedness Used in Payment

Current through Register Vol. 49, No. 6, June, 2024
Notes or other evidence of indebtedness received in payment
					 for services and not merely as security for such payment constitutes income to
					 the amount of their fair market value. The taxpayer receiving as compensation a
					 note regarded as good for its face value at maturity, but not bearing interest,
					 shall treat as income as of the time of receipt the fair discounted value of
					 the note at such time. Thus, if it appears that such a note is or could be
					 discounted on a six percent basis, the recipient shall include such note in his
					 gross income as to the amount of its face value less discount computed at the
					 prevailing rate for such transactions. If the payments due on a note so
					 accounted for are made as they become due, they should be included as income in
					 respect of such payment so much thereof as represent recovery of the discount
					 originally deducted.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 7.26-51-404(a)(1) - Scholarships, Fellowships, Grants and Stipends

Current through Register Vol. 49, No. 6, June, 2024
A scholarship is a grant of money to further the
					 undergraduate education of the recipient without a quid pro quo to the
					 University or the donor. A fellowship is a grant of money for the primary
					 purpose of furthering the education and training of the recipient toward a
					 higher degree or for independent research with no corresponding benefit to the
					 donor. Stipend means wages, salary, or the equivalent thereof, where the
					 context shows that it refers to something given as compensation for services,
					 as for example, where a student for an advanced degree performs services of
					 some type for a school or organization in return for room, board, tuition or
					 other equivalent compensation. Grants made to students for scholarships and
					 fellowships are gifts and therefore not included in taxable income, but
					 stipends are fully taxable. The Director reserves the right to examine the
					 substance of the transaction rather than the name given to
					 it.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 8.26-51-404(a)(1) - Commissions, Tips and Other Types of Compensation

Current through Register Vol. 49, No. 6, June, 2024
Commissions paid salesmen, compensation for services on the
					 basis of percentage of profit, commissions on insurance premiums, tips, and pay
					 of persons in the service of the State of Arkansas are income to the
					 recipients. Marriage fees, baptismal offerings, sums paid for saying masses for
					 the dead, and other contributions received by clergymen, evangelists or
					 religious workers for services rendered, are also income to the
					 recipient.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 9.26-51-404(a)(1) - Farm - Defined

Current through Register Vol. 49, No. 6, June, 2024
The term farm includes stock, dairy, poultry, fruit and
					 truck farms, plantations, ranches and all land used for farming operations. The
					 term farm does not include tree farms except those farms that have trees
					 bearing fruit or nuts.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 10.26-51-404(a)(1) - Gain on Sale of Property or Capital Assets

Current through Register Vol. 49, No. 6, June, 2024
When property is acquired and later sold for an amount in
					 excess of the cost or other basis, the gain on the sale is income. When a
					 corporation sells its capital assets in whole or in part it shall include in
					 its gross income for the tax year in which the sale was made the gain from such
					 sale computed as provided in ACA
					 26-51-411
					 through ACA
					 26-51-413.
					 If the purchaser takes over all of the assets and assumes the liability the
					 amount so assumed is part of the selling price.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 11.26-51-404(a)(1) - Annuities and Endowment Contracts

Current through Register Vol. 49, No. 6, June, 2024
Amounts received as an annuity under an annuity or
					 endowment contract are in general subject to tax to the extent that the
					 aggregate amounts received by the annuitant exceed the amounts paid as a
					 consideration of the contract.
An annuity contract charged upon devised property is
					 taxable income to the annuitant whether paid by the devisee out of the income
					 of such properties or other sources. The devisee is not required to return as
					 gross income the amount of the proceeds paid to the donee annuitant and he is
					 not entitled to deduct from his gross income any sums paid to the annuitant.
					 The amounts received by an insured as a return of premiums paid by him under
					 life insurance, endowment or annuity contracts, such as the so-called
					 "dividend" of a mutual insurance company which may be credited against the
					 current premium, are not subject to tax.
Example:
Brown received $10,000.00 on a
					 10-year endowment contract which matured in 1993. He had paid premiums of
					 $8,500.00 and had received dividends of $200.00 before the contract matured.
					 Brown's cost to be recovered tax free is $8,300.00 ($8,500.00 minus
					 $200.00).
The annuity starting date is the first day of the first
					 period for which a benefit is received as a payment under the annuity contract
					 or on the fixed date in the contract whichever is later.
Investment in the contract is the total aggregate premiums
					 paid plus other consideration less amounts received prior to the annuity
					 starting date which were not included in gross income.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 12.26-51-404(a)(1) - Cost Basis of Divided Tract of Land

Current through Register Vol. 49, No. 6, June, 2024
Where a tract of land is purchased with an intent of
					 dividing it into lots or parcels of ground to be sold as such, the cost or
					 other basis shall be equitably apportioned to the several lots or parcels and
					 made a matter of record on the books of the taxpayer, to the extent that any
					 gain derived from the sale of any such lots or parcels which constitutes
					 taxable income may be reported as income for the tax year in which the sale is
					 made. This rule contemplates that there must be a measure of gain or loss on
					 every lot or parcel sold, and not measured on the entire tract as a whole. The
					 sale of each lot or parcel must be treated as a separate transaction and gain
					 or loss computed accordingly.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 13.26-51-404(a)(1) - Buildings and Lease Hold Improvements

Current through Register Vol. 49, No. 6, June, 2024
When buildings are erected or improvements made by a lessee
					 in pursuance of an agreement with the lessor and such buildings or improvements
					 are not subject to removal by the lessee, the lessor may at his option report
					 the income therefrom upon either of the following basis:
(a) The lessor may report as income, at the
				  time when such buildings or improvements are completed, the fair market value
				  of such buildings or improvements subject to the lease.
(b) The lessor may spread over the life of
				  the lease the estimated depreciated value of such buildings or improvements at
				  the termination of the lease and report as income for each tax year of the
				  lease an allocated part thereof.
If, for any other reason than a bona fide purchase from the
					 lessee by lessor the lease is terminated, so that the lessor comes into
					 possession or control of the property prior to the time originally fixed for
					 the termination of the lease, the lessor receives additional income for the tax
					 year in which the lease is so terminated to the extent that the value of such
					 buildings or improvements when he became entitled to such possession exceeds
					 the amount already reported as income on account of the erection of such
					 buildings or improvements. No appreciation in value due to causes other than
					 the premature termination of the lease shall be included. Conversely, if the
					 buildings or improvements are destroyed prior to the expiration of the lease,
					 the lessor is entitled to deduct as a loss for the tax year when such
					 destruction takes place the amount previously reported as income because of the
					 erection of such buildings or improvements, less any salvage value subject to
					 the lease to the extent that such loss was not compensated for by
					 insurance.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 14.26-51-404(a)(1) - Long-Term Contracts

Current through Register Vol. 49, No. 6, June, 2024
Income from long-term contracts is taxable for the period
					 in which the income is determined, such determination depending upon the nature
					 and terms of the particular contract. Arkansas taxpayers must use the same
					 accounting method as that used for federal income tax
					 purposes.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 15.26-51-404(a)(1) - Stock Dividends and Distributions from Regulated Investment Companies

Current through Register Vol. 49, No. 6, June, 2024
The issuance of its own stock by a corporation as a
					 dividend to its shareholders does not result in taxable income to such
					 shareholders but the gain so derived or loss sustained from the sale of such
					 stock, or from the sale of the stock in respect to which it is issued.
					 Distributions received by shareholders from regulated investment companies are,
					 by reason of the shareholder's option to receive the equivalent of cash or new
					 stock, deemed to be a cash dividend and therefore taxable.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 16.26-51-404(a)(1) - Interest

Current through Register Vol. 49, No. 6, June, 2024
When interest coupons have matured and are payable but
					 have not been cashed, such interest, though not collected when due and payable,
					 shall be included in gross income for the year during which the coupons mature,
					 unless it can be shown that there are no funds available for payment of the
					 interest during such year. The interest shall be included in gross income even
					 though the coupons are exchanged for other property instead of eventually being
					 cashed. Defaulted coupons are income for the year in which paid. Dividends on
					 corporate stock are subject to tax when unqualifiedly made subject to the
					 demand of the shareholder. As for the distributive share of the profits in a
					 partnership, see 2.
					 26-51-405(a).
					 Interest credited on savings bank deposits, even though the bank has a rule,
					 seldom or never enforced, that it may require so many days notice before
					 withdrawals are permitted is income to the depositor when credited. An amount
					 credited to shareholders of a building and loan association, when such credit
					 passes without restriction to the shareholder, shall be included in taxable
					 income for the year of the credit. Where the amount of such accumulations does
					 not become available to the shareholder until the maturity of a share, the
					 amount of any share in excess of the aggregate amount paid in by the
					 shareholder is income for the year of the maturity of the
					 share.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 1.26-51-404(b)(1) - Gain on Sale - Involuntary Conversion

Current through Register Vol. 49, No. 6, June, 2024
Section 1033 of the Internal Revenue Code of 1986, as in
					 effect on January 1, 1999 relating to the exclusion from gross income of gain
					 resulting from the involuntary conversion of a taxpayer's property, has been
					 adopted for the purpose of computing Arkansas income tax liability.
In any case where the taxpayer elects to replace or restore
					 the converted property, but it is not practical to do so immediately, see 4.
					 26-51-412(a)
					 for procedure.
The special rules for property damaged in a Presidentially
					 declared disaster are found at IRC Sec. 1033(h).
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 1.26-51-404(b)(2) - Gain on Sale or Exchange of Principal Residence

Current through Register Vol. 49, No. 6, June, 2024
Gross income shall not include the
gain
resulting from the sale or exchange of real estate located within Arkansas when
all
of the following conditions are met:
(a) the real estate sold or exchanged by the
				  taxpayer was the taxpayer's principal residence;
b) the taxpayer uses the *gain within a four
				  (4) year period, beginning two (2) years prior to the date of sale or exchange
				  and ending two (2) years after that date, to purchase, build or restore a new
				  parcel of real estate;
c) the new
				  parcel of real estate is located within Arkansas; and
d) the new parcel of real estate is used or
				  will be used by the taxpayer as his principal place of residence.
*This exclusion from gross income shall only apply to that
					 portion of the "gain" actually used to purchase, build or restore the new
					 parcel of real estate.
Gain shall be computed as set forth in ACA
					 26-51-411(d).
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 1.26-51-404(b)(5) - Gifts

Current through Register Vol. 49, No. 6, June, 2024
A gift is where a capable donor with the intention of
					 making a gift completes delivery of a property to a donee who, in turn, accepts
					 the property. Property received as a gift is exempt from income tax although
					 the income therefrom derived from investment, sale or otherwise, is
					 taxable.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 2.26-51-404(b)(5) - Bequests, Devise or Descent

Current through Register Vol. 49, No. 6, June, 2024
A bequest is a gift by will of personal property. A devise
					 is a gift of real property by the last will and testament of the donor. A
					 bequest or devise received by a legatee under the provisions of a will or by an
					 heir in accordance with the statutes of descent and distribution is tax exempt,
					 but not the income therefrom.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 1.26-51-404(b)(6) - Interest - Obligations of The United States or its Possessions

Current through Register Vol. 49, No. 6, June, 2024
Interest earned on obligations of the United States or its
					 possessions is not included in gross income.
"Obligations of the United States" means any U.S.
					 Government obligation used to finance the national debt, e.g., U.S. Treasury
					 bills, or any other instrument acknowledged by the U.S. Secretary of Treasury
					 as an obligation of the United States.
These obligations must be specifically exempt from state
					 taxation by United States Laws or must meet the four criteria established by
					 Smith v. Davis, 323 U.S. 111, 114 (1944). The requirements are that the
					 obligations must:
1) be in
				  writing;
2) bear specific
				  interest;
3) bind the U.S. to pay
				  specific sums at specific dates; and
4) have congressional authority to pledge the
				  full faith and credit of the United States in support of the promise to pay.
As an example, interest received from the Federal National
					 Mortgage, Government National Mortgage and Federal Home Loan Mortgage
					 Corporation do not meet all four of the above stated requirements and is not
					 tax exempt. This is not intended to be an all inclusive list.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 2.26-51-404(b)(6) - Interest - Obligations of the State of Arkansas

Current through Register Vol. 49, No. 6, June, 2024
Interest earned on obligations of the State of Arkansas or
					 any political subdivision thereof, is not included in gross income.
"Obligations of the State of Arkansas" means any obligation
					 backed by credit of the State of Arkansas.
"Any political subdivision" means any county, city or town
					 obligations, including special assessment districts such as road, water, sewer,
					 reclamation, drainage, levee, school or similar districts.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 1.26-51-404(b)(7) - Social Security Benefits

Current through Register Vol. 49, No. 6, June, 2024
Social security benefits are excluded from gross income for
					 state income tax purposes. Thus, amounts received as pensions or annuities
					 under the Social Security Act or the Railroad Retirement Act are excluded from
					 gross income.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 2.26-51-404(b)(7) - Unemployment Benefits Paid by Organized Union

Current through Register Vol. 49, No. 6, June, 2024
Amounts paid by an organized union as unemployment benefits
					 to its unemployed members are taxable where the benefits are paid through union
					 dues. Where union members make special payments to a fund, unemployment
					 benefits which they receive from the fund are includible in gross income only
					 to the extent they exceed the recipient's contributions. The amounts
					 contributed to the fund are not deductible.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 3.26-51-404(b)(7) - Unemployment Benefits Paid by State or Federal Agency

Current through Register Vol. 49, No. 6, June, 2024
Unemployment insurance benefits received from a state
					 agency from funds received from the Federal Unemployment Trust Fund are not
					 taxable. Unemployment insurance benefits received from the Railroad Retirement
					 Board are not includible in gross income. Unemployment compensation paid to
					 federal employees by state or federal agencies is excludable from gross
					 income.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 1.26-51-404(b)(11) - Cancellation or Forgiveness of Debt

Current through Register Vol. 49, No. 6, June, 2024
The cancellation and forgiveness of indebtedness may amount
					 to a payment of income, to a gift or to a capital transaction, dependent upon
					 the circumstances. If, for example, an individual performs services for a
					 creditor who in consideration thereof cancels the debt, income to that amount
					 is realized by the debtor as compensation for his services. If, however, a
					 creditor merely desires to benefit a debtor, and, without any consideration
					 therefore, cancels the debt, the amount of the debt is a gift from the creditor
					 to the debtor and need not be included in the latter's gross income. If a
					 shareholder in a corporation which is indebted to him gratuitously forgives the
					 debt, the transaction amounts to a contribution to the capital of the
					 corporation.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 1.26-51-404(b)(12) - Cafeteria Plan and Flexible Spending Arrangements - Taxability of Benefits

Current through Register Vol. 49, No. 6, June, 2024
"Qualified benefits," as defined in IRC Sec. 125(f),
					 received through a cafeteria plan or flexible spending arrangement (FSA) are
					 excluded from the taxpayer's gross income. However, the term "qualified
					 benefits" does not include benefits paid by an employer towards long-term care
					 insurance premiums or long-term care services. Such benefits paid on behalf of
					 the employee/taxpayer through a cafeteria plan or FSA are includable in the
					 taxpayer's gross income.
It should be noted that under certain circumstances,
					 expenses incurred by a taxpayer for qualified long-term care services and
					 eligible long-term care insurance premiums may be taken as an itemized
					 deduction. This deduction for unreimbursed medical expenses can be taken only
					 to the extent such expenses exceed 7.5% of the taxpayer's AGI. IRC Sec.
					 213(d)(1)(C) & (D).
"Qualified" long-term care services are necessary
					 diagnostic, preventive, therapeutic, curing, treating, mitigating and
					 rehabilitative services, as well as maintenance or personal care services
					 which:
1. Are required by a
				  chronically ill individual; and
2.
				  Are provided under a plan of care prescribed by a licensed health care
				  practitioner. IRC Sec. 7702B(c)(1).
"Eligible" long-term care insurance premiums may be
					 deductible as medical expenses when such premiums are paid towards "qualified"
					 long-term care insurance. The definition of "qualified" long-term care
					 insurance is set forth in IRC Sec. 7702B(b)(1).
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-404 - GROSS INCOME GENERALLY › Rule 1.26-51-404(b)(15) - Lawsuit Damages

Current through Register Vol. 49, No. 6, June, 2024
Compensatory and punitive damages are includable in gross
					 income unless the damages are received on account of a personal physical injury
					 or physical sickness. If an action has its origin in a
physical
injury or
physical
sickness, then all damages (other than punitive
					 damages) that flow from that injury or sickness are treated as payments
					 received on account of physical injury or physical sickness, whether or not the
					 recipient of the damages is the injured party. However, punitive damages are
					 includable in gross income even if they are received on account of a personal
					 physical injury or physical sickness. IRC Sec. 104(a)(2).
The taxability of damages remains the same whether the
					 damages are received as a settlement or jury award.
Example:
damages (other than punitive damages)
					 received by an individual on account of a claim for loss of consortium due to
					 the physical injury or physical sickness of that individual's spouse are
					 excludable from gross income.