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 26-51-405 - PARTNERSHIP INCOME › Rule 2.26-51-405 - Partnership Composite Return

Current through Register Vol. 49, No. 6, June, 2024
Before the Department will allow a composite individual
					 income tax return ("block filing"), certain conditions must be agreed to. Those
					 conditions are as follows:
1. The
				  Revenue Division must be provided with the names of all relevant
				  partners.
2. Each composite or
				  block return must be filed in the name of the partnership and the partner that
				  signs the return will be responsible for any assessments or deficiencies
				  incurred by the return. This requirement does not relieve any of the partners
				  from their personal liability in any way.
3. The total net taxable income in Arkansas
				  must be reported on form AR1000. Tax will be computed at a flat 7% tax
				  rate.
4. Partners who become or are
				  residents of Arkansas, or who have income or losses from Arkansas sources other
				  than from the partnership, will be excluded from the block filing. Only those
				  partners who must file Arkansas non-resident individual income tax returns as a
				  result of their interest in the partnership will be included in the proposed
				  block filing.
5. The agreement to
				  allow composite or block filing will be reviewed annually and the agreement is
				  revocable at the option of the Revenue Division. Permission to file a composite
				  return must be obtained from an Individual Income Tax Section Manager before
				  such a return is filed.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-405 - PARTNERSHIP INCOME › Rule 1.26-51-405(a) - Partnerships

Current through Register Vol. 49, No. 6, June, 2024
A partnership must keep records showing the participation
					 of the partners, the interest owned by them, duties performed and services
					 rendered in the operation of the business. A partnership as such is not subject
					 to taxation but it must make a return of income, which return properly reflects
					 the net income for each partner. Individuals carrying on business in
					 partnership are taxable upon their distributive shares of the net income of
					 such partnerships, whether distributed or not, and are required to include such
					 distributive shares in their individual returns.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-405 - PARTNERSHIP INCOME › Rule 2.26-51-405(a) - Distributive Share of Partnership Income

Current through Register Vol. 49, No. 6, June, 2024
The distributive share of the net income of the partnership
					 which a partner is required to include in his return is his proportionate share
					 of the net income of the partnership, either:
(a) For the taxable year upon the basis of
				  which the partner's net income is computed, or
(b) If the partner's net income is computed
				  upon the basis of a taxable year different from that upon the basis of which
				  the net income of the partnership is computed, for the taxable year of the
				  partnership ending within the taxable year upon the basis of which the
				  partner's net income is computed.
Amounts earned and distributed to a partner by a
					 partnership after the end of its taxable year and before the end of his
					 corresponding taxable year should be accounted for both by the partnership and
					 by the partner in their returns for their next succeeding taxable year. Where
					 the results of partnership operation is a net loss, the loss will be divisible
					 by the partners in the same proportion as net income would have been divisible
					 (or, if the partnership agreement provides for the division of a loss in a
					 manner different from the division of a gain, in the manner so provided), and
					 may be taken by the individual partners in their returns 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 26-51-409 - FEDERAL SUBCHAPTER S ADOPTED › Rule 1.26-51-409 - IRC Subchapter S Adopted

Current through Register Vol. 49, No. 6, June, 2024
Subchapter S of the Internal Revenue Code of 1986, as in
					 effect on January 1, 1997, regarding small business corporations, has been
					 adopted for the purpose of computing Arkansas income tax
					 liability.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-409 - FEDERAL SUBCHAPTER S ADOPTED › Rule 2.26-51-409 - Corporations That Must File as an S Corporation

Current through Register Vol. 49, No. 6, June, 2024
Corporations incorporated in Arkansas, or registered to
					 conduct business within Arkansas or having income from Arkansas *sources, must
					 file an income tax return with the State of Arkansas. Such corporations must
					 file an S Corporation income tax return (AR1100S) with the State of Arkansas
					 if:
(a) the corporation elected, by
				  filing Form AR1103, to be taxed as an S Corporation within seventy-five (75)
				  days of incorporation;
b) the
				  election was accepted by the State of Arkansas; and
c) the election remains in effect.
* Having income from Arkansas "sources" means income
					 derived from property located within Arkansas or from business activity carried
					 on within Arkansas.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-409 - FEDERAL SUBCHAPTER S ADOPTED › Rule 3.26-51-409 - Applicable Rules - Generally

Current through Register Vol. 49, No. 6, June, 2024
The rules of Subchapter C (corporate distributions,
					 liquidations, contributions and reorganizations) apply to S corporations,
					 unless the Internal Revenue Code or Arkansas law otherwise provides or a
					 Subchapter C rule is inconsistent with a Subchapter S rule.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-409 - FEDERAL SUBCHAPTER S ADOPTED › Rule 4.26-51-409 - S Corporation - Auditing

Current through Register Vol. 49, No. 6, June, 2024
S corporations are generally audited on a
					 shareholder-by-shareholder basis. The general rule is that an S corporation's
					 taxable income is computed under the rules that apply to
					 individuals.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-409 - FEDERAL SUBCHAPTER S ADOPTED › Rule 5.26-51-409 - Consistency Between S Corporation Returns and Shareholders' Returns

Current through Register Vol. 49, No. 6, June, 2024
An S corporation shareholder should generally treat a
					 Subchapter S item on his own individual income tax return consistently with the
					 treatment of that item on the S corporation's return. If the shareholder treats
					 an item or items inconsistently between his return and the corporation's
					 return, the shareholder must notify the Department's Individual Income Tax
					 Section (as well as the IRS) of the inconsistency. This notification should be
					 provided on IRS Form 8082.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-409 - FEDERAL SUBCHAPTER S ADOPTED › Rule 1.26-51-409(c)(1) - Reporting S Corporation Income, Loss, Deductions and Credits

Current through Register Vol. 49, No. 6, June, 2024
All resident
and
nonresident shareholders of
					 corporations that have elected to be taxed by Arkansas as S Corporations and
					 who receive a share of the corporation's income, loss, deductions or credits,
					 must file an Arkansas individual income tax return reporting the share so
					 received. However, a nonresident shareholder of such a corporation shall only
					 be required to file an Arkansas individual income tax return if
some
or
all
of his share of the corporation's income,
					 loss, credits or deductions are attributable to Arkansas sources. When an
					 Arkansas return is required to be filed, the nonresident must report
all
of his gross income on his Arkansas nonresident return
					 pursuant to ACA
					 26-51-435
					 and ACA
					 26-51-504.
					 Moreover, a shareholder's share of S Corporation income attributable to
					 Arkansas is subject to Arkansas income tax whether or not it is actually
					 distributed to the shareholder.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-409 - FEDERAL SUBCHAPTER S ADOPTED › Rule 2.26-51-409(c)(1) - Reporting S Corporation Income, Loss, Deductions and Credits + Shareholder Termination

Current through Register Vol. 49, No. 6, June, 2024
An S corporation's items of income, loss, deduction and
					 credit for its tax year are usually allocated to its shareholders on a
					 per-share, per-day basis. An equal part of a tax year's items is assigned to
					 each day of the tax year, and is divided pro rata among the shares outstanding
					 on the day to which it's assigned. However, if the corporation and all
					 *"affected" shareholders agree, an election could be made to terminate the S
					 corporation's tax year when a shareholder terminated his interest in the
					 corporation. The effect of the election is that the tax year of the corporation
					 is treated as if it consists of two tax years, with the first tax year ending
					 on the date on which the shareholder's interest was terminated. IRC Sec.
					 1377(a)(2)(A). The items of income, loss, deduction and credit, determined for
					 each separate "tax year" by closing the books, are allocated on a per-share,
					 per-day basis to shareholders who were shareholders during the separate "tax
					 year".
* affected shareholders include the shareholders who
					 terminate their interests and all shareholders to whom the terminating
					 shareholders transfer their shares during the tax year. If shares are
					 transferred to the corporation, all persons who were shareholders during the
					 tax year are treated as affected shareholders. IRC Sec.
					 1377(a)(2)(B).
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-409 - FEDERAL SUBCHAPTER S ADOPTED › Rule 3.26-51-409(c)(1) - S Corporation Shareholder Basis

Current through Register Vol. 49, No. 6, June, 2024
An S corporation shareholder's basis is significant
					 because:
(1) distributions in excess
				  of his basis may result in gain to the shareholder; and
(2) the shareholder can deduct his pro rata
				  share of the corporation's losses only to the extent of his adjusted basis in
				  the S corporation's stock and debt.
The adjusted basis of the shareholder's stock for purposes
					 of computing the limitation on the amount of the S corporation's losses he can
					 deduct (the loss limitation) is computed after the basis is reduced by the
					 year's nontaxable distributions made to the shareholder. IRC Sec.
					 1366(d).
The adjusted basis of the shareholder's stock for
					 determining the tax effects of the S corporation distributions to him is
					 determined by increasing the basis for his share of the S corporation's income
					 items for the year, but without decreasing the basis for his share of the S
					 corporation's losses for the year. IRC Sec. 1368.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-410 - INVENTORY › Rule 1.26-51-410 - What Constitutes Inventory

Current through Register Vol. 49, No. 6, June, 2024
In order to reflect the net income correctly, inventories
					 at the beginning and end of each year are necessary in every case in which the
					 production, purchase, or sale of merchandise is an income-producing factor. The
					 inventory should include raw materials and supplies on hand that have been
					 acquired for sale, consumption or use in productive processes, together with
					 all finished or partly finished goods. Only merchandise, title to which is
					 vested in taxpayer, should be included in the inventory. Accordingly, the
					 seller should include in his inventory goods under contract for sale but not
					 yet segregated and applied to the contract and goods out upon consignment but
					 should exclude from inventory goods sold, title to which has passed to the
					 purchaser. A purchaser should include in inventory merchandise purchased, title
					 to which has passed to him, although such merchandise is in transit or for
					 other reasons has not been reduced to physical possession, but should not
					 include goods ordered for future delivery, transfer of title to which has not
					 yet been affected.
There are two tests to which each inventory must
					 conform:
1. It must conform as nearly
				  as may be to the best accounting practice in the trade or business.
2. It must clearly reflect the
				  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 26-51-411 - GAIN OR LOSS - SALES OF PROPERTY › Rule 1.26-51-411(a) - Amount Realized on Disposition of Property

Current through Register Vol. 49, No. 6, June, 2024
The amount realized from the sale or other disposition of
					 property is the sum of any money received plus the fair market value of the
					 property (other than money) received. The fair market value of the property is
					 a question of fact, but only in rare and extraordinary cases does the property
					 have no fair market value.
In computing the amount of gain or loss, however, the cost
					 or other basis of the property shall be properly adjusted for any expenditure,
					 receipt, loss or other item properly chargeable to capital account including
					 the cost of improvements and betterment made to the property since the basic
					 date and carrying charges such as taxes on nonproductive property. Where the
					 taxpayer has elected to deduct carrying charges in computing net income or used
					 such charges in determining his liability for filing returns of income for
					 prior years, the cost or other basis may not be increased by such items in
					 computing the gain or loss from the subsequent sale of such property. The cost
					 or other basis of the property must also be decreased by the amount of the
					 deductions for exhaustion, wear and tear, obsolescence and depletion which
					 have, since the acquisition of the property, been allowable in respect of such
					 property whether or not such deductions were claimed by the taxpayer or
					 formally allowed. Adjustments to the cost or other basis on account of such
					 allowable deductions as distinguished from the deductions actually taken in
					 prior years will be made only on the basis of explicit and convincing evidence
					 (calculations based upon a theoretical formula are not such evidence), that the
					 deductions taken were insufficient or excessive, as the case may be, due regard
					 being given to the expenditures made by the taxpayer to maintain the effective
					 usefulness of the property.
In no case shall the amount of the diminution in respect to
					 depletion exceed a depletion deduction computed without reference to discovery
					 in the case of mines, oil and gas wells.
In the case of stock, the basis must be diminished by the
					 amount of distributions previously made in respect of such stock to the extent
					 that they have been a return of capital. The provisions of ACA
					 26-51-411
					 shall not be construed so as to conflict with the provisions of ACA
					 26-51-404(a)(2)
					 which make special provisions for the reporting of income from the sale of
					 property on the installment plan where the initial payment is 30 percentum or
					 less.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-411 - GAIN OR LOSS - SALES OF PROPERTY › Rule 3.26-51-411(a) - Sale of Real Estate or Personal Property

Current through Register Vol. 49, No. 6, June, 2024
Sales of real estate or personal property in which more
					 than thirty percent (30%) of the sales price is received in the year in which
					 the sales is consummated will be handled as provided in ACA
					 2651-411.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-411 - GAIN OR LOSS - SALES OF PROPERTY › Rule 4.26-51-411(a) - Sale of Property Acquired by Gift

Current through Register Vol. 49, No. 6, June, 2024
If the property was acquired by gift, (even though the gift
					 was made in contemplation of or was intended to take effect in possession or
					 enjoyment at or after the donor's death) the basis is the same as it would be
					 in the hands of the donor or the last preceding owner by whom it was not
					 acquired by gift. If the donee is unable to ascertain the facts necessary to
					 determine the basis, he shall so state upon his return and the Income Tax
					 Director will, if possible, obtain such facts from the donor or last preceding
					 owner or any other person cognizant therefore. If the Income Tax Director finds
					 it impossible to obtain such facts, the basis shall be the last assessed
					 valuation of the property while in the hands of the donor.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-411 - GAIN OR LOSS - SALES OF PROPERTY › Rule 5.26-51-411(a) - Basis of Property Acquired On or Before March 9, 1929

Current through Register Vol. 49, No. 6, June, 2024
In computing the gain or loss from the sale of other
					 disposition of property acquired by gift on or before March 9, 1929, the basis
					 shall be the assessed valuation of the property.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-411 - GAIN OR LOSS - SALES OF PROPERTY › Rule 6.26-51-411(a) - Patents and Copyrights

Current through Register Vol. 49, No. 6, June, 2024
A taxpayer disposing of patents or copyrights by sale
					 should determine the gain or loss arising therefrom by computing the difference
					 between the selling price and the cost or other basis, with property adjustment
					 for depreciation as provided 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 26-51-412 - GAIN OR LOSS - EXCHANGE OF PROPERTY › Rule 1.26-51-412(a) - Exchange of Property for Like Property

Current through Register Vol. 49, No. 6, June, 2024
For purposes of the Income Tax Act, no gain or loss shall
					 be recognized in an exchange of property for like property of a similar
					 value.
If property held for productive use in trade or business or
					 for investment (not including stock in trade or other property held primarily
					 for sale, nor stocks, bonds, notes, certificates of trust or beneficial
					 interest or other securities or evidence of indebtedness) is exchanged solely
					 for property of like kind to be held either for productive use in trade or
					 business or for investment, no gain or loss is recognized.
The words "like kind" have reference to the nature or
					 character of the property and not its grade or quality. Therefore, under this
					 paragraph, no gain or loss is realized by one, other than a dealer, from the
					 exchange of real estate for other real estate. One kind or class of property
					 may not, under this paragraph, be exchanged for property of a different kind or
					 class, as real estate for personal property.
If property, real, personal or mixed, is transferred to a
					 corporation by one person solely in exchange for stock or securities in such
					 corporation and, immediately after the exchange, such person is in control of
					 the corporation, or by two or more persons solely in exchange for stock or
					 securities in such corporation, and if, immediately after the exchange, such
					 persons are in control of the corporation, and the amount of stock and
					 securities received by each is substantially in proportion to his interest in
					 the property prior to the exchange, no gain or loss will be recognized.
If common stock in a corporation is exchanged solely for
					 common stock in the same corporation, or if preferred stock in a corporation is
					 exchanged solely for preferred stock in the same corporation by one person
					 solely in exchange for stock or securities in such corporation and, immediately
					 after the exchange, such person is in control of the corporation, or by two or
					 more persons solely in exchange for stock or securities in such corporation,
					 and if, immediately after the exchange, such persons are in control of the
					 corporation, and the amount of stock and securities received by each is
					 substantially in proportion to his interest in the property prior to the
					 exchange, no gain or loss will be recognized.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-412 - GAIN OR LOSS - EXCHANGE OF PROPERTY › Rule 2.26-51-412(a) - Exchange of Property for Property Not of Like Kind

Current through Register Vol. 49, No. 6, June, 2024
When property is exchanged for other property not of a like
					 kind, the property received in exchange shall, for the purpose of determining
					 gain or loss, be treated as the equivalent of cash to the amount of its fair
					 market value. If no market exists in which all of the property so received can
					 be disposed of at the time of exchange for a reasonably certain and definite
					 price in cash, the exchange shall be considered as a conversion of assets from
					 one form to another form which no gain or loss shall be deemed to arise and the
					 property received in exchange shall be taken into the records of the taxpayers
					 at the same cost or assessed value, (plus additions and minus depreciation and
					 depletion allowable), as the property which he exchanged.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-412 - GAIN OR LOSS - EXCHANGE OF PROPERTY › Rule 3.26-51-412(a) - Dividends Paid In Securities or Other Property

Current through Register Vol. 49, No. 6, June, 2024
Dividends paid in securities or other property (other than
					 its own stock) in which the earnings of a corporation have been invested, are
					 income to the recipients in the amount of the market value of such property
					 when receivable by the shareholders. Where a corporation declared a dividend
					 payable in stock of another corporation, setting aside the stock to be so
					 distributed and notifying the shareholders of its action, the income arising to
					 the recipients of such stock is its market value at the time the dividends
					 become payable. Scrip dividends are subject to tax in the year in which the
					 warrants are issued.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-412 - GAIN OR LOSS - EXCHANGE OF PROPERTY › Rule 4.26-51-412(a) - Property Acquired as a Result of an Involuntary Conversion

Current through Register Vol. 49, No. 6, June, 2024
In the case of property acquired as a result of an
					 involuntary conversion, the basis of the property shall be the same as in the
					 case of the property so converted, decreased in the amount of any money
					 received by the taxpayer which was not expended, and increased in the amount of
					 the gain or decreased in the amount of loss to the taxpayer recognized upon
					 such conversion applicable to the year in which the conversion was made. Refer
					 to 1.
					 26-51-404(b)(1).
In any case where the taxpayer elects to replace or restore
					 the converted property, but it is not practicable to do so immediately, he may
					 obtain permission to establish a replacement fund in his accounts in which part
					 or all of the compensation so received shall be held, without deduction for the
					 payment of any mortgage. In such a case the taxpayer should make application to
					 the Director for permission to establish such a replacement fund, and in his
					 application should recite all the facts relating to the transaction and declare
					 that he will proceed as expeditiously as possible to replace or restore such
					 property. The taxpayer will be required to furnish a bond with such surety as
					 the Director may require in an amount not in excess of double the estimated
					 additional income taxes which would be payable if no replacement fund were
					 established. The estimated additional taxes, for the amount of which the
					 claimant is required to furnish security, should be computed at the rates at
					 which the claimant would have been obliged to pay, taking into consideration
					 the remainder of his net income and resolving against him all matters in
					 dispute affecting the amount of the tax. Only surety companies will be approved
					 as sureties. The application should be executed in triplicate, so that the
					 Director, the applicant, and the surety or depository may each have a
					 copy.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-412 - GAIN OR LOSS - EXCHANGE OF PROPERTY › Rule 1.26-51-412(b) - Basis of Stock Received for Property - Real, Personal or Mixed

Current through Register Vol. 49, No. 6, June, 2024
In the case of the organization of a corporation, the
					 stock or securities of the corporation received for property, real, personal or
					 mixed, transferred to the corporation, shall be deemed to have the same value
					 or cost as the property so transferred and no gain or loss shall arise from the
					 transaction.
The cost or value of the property transferred (adjusted as
					 to depreciation and depletion) shall be entered in the records of the taxpayer
					 as the cost of his stock in the corporation and a record of such cost must be
					 maintained. Gain or loss in future sales of such stock shall be measured by the
					 difference between the individual cost per share determined as above applied to
					 the selling price of such stock.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-412 - GAIN OR LOSS - EXCHANGE OF PROPERTY › Rule 1.26-51-412(c) - Stock or Securities Exchanged in a Reorganization

Current through Register Vol. 49, No. 6, June, 2024
If stock or securities in a corporation, a party to a
					 reorganization are, in pursuance to the plan of reorganization, exchanged for
					 stock or securities in such corporation, or in another corporation, a party to
					 the reorganization, and other property or money, the gain, if any, to the
					 recipient shall be recognized in an amount not in excess of the sum of the
					 money and the fair market value of other property. No loss from such an
					 exchange will be recognized.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-412 - GAIN OR LOSS - EXCHANGE OF PROPERTY › Rule 2.26-51-412(c) - Stock or Securities Received in a Reorganization

Current through Register Vol. 49, No. 6, June, 2024
If without any surrender of his stock or securities, a
					 shareholder in a corporation, a party to a reorganization, receives in
					 pursuance of the plan of reorganization, stock or securities in such
					 corporation or in another corporation, a party to the reorganization, no gain
					 to the shareholder will be recognized.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-412 - GAIN OR LOSS - EXCHANGE OF PROPERTY › Rule 3.26-51-412(c) - Basis of Stock or Securities Received in a Reorganization

Current through Register Vol. 49, No. 6, June, 2024
In the case of stock or securities acquired by a
					 shareholder in connection with the transactions described in 1.
					 26-51-412(c),
					 the cost or assessed value of the stock in respect of which the distribution
					 was made, shall be apportioned between such stock and the stock or securities
					 distributed to the shareholder. The basis of each share will be the quotient of
					 the cost or assessed value of the old shares of stock divided by the total
					 number of the old and new shares.
Where the stock distributed in reorganization is materially
					 different from the stock in respect of which the distribution is made, the cost
					 or other basis of the old shares of stock shall be divided between such old
					 stock and the new stock in proportion as nearly as may be to the respective
					 values of each class of stock, old and new, at the time the new shares of stock
					 are distributed, and the basis of each share of stock will be the quotient of
					 the cost or other basis of the class with which such share belongs, divided by
					 the number of shares in the class.
Where the stock in respect of which a distribution in
					 reorganization is made was purchased at different times and prices, and the
					 identity of the lots cannot be determined, any sale of the original stock will
					 be charged to the earliest purchases of such stock (see 2.
					 26-51-411(a)
					 ), and any sale of the stock distributed in reorganization will be presumed to
					 have been made from the stock distributed in respect of the earliest purchased
					 stock.
Where the stock in respect of which a distribution in
					 reorganization is made was purchased at different times and prices, and the
					 stock distributed in reorganization cannot be identified as having been
					 distributed in respect of any particular lot of such stock then any sale of the
					 stock distributed in reorganization will be presumed to have been made from the
					 stock distributed in respect of the earliest purchased stock.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-413 - CORPORATE LIQUIDATIONS › Rule 1.26-51-413 - Amounts Distributed in Complete Liquidation

Current through Register Vol. 49, No. 6, June, 2024
Amounts distributed in complete liquidation of a
					 corporation are to be treated as in full payment in exchange for the stock, and
					 the amounts distributed in partial liquidation are to be treated as in part or
					 full payment in exchange for the stock so canceled or redeemed. The phrase
					 "amounts distributed in partial liquidation" means a distribution by a
					 corporation in complete cancellation or redemption of all of its stock, or one
					 of a series of distributions in complete cancellation or redemption of all or a
					 portion of its stock.
The gain or loss to a shareholder from a distribution in
					 liquidation is to be determined by comparing the amount of the distribution
					 with the cost or other basis of the stock. In the case of amounts distributed
					 in partial liquidation, other than a distribution in pursuance of a plan of
					 reorganization as described in ACA
					 26-51-412,
					 the part of such distribution which is properly chargeable to capital account
					 shall not be considered a distribution of earnings or profits within the
					 meaning of ACA
					 26-51-411
					 for the purpose of determining the taxability of subsequent distribution by 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 26-51-413 - CORPORATE LIQUIDATIONS › Rule 2.26-51-413 - Corporate Liquidation - Stock Purchase Treated as Asset Acquisition

Current through Register Vol. 49, No. 6, June, 2024
A taxpayer who has elected to be treated as an S
					 corporation for federal income tax purposes but not for state income tax
					 purposes (therefore retaining its C corporation status), must file a §338
					 election with the Department's Individual Income Tax Section stating that it
					 desires to be taxed in accordance with IRC Section 338. This is so despite the
					 fact that the taxpayer may already have a §338 election on file with the
					 IRS.
If the taxpayer has elected to be treated as an S
					 corporation for
both
federal and state income tax purposes, and
					 the taxpayer has also filed a §338 election with the IRS, the taxpayer need not
					 file a separate §338 election with the Department -- the taxpayer will
					 automatically receive §338 treatment by the Department for state income tax
					 purposes as well.
If the taxpayer has elected to be treated as a C
					 corporation for both federal and state income tax purposes, and the taxpayer
					 has also filed a §338 election with the IRS, the taxpayer need not file a
					 separate §338 election with the Department -- the taxpayer will automatically
					 receive §338 treatment by the Department for state income tax purposes as
					 well.
Under IRC Sec. 338, certain stock purchases will be treated
					 as asset acquisitions for purposes of income taxation.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-414 - DEFERRED COMPENSATION PLANS › Rule 1.26-51-414 - Deferred Compensation Plans - IRAs

Current through Register Vol. 49, No. 6, June, 2024
A nonworking spouse can open up his or her own IRA and
					 contribute up to $2,000.00 per year to the IRA. Under prior law, a nonworking
					 spouse did not have the option of owning his or her own "spousal" IRA. To
					 determine the deductibility of the contributions made to a married couple's
					 IRAs, refer to IRC Sec. 219(c). The requirement of filing a joint return under
					 IRC Sec. 219(c)(2)(A) in order to deduct contributions shall not
					 apply.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-414 - DEFERRED COMPENSATION PLANS › Rule 2.26-51-414 - Deferred Compensation Plans - Lump-Sum Distributions

Current through Register Vol. 49, No. 6, June, 2024
Lump-sum distributions from qualified retirement plans will
					 no longer be eligible for special 5 year income averaging beginning with the
					 2000 tax year. Except for older taxpayers eligible for the 1986 Tax Reform Act
					 transition rules (i.e., 10 year averaging and capital gains treatment for the
					 pre-1974 portion of the distribution), distributions from qualified plans will
					 be taxed in the same manner as other income, regardless of the form of
					 distribution. IRC Sec. 402(e)(4)(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 26-51-414 - DEFERRED COMPENSATION PLANS › Rule 3.26-51-414 - Deferred Compensations Plans Self-Employed Ministers

Current through Register Vol. 49, No. 6, June, 2024
A "church plan" is a retirement plan established and
					 maintained by a tax exempt church or association of churches for its employees.
					 These plans can cover ministers, regardless of the source of the ministers'
					 compensation. A self-employed minister covered under a church plan is treated
					 as his own employer. IRC Sec. 414(e)(5). Therefore, the minister can deduct his
					 contributions to the church plan. IRC Sec. 404(a)(10). Prior to the 1997 tax
					 year, self-employed ministers could participate in church plans, but their
					 contributions were not deductible because the contributions were treated as
					 made by the church itself, rather than the ministers.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-414 - DEFERRED COMPENSATION PLANS › Rule 4.26-51-414 - Deferred Compensation Plans - Section 457 Plan Distributions

Current through Register Vol. 49, No. 6, June, 2024
Amounts that a participant defers under an "eligible
					 deferred compensation plan" of a tax-exempt or state or local governmental
					 employer (i.e., a "section 457 plan") are includible in gross income after the
					 participant separates from service only in the tax year in which the amounts
					 are actually paid or otherwise "made available" to the participant.
Amounts deferred under a section 457 plan generally may not
					 be "made available" to an employee before
the earlier of:
(a) the
					 calendar year in which the participant attains age 701/2, (b) when the
					 participant is separated from service with the employer, or (c) when the
					 participant is faced with an unforeseeable emergency.
Amounts payable are not treated as "made available," and
					 thus, will neither be includible in a participant's gross income under the
					 constructive receipt rules, nor run afoul of the Code Sec. 457 distribution
					 rules, in the following circumstances:
In-service section 457 plan distributions are not treated
					 as "made available" if:
(1) the total
				  amount payable doesn't exceed $3,500;
(2) There has been no prior distribution from
				  the 457 plan to the participant. IRC Sec. 457(e)(9)(A).
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-414 - DEFERRED COMPENSATION PLANS › Rule 5.26-51-414 - Penalty-Free Withdrawals from IRAs and Qualified Retirement Plans

Current through Register Vol. 49, No. 6, June, 2024
A taxpayer may make an early withdrawal of funds from an
					 IRA or other qualified retirement plan free of the 10% penalty normally
					 associated with such early withdrawals under the following two
					 circumstances:
1 Payment of medical
				  expenses in excess of 71/2% of the taxpayer's adjusted gross income (AGI). For
				  example, a taxpayer's AGI is $40,000.00. 71/2% of $40,000.00 is $3,000.00. The
				  taxpayer incurs medical expenses of $10,000.00 and makes an early withdrawal of
				  $10,000.00 from his IRA to pay the expenses in full. The first $3,000.00 of the
				  withdrawal would be subject to the 10% penalty. However, the remaining
				  $7,000.00 would not be subject to the 10% penalty. IRC Sec.
				  72(t)(2)(B).
2 The taxpayer is
				  unemployed at the time the withdrawal is made and meets the following criteria:
a The taxpayer has received unemployment
				  compensation for at least 12 consecutive weeks;
b The withdrawal does not exceed the total
				  amount paid during the tax year by the taxpayer for premiums for health
				  insurance coverage for the taxpayer, the taxpayer's spouse and
				  children;
c The withdrawal must be
				  made in the year the unemployment compensation is actually received or the
				  following year. IRC Sec. 72(t)(2)(D).
The actual retirement funds withdrawn do not have to be
					 paid towards the health insurance premiums to qualify for the break from the
					 10% penalty.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-416 - DEDUCTIONS - TAXES › Rule 1.26-51-416 - State Income Taxes

Current through Register Vol. 49, No. 6, June, 2024
No deduction will be allowed for Arkansas state income
					 taxes in the computation of net income. All other states' income taxes are
					 deductible as a miscellaneous deduction not subject to the two percent of AGI
					 reduction unless said taxes are taken as a credit.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-419 - DEDUCTIONS - CHARITABLE CONTRIBUTIONS › Rule 1.26-51-419 - Charitable Contributions

Current through Register Vol. 49, No. 6, June, 2024
Arkansas has adopted IRC Sec. 170 as referenced in ACA
					 26-51-419.
					 IRC Sec 170(d)(2)(B) does not allow unused contributions to increase NOL carry
					 forward. It merely decreases net taxable income by accumulated contributions
					 carry forward first up to 10%, therefore, decreasing the amount of NOL used and
					 thus results in an increase of NOL for future years.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-423 - DEDUCTIONS - EXPENSES › Rule 1.26-51-423(a) - Types of Deductions

Current through Register Vol. 49, No. 6, June, 2024
In computing an individual's taxable income, the individual
					 is permitted to claim certain deductions, Some of these deductions may be
					 subtracted from gross income, while other types of deductions must be claimed
					 as itemized deductions and subtracted from the individual's adjusted gross
					 income. A Deduction from adjusted gross income is generally referred to as a
					 "itemized deduction". To be deductible as a trade or business expense, an
					 expense must be:
(1) an ordinary and
				  necessary expense of the taxpayer's trade or business,
(2) paid or incurred during the tax year in
				  which it is deducted,
(3) connected
				  with a trade or business conducted by the taxpayer.
The business expenses of a sole proprietorship or a
					 "statutory employee" are claimed on Schedule C of Form 1040.
A "trade or business," although not defined in the tax law,
					 has been characterized as an activity carried on for a livelihood or for
					 profit.
A profit motive must be present and some type of economic
					 activity must be conducted. With respect to the profit motive, an activity is
					 considered a business if it is entered into and carried on in good faith for
					 the purpose of making profit. Moreover, a trade or business is characterized by
					 regularity of activities and transactions and 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 26-51-423 - DEDUCTIONS - EXPENSES › Rule 1.26-51-423(a)(1) - Business Expenses - Long-Term Care Insurance Premiums

Current through Register Vol. 49, No. 6, June, 2024
A self-employed taxpayer can deduct as a business expense
					 on U.S. Form 1040, Schedule C, a percentage of the premiums paid during the tax
					 year for "qualified" long-term care insurance. The definition of "qualified"
					 long-term care insurance is set forth in IRC Sec. 7702B(b)(1). The applicable
					 percentage begins with 40% for the 1997 tax year and increases up to a maximum
					 of 80% in 2006. The percentages are as follows:
1997 .................
40%
2004 .....................
60%
1998 through 2002 ..........
45%
2005.......................
70%
2003 ..................
50%
2006 or thereafter.......
80%
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-423 - DEDUCTIONS - EXPENSES › Rule 1.26-51-423(a)(2) - Medical Expenses - Long-Term Care Insurance Premiums

Current through Register Vol. 49, No. 6, June, 2024
Under certain circumstances, expenses incurred by a
					 taxpayer for 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)(D).
"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 26-51-423 - DEDUCTIONS - EXPENSES › Rule 1.26-51-423(b) - Travel and Entertainment

Current through Register Vol. 49, No. 6, June, 2024
For tax years beginning before 01/01/95, IRC Sec. 274 as
					 in effect 01/01/89 shall apply. For tax years 1995 and 1996, IRC Sec. 274 as in
					 effect on 01/01/95 shall apply. Beginning with the 1997 tax year, IRC Sec. 274
					 as in effect on 01/01/97 shall apply. 80% of qualified expenses will be allowed
					 for tax years beginning before 01/01/95, and 50% of qualified expenses will be
					 allowed for tax years beginning on or after 01/01/95.
Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Regulation 1997-4 - Comprehensive Individual Income Tax Regulations › Rule 26-51-423 - DEDUCTIONS - EXPENSES › Rule 1.26-51-423(c)(1) - Business Expenses - Medical Care Insurance Premiums

Current through Register Vol. 49, No. 6, June, 2024
A self-employed taxpayer can deduct as a business expense
					 on U.S. Form 1040, Schedule C, a percentage of the premiums paid during the tax
					 year for insurance which constitutes medical care for the taxpayer, his spouse
					 and dependents. The applicable percentage begins with 40% in 1997 and increases
					 up to a maximum of 80% in 2006. IRC Sec. 162(l). The percentages are as
					 follows:
1997......................
40%
2004
60%
1998 through 2002 .....
45%
2005
70%
2003 ...........
50%
2006 or thereafter .......
80%