IRS allows deduction for severance payments after Sec. 338 election. (Internal Revenue Code section 338): An article from: The Tax Adviser

This digital document is an article from The Tax Adviser, published by American Institute of CPA's on October 1, 1997. The length of the article is 567 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available in your Amazon.com Digital Locker immediately after purchase. You can view it with any web browser.

From the supplier: The IRS has indicated in Letter Ruling 9721002 that a taxable capitalizable event does not change the character of deductible expenses occurring proximate in time but after the event. Where the purchasing company has contractual obligations to pay severance pay to its new employees whom it terminates, the severance pay cannot be capitalized or included in the adjusted grossed-up basis of the acquired assets under IRC section 338. Instead, the new liabilities are be deducted currently.

Citation Details
Title: IRS allows deduction for severance payments after Sec. 338 election. (Internal Revenue Code section 338)
Author: Howard Brodman
Publication:The Tax Adviser (Magazine/Journal)
Date: October 1, 1997
Publisher: American Institute of CPA's
Volume: 28 Issue: n10 Page: 618(1)

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