Inequitable Administration: Documenting Family for Tax Purposes

By Infanti, Anthony C. | Columbia Journal of Gender and Law, Winter 2012 | Go to article overview
Save to active project

Inequitable Administration: Documenting Family for Tax Purposes

Infanti, Anthony C., Columbia Journal of Gender and Law

5. Documentation Required

Only a handful of provisions incorporate the [section] 267 or [section] 318 attribution rules by reference and actually include an identification or documentation requirement. For instance, to obtain the (now expired) first-time homebuyer credit in [section] 36, a taxpayer must file Form 5405, which requires the taxpayer to certify that her home was not purchased from a related person. (223) The taxpayer is also required by statute to attach to her return a copy of the executed settlement statement relating to the purchase as a prerequisite to obtaining the credit. (224) In addition, the installment sale rules of [section] 453 contain antiabuse rules targeted at potentially manipulative sales of property between related persons. (225) A taxpayer reporting gain on the installment method must file Form 6252, which contains a section that specifically addresses related party installment sales. The first line of this section requires the taxpayer to identify the name, address, and taxpayer identification number of the related purchaser of the property. (226) And [section] 1031(f) contains an antiabuse rule that is designed to prevent related persons from engaging in a like-kind exchange in order to shift the basis of properties prior to an anticipated sale. (227) The IRS requires taxpayers to make relatively detailed reports regarding such related party exchanges, including documenting the identity of the related party to the exchange. (228)

B. Other Attribution Rules

Though [section][section] 267 and 318 are the most commonly encountered attribution rules in the Code, there are a few provisions with their own unique attribution rules. In this section, I briefly describe these attribution rules and their attendant identification and documentation requirements (if any). I first describe generally applicable attribution rules and then address rules that apply only to married different-sex couples. The identification and documentation requirements in these attribution rules share the same haphazard quality as the family tax provisions discussed in Part II of this Article.

3. General Attribution Rules

Section 541 imposes a personal holding company tax on the undistributed, generally passive income of corporations. As originally conceived, the personal holding company tax targeted corporations that functioned as incorporated pocketbooks, incorporated talents, or incorporated yachts or country estates to provide their shareholders a means of avoiding taxation at the (then higher) graduated rates that applied to individuals. (229) To be classified as a personal holding company, a corporation must meet both an income test and an ownership test. (230) The ownership test requires that more than 50% of the value of the corporation's stock must be held by five or fewer individuals. (231) For purposes of determining whether this ownership test has been satisfied, [section] 544 requires taxpayers to take into account its own special set of constructive ownership rules. (232) Given the central importance of the ownership requirement to classification as a personal holding company, it should not be surprising that there is a section of the personal holding company tax return that requires the corporation to identify the name and address of each of the shareholders who comprise the requisite five or fewer individuals who own more than 50% of the value of its stock. (233) Interestingly, this same stock ownership requirement is incorporated by reference in the at-risk rules of [section] 465 (including a modified version of the constructive ownership rules), and it there serves the important role of setting the outside parameters of the class of closely held corporations subject to those rules. (234) Yet, there is no requirement that corporate taxpayers document which shareholders cause them to be subject to the at-risk rules. (235) The same is true of the passive activity rules, which indirectly borrow the personal holding company stock ownership requirement by incorporating by reference the definition of closely held corporation from [section] 465.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Inequitable Administration: Documenting Family for Tax Purposes


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?