GATT Bill Effects Tax Changes

Journal of Accountancy, February 1995 | Go to article overview

GATT Bill Effects Tax Changes


The enactment of the General Agreement on Tariffs and Trade on December 8, 1994, included a number of tax changes to offset the $11.5 billion cost of the reduction in tariffs. Among the changes are provisions to speed up some tax payments and alterations in pension rules and tax shelter penalty provisions intended to tighten standards.

The U.S. Treasury is assessing the tax changes and developing guidance to aid taxpayers in complying with them. Although some are administrative and require little regulation, more guidance may be needed to implement proposals such as a change in the treatment of partnership distributions.

Subpart F income. The largest single revenue raiser in the GATT treaty alters the estimated tax treatment for U.S. corporations in Puerto Rico and other U.S. possessions. An estimated $1.4 billion is expected to be raised over five years by requiring that estimated tax payments be made throughout the year for subpart F inclusions and certain amounts includable under Internal Revenue Code section 936. In response to criticisms by multinational corporations that it is too difficult to estimate controlled foreign corporations' (CFCs') income during a given year, the GATT treaty will allow U.S. corporations with controlling interests in CFCs to meet a safe harbor by electing to include pro rata in income 115% of the prior year's subpart F income.

Lower interest rate on overpayments. Another revenue source expected to raise an estimated $799 million is the lower interest rate the IRS will pay on any part of corporate income tax overpayments that exceed $10,000; the rate will drop to the federal short-term rate plus one-half percentage point. The rate payable on large corporate underpayments is set at five percentage points above the federal short-term rate and does not change under GATT. The new rate applies for interest rate periods after December 31, 1994.

Partnerships distributions. Distributions by certain partnerships of marketable securities made after December 8, 1994, must be treated as a distribution of cash for measuring gain. Exempted are distributions before January 1, 1995, by partnerships that held the securities on July 27, 1994.

Understatement penalty for corporate tax shelters. An estimated $95 million will be raised by a penalty imposed for any corporate tax shelter item unless the corporatoin qualifies for the general waiver for reasonable cause under IRC section 6664. …

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

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.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

GATT Bill Effects Tax Changes
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
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?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    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.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.