adp@hp-sdd.UUCP (Tony Parkhurst) (08/23/86)
What's with these "Transitional tax breaks" (I think that is what
the congrescritters are calling loopholes)? I saw on a news show
(therefore its true, right?) about these tax breaks that are being put
into our "Tax Reform". Whose kidding whom?!?
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* Tony Parkhurst -- {hplabs|sdcsvax|ncr-sd|hpfcla|ihnp4}!hp-sdd!adp *
* OR hp-sdd!adp@nosc.arpa *
*******************************************************************************dave@lsuc.UUCP (David Sherman) (08/28/86)
In article <408@hp-sdd.UUCP> adp@hp-sdd.UUCP (Tony Parkhurst) writes: > > What's with these "Transitional tax breaks" (I think that is what >the congrescritters are calling loopholes)? I'm not familiar with the provisions of U.S. tax law which the above refers to, but speaking from my knowledge of Canadian tax law I'd like to point out that transitional provisions are often very important, reasonable and necessary. Of course, it depends on what provisions have been changed and what the changes are. In general, however, where details of the tax system change radically, people who have made investment or planning decisions based on the old law can be adversely affected. Transitional provisions attempt to soothe the blow, sometimes by giving taxpayers a period of time during which to adjust. The term "loophole" is probably inappropriate. An example which is still with us: capital gains were not taxed in Canada before 1972. Transitional provisions in the Income Tax Application Rules therefore provide (paraphrasing and simplifying) that the cost base for property owned before 1972 and sold now will be bumped up to the December 31, 1971 value (assuming original cost < 31/12/71 value < current value), effectively retaining the tax-free status of the pre-1972 capital gain. (The details are a lot more complicated, of course.) Dave Sherman (author, Basic Income Tax CAI course) The Law Society of Upper Canada Toronto -- { ihnp4!utzoo seismo!mnetor utzoo hcr decvax!utcsri } !lsuc!dave