Sulphur Springs News-Telegram (Sulphur Springs, Tex.), Vol. 113, No. 32, Ed. 1 Thursday, February 7, 1991 Page: 4 of 20
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4—THE NEWS-TELEGRAM, Sulphur Spring*, T*xa*. Thursday, F*bru*ry 7,1M1
Business
Tax shelters have
to earn their keep
By George W Smith
Only a few years ago. taxpayers,
with few exceptions, could use deduc
tions from an activity to offset in-
come from any other activity Simi-
larly, most tax credits could be used
to offset tax on income Often this
was accomplished by the taxpayer's
investing in tax shelters
Congress determined that exten-
sive tax shelter activity contributed
to public concerns that the tax system
was unfair In response to those con-
cerns, Congress enacted special rules
for tax shelters
Investments in passive activities
(formerly called tax shelters) that
taxpayers acquired before Oct 23,
1986. are eligible for a gradual phase-
in of the passive activity loss and
credit limitations Because of the
phase-in provision, a certain percent-
age of these passive activity losses
add credits will be allowed to offset
non-passive income (wages, salaries,
commissions, etc) until the phase-in
of the limitations is complete in 1991
The percentage of loss allowed for
each year in the pha^e-in period is as
follows
Year deductible Percentage
1987 65 percent
1988 40 percent
1989 20 percent
1990 10 percent
1991 0 percent
Losses and credits from passive ac-.
tivities. such as investments and low-
income housing or increasing re-
search credits, acquired after Oct. 22,
1986, can only offset income and taxes
generated by income in passive activ-
ities. Passive activity losses and cred-
its not allowed in the tax year may be
carried forward and added to next
year's income or loss
Rental income and losses. Rental
income is accounted for on Schedule
E. Supplemental Income and Loss, of
Form 1040 The income may be from
an apartment, mobile home, condo-*
minium, vacation home, commercial
building or from a rented portion of
your own residence
Brookshires announces
contest representatives
Brookshire’s Food Store in Sul-
phur Springs has announced its lo-
cal entrants in the company’s an-
nual Aggressive Hospitality,
Checker of the Year and Bag-off
contests.
Teresa Foreman and L.B. Mor-
gan, local Brookshire’s employees,
will represent the store’ in the Ag-
gressive Hospitality contest. They
will compete against more than 180
employees from Texas, Louisiana
and Arkansas.
From the store winners, a Mr.
Aggressive Hospitality and a Ms.
Aggressive Hospitality will be
sdlectedl from the company’s nine
retail districts. Overall winners will
then be chosen from among the dis-
trict wiriners. Overall winners will
each receive a trip for two to
Hawaii. District winners will
receive a 25-inch color television
while store Representatives will
receive customized Seiko watches.
Janice Johnson, a checker at the
local store, will be in the Checker
of the Year contcsL Johnson will
compete against more than 90
checkers from Texas, Louisiana and
Arkansas. Nine district winners
will be selected from the store win-
ners and then an overall winner will
be selected.
Checkers arc judged in such
areas as courtesy, accuracy,
friendliness, adherence to policies
and appearance.
The grand prize for overall win-
ners will be a trip for two to Nuevo
Vallarta, Mexico, while district
winners will receive a diamond and
garnet necklace and store represen-
tatives will receive a Jordache
SupcrCarrier Tote Bag.
Michael Crabtree will be the
cal store’s representative
Bag-Off.contest. He will comi!
against 80 courtesy clerks from the
tri-state area. Seven district winners
will be chosen from the store
representatives and then an overall
champion will be selected.
Courtesy clerks are judged on
customer awareness, appearance,
speed, proper bagging techniques,
nearness of final product, efficient
use of bags and proper weight dis-
tribution.
The overall winner will receive a
.Magnavox stereo system while the
district winners will receive a
35mm camera package and store
representatives will receive AM-
FM headset radios.
Net Losses. It is not an uncommon
occurrence to end up with a net loss
from rental operations, particularly
in the first few years of ownership;
Often a loss occurs as a direct result
of the large interest payments on the
mortgage A net loss could also occur
in a year of frequent and costly repair
expenditures, or the major redecora-
tion of the tenant's quarters. Under
the passive loss rules, a loss from
rental activities may be limited for
the current year
Passive Losses. While the rental
property may have produced a loss,
special rules determine the extent to
which the loss may be claimed each
year. Under the passive loss limita-
tion rules, losses from passive activi-
ties generally are deductible only to
the extent of income from other pas-
sive activities This rule was original-
ly designed to limit losses only from
tax shelters, but rental activities
were also included in the rules. Rental
activities are automatically treated’
under the passive loss rules as passive
activities, so losses are limited to in-
come from passive activities.
Under this transition rule, certain
passive losses may be claimed with-
out regard to passive income.
For 1990, the percentage of losses
from pre-Oct. 23, 1986 investments
dropped to 10 percent; starting in
1991, losses are fully subject to the
passive loss limitations.
Losses currently suspended under
the passive loss rules are carried over
to subsequent years and may be
claimed in full when:
1) There is passive income to offset
the passive losses, or
2) There is a sale or other disposi-
tion of the entire interest in the
property.
Simply stated, beginning in 1991, if
there is no current passive income,
passive losses, such as rental losses,
cannot be deducted (subject to the fol-
lowing paragraph).
Tax break for rental activities —
or, all is not loss. If you actively par-
ticipated in your rental *ctivity,
825,000 of remal lenses in ettess of
rental income may be deducted if
your adjusted gross income does not
exceed $100,000. For taxpayers with
adjusted gross income over $100,000,
the $25,000 special allowance is re-
duced by one-half of the excess, so
that a loss is not allowed once adjust-
ed gross income reaches $150,000.
© IW0 NEWSPAPER ENTERPRISE ASSN
George W. Smith is the managing
partner of a certified public account-
ing firm in Michigan and a syndicated
columnist for Newspaper Enterprise
Association.
Excerpted from “Cut Your Own Taxes
and Save 1991’ (World Almanac, 1990).
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Walk-around winner
James Cox, left, congratulates Bruce Taylor on his winning second place in the Ark-La-Tex “walk-around
competition” for Nissan Motors. Taylor won the local round in December when Taylor’s local dealership,
Price Ford-Lincoln-Mercury-Nissan, was visited by a “shopper” who asked him 18 questions about Nissan
vehicles. Taylor answered 16 correctly to win $200 in local competition.
—SUIT photo by Larry Barr
Quality award
The Sulphur Springs Ocean Spray plant won the quality award for fiscal 1990 after taking top honors in
both the third and fourth quarters in quality competition. Taking part in presentation ceremonies at the
plant were from the left, Tom Wagner, vice-president of manufacturing; Jack Llewellyn, president and
C.E.O. of Ocean Spray Cranberries Inc.; Ray Smith, Sulphur Springs employee; Bob Keeper, director of
quality control; Craig Miller, Sulphur Springs plant manager; and Milt Algood, quality control in Sulphur
Springs.
—Staff photo by Larry Barr
L
Employee honored Double winner
_ _ . ■ Marcus Kendricks, left, is congratulated by Theresa Collins, personnel manager for Grocery Supply Com-
Theresa Collins, left, personnel manager for Grocery Supply Company, congratulates Danny Mark Pope on pany, on being named as the 1990 Driver of the Year. Kendricks was also selected as the company’s
being named Grocery Supply’s Employee of the Month for December. Employee of the Month for January.
Employee of the Month for January.
—Staff photo by Larry Barr —Staff photo by Larry Barr
ENSERCH
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Keys, Clarke. Sulphur Springs News-Telegram (Sulphur Springs, Tex.), Vol. 113, No. 32, Ed. 1 Thursday, February 7, 1991, newspaper, February 7, 1991; Sulphur Springs, Texas. (https://texashistory.unt.edu/ark:/67531/metapth824116/m1/4/: accessed April 26, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting Hopkins County Genealogical Society.