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Related Parties For Federal Income Tax Purposes, Guido Van Der Hoeven
Related Parties For Federal Income Tax Purposes, Guido Van Der Hoeven
Rural Tax Education
“Relationships! We all got 'em, we all want 'em. What do we do with 'em?” – Jimmy Buffett
The lyrics of the song “Fruitcakes,” sung by Jimmy Buffett, ask what to do with relationships. Taxpayers need to be aware of potential income tax consequences when dealing with related parties in business transactions. Specifically, the taxpayer must identify the potentially related party and the tax issue that may apply relative to both the taxpayer and the potentially related party. To further muddy the waters regarding this issue, related parties may be defined differently for different income tax transactions. Five common tax …