First, that part of a tax allowance is not included in gross income if the taxable person pays more federal income tax than he or she should have been on the sole basis of the actions of a third party; This is due to the fact that payment is reserved for the taxable person only in the position in which he could have engaged without the actions of the third party. The general rule for tax payments is that payments of a taxpayer`s tax debt, directly or indirectly, as income to the beneficiary according to Treas. Reg. Section 1.61-14(a) are taxable. There are, however, two exceptions. Sometimes one person or company will compensate another for the payment of the tax debt of the first. An agreement for this agreement is called a tax compensation agreement. For example, Company #1 Company compensates #2 for taxes collected by Company #2. Companies #1 do so because the two companies have joint business activities (for example. B one company can sell the products of the other).
1.61-14 (a). See also Ltr. Rul 7749029. . . .