Bankruptcy and reorganization

Mortgage Interest and Bankruptcy

Individual taxpayers often engage in more than one business venture. However, when a business also involves personal pleasure or recreation, the IRS may take notice. If the operation generates large losses that offset income from other sources, a taxpayer should consider all facts and circumstances before deciding to deduct the

Self-Rental Income Considered Active

IRC section 469 states that a taxpayer can use losses from a passive activity only to offset passive activity income. In other words, passive losses cannot shelter active income such as salaries, commissions, wages or portfolio income such as interest, dividend or annuity income. Under IRC sections 469(c)(2) and (c)(4),

Automatic Consent to Change Accounting Method Available

Under IRC section 446, taxpayers generally can choose any method of accounting to compute taxable income as long as that method clearly reflects income. However, many small business taxpayers who wish to use the cash method are prevented from doing so because of Treasury regulations section 1.446-1(c)(2)(i), which states a

Counseling Clients on Credit

EXECUTIVE SUMMARY WITH CONSUMER DEBT AT AN ALL-TIME HIGH, CPAs need to help clients focus more attention on debt management. The Federal Reserve says Americans owed $1.33 trillion, excluding mortgage debt, at the beginning of 1999. MOST LENDERS AND CREDIT COUNSELORS RECOMMEND that families limit debt payments to 36% of

When Your Customer Goes Belly-Up

EXECUTIVE SUMMARY BANKRUPTCY LAW HAS SOME UNPREDICTABLE consequences. If a customer has physical possession of its supplier's property, ownership may be debated. Conversely, a supplier may reclaim some goods it has already shipped. If a supplier files a formal proof of claim, it may waive other rights. THE COURT MAY

Tax Brief. Business/Industry: New pension plan self-correction programs.

BUSINESS/INDUSTRY New Pension Plan Self-Correction Programs The IRS consolidated four correction programs for tax qualified plans into a single Employee Plans Compliance Resolution System (EPCRS). Self-correction programs allow employers that sponsor tax-qualified pension plans to correct failures or defects that otherwise might threaten a plan's qualification. Revenue procedure 98-12 provides

Who Got Sued?

EXECUTIVE SUMMARY AUDITOR LITIGATION RESEARCH SHOWS that auditors encounter a significant level of weak claims and engage in costly activities to dispose of these weak claims. DEFENDING AGAINST WEAK LAWSUITS is a difficult, time-consuming and financially burdensome experience. The average weak claim costs $3.7 million to defend against and 3.7

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How tax reform — and Excel — are changing the CPA Exam

Mike Decker, the vice president of examinations at the AICPA, discusses changes being made to the exam as a result of tax reform — and about how Excel will now be available for use on the test.