A district court held that a partnership’s reported capital loss stemming from nonperforming loans lacked economic substance and denied the claimed tax benefits. D. Andrew Beal owned a bank that was in the business of acquiring nonproducing loans (NPLs) at extreme discounts. With an associate and China Cinda Asset Management
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TOPICS / PERSONAL FINANCIAL PLANNING
Tax planning
Tax Consequences of Mortgage Discharge
In the current real estate climate of decreased property values and excess inventories, many rental property owners are facing reduced cash flows due to vacancies. At the same time, the fair market value of their property may be close to or even less than the amount owed on the mortgage
“Unforeseen Circumstances” Exclusion From Gain on Sale of Home
Despite the recent downturn in the American housing market, one of the highest-value assets owned by most taxpayers remains their home. While many taxpayers have seen the value of their home decline, those in locales where home values have remained relatively strong—such as parts of some Southern and Midwestern states—could
Coalition Urges Congress to Ban Tax Strategy Patents
A coalition of various organizations, including the AICPA, has written to members of Congress to ask for a ban on the patenting of tax strategies. The letter says tax strategy patents “pose a significant threat to taxpayers and their advisers,” and urges Congress to prohibit them. In the past few
IRS Releases Annual Inflation Adjustments, Many Unchanged for 2010
The IRS has released its annual revenue procedure updating the tax bracket amounts and making inflation adjustments for various credits and other tax items (Revenue Procedure 2009-50). Because inflation has been minimal, many of the numbers are unchanged from 2009 or have only been adjusted slightly. The Social Security Administration
ARRA Changes 2009 Estimated Tax Rules
For tax years beginning in 2009 only, the American Recovery and Reinvestment Act of 2009 (ARRA) reduced the amount of estimated tax that individual taxpayers with income from small businesses must pay. As 2009 draws to a close, practitioners should make sure their clients are aware of and taking advantage
The Generation-Skipping Transfer Tax: A Quick Guide
Sooner or later, every estate planner comes face to face with the generation-skipping transfer tax (GSTT). Many practitioners do not feel up to the challenge because this particular tax has a reputation for being as treacherous as the sea. But after you boil down all the complications, you’re left with
Recovery Act Reminders for 2009
Given the breadth and variety of tax relief provisions in the American Recovery and Reinvestment Act (ARRA) of 2009, PL 111-5, one or more could affect your clients’ individual returns for the 2009 tax year. Many are intended to provide relief for taxpayers in financial distress, stimulate consumer spending or
Charitable Remainder Trust Update
Although many investment assets have lost value in the past year, individuals coming to CPAs for estate planning advice often hold highly appreciated assets, and many want to make significant charitable gifts. For that reason, charitable remainder trusts remain a popular method of reducing assets subject to estate tax. They
Broken Home: Divorce and the Principal Residence
When Bill and Jen decided to divorce, they never expected their personal residence to become a major problem. Initially, Jen thought she wanted to stay in the house. She was emotionally attached to the home, and she thought remaining in it would help minimize the impact of the divorce on
Trusts as S Corporation Shareholders
Sometimes a C corporation considering S corporation status has a trust as a shareholder. If the trust was not originally drafted with the intent of being an eligible S corporation shareholder but continues to hold the stock, the corporation could be prevented from making the S election. Nevertheless, it may
Harvesting Tax Benefits of Green Building Incentives
In the past two years, several federal tax incentives have been extended and enhanced for designing and constructing energy-efficient buildings, both residential and commercial. Some of these measures should be equally attractive for businesses and individuals looking to remodel existing homes and workplaces to save on energy and, as a
IRS Issues Proposed Regs on Claiming Reduced Research Credit
The IRS released proposed regulations on Wednesday that would simplify the procedures taxpayers must follow to claim the reduced research credit under IRC § 280C(c)(3). Taxpayers who claim a credit under section 41 for increasing research expenses must reduce their research expense deduction under section 174 by the amount of
Due Diligence on a QI
As the financial press focuses on Bernard Madoff and other Ponzi schemes, recent investor losses approaching $1 billion by the failure of qualified intermediaries have gone relatively unnoticed. Qualified intermediaries, or QIs, facilitate tax-deferred exchanges of like-kind property under section 1031 of the Internal Revenue Code. Some QIs have made
Deducting Losses for Defrauded Investors
The financial collapse of high-profile investment institutions has generated billions of dollars of losses. A recent report notes that federal and state prosecutors “are preparing for a surge of prosecutions of financial fraud.”1 A question may arise as to whether these losses for tax purposes are to be treated as
Supreme Court Grants Cert. in Bilski Case
On Monday, the U.S. Supreme Court granted a writ of certiorari in the case of Bilski v. Doll, Sup. Ct. Dkt. No. 08-964. The Court has agreed to review the Federal Circuit’s earlier decision in the case and address the question of when business methods are eligible for patent protection.
IRS Notice Provides Work Opportunity Credit Definitions
The IRS has released a notice that defines the terms “unemployed veteran” and “disconnected youth,” for purposes of the IRC § 51 work opportunity credit (Notice 2009-28). The notice also gives transition relief to employers who hire employees from those targeted groups after Dec. 31, 2008, and before July 17,
Retirement Planning Using a Client’s Tax Return
Many CPAs never follow up with clients after tax season, but CPAs can provide valuable assistance by taking some time after busy season to use the tax return as a guide to helping clients prepare for retirement. A tax return is an excellent starting point for the personal financial planning
Help for Homebuyers: A Guide to the New First-Time Homebuyer Credit
The first-time homebuyer credit, introduced by the Housing and Economic Recovery Act of 2008, PL 110-289 (the 2008 act), has been substantially modified and clarified by two developments this year: the passage of the American Recovery and Reinvestment Act of 2009, PL 111-5 (the 2009 act), and the issuance of
CPAs Head to the Hill to Discuss Reform, Economy, Taxes
CPAs wrapped up the 2009 AICPA Spring Meeting of Council in Washington on Tuesday with visits to Capitol Hill to discuss regulatory reform, the economic crisis and tax issues. Before heading into discussions with legislators, the group heard briefings from members of Congress. “We have a lot of work before
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FROM THIS MONTH'S ISSUE
How a CPA beat burnout after strokes, depression
Randy Crabtree, CPA, suffered two strokes in four days and struggled with his mental health for years before he learned to recognize, address, and prevent chronic stress. Learn from his insights on how CPAs can avoid professional burnout.
From The Tax Adviser
December 31, 2025
Practical tax advice for businesses as a result of the OBBBA
November 30, 2025
Digital asset transactions: Broker reporting, amount realized, and basis
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