Small businesses have enough to worry about without having to wade through the intricacies of hundreds of pages of the health care legislation enacted in 2010: the Patient Protection and Affordable Care Act, P.L. 111-148, as amended by the Health Care and Education Reconciliation Act P.L. 111-152, referred to here
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TOPICS / TAX
Business tax
Tax season: Cued up and ready?
The tax organizer files are starting to come in, the return preparation software is updated, and the staff has cleared its calendar for the long days and nights ahead. That’s right, it’s tax preparation season, and for 2012 returns, CPAs have much to consider that’s new. They may also have
Final regs. remove de minimis partner rule
The IRS issued final regulations that remove the de minimis partner rule from Regs. Sec. 1.704-1(b)(2)(iii)(e) (T.D. 9607). This means that when determining whether special allocations have substantial economic effect, partnerships will no longer be permitted to ignore the tax attributes of de minimis partners. The IRS received many suggestions
Sec. 304 anti-abuse, anti-avoidance rules finalized
In T.D. 9606, the IRS finalized regulations that apply to transactions subject to Sec. 304 but that are structured with the principal purpose of avoiding the statute’s application. The regulations target transactions designed to avoid Sec. 304 treatment of a corporation that controls an acquiring corporation or a deemed acquiring
Voluntary Classification Settlement Program expanded, liberalized
On Tuesday, the IRS made significant changes to its Voluntary Classification Settlement Program (VCSP). In Announcement 2012-46, in effect until June 30, 2013, the IRS is temporarily permitting employers who have not filed Forms 1099 for their workers to participate in the program by paying a larger amount of past
Rules distinguishing tips from service charges delayed until 2014
In Announcement 2012-50, the IRS announced that businesses have additional time to make the changes needed to comply with the proper treatment of tips and service charges under Q&A-1 of Rev. Rul. 2012-18. Announcement 2012-25 previously delayed implementation to amounts paid on or after Jan. 1, 2013, and requested comments
Reportable transaction rules updated for certain losses
Rev. Proc. 2013-11, issued on Thursday, provides that certain losses are not taken into account in determining whether a transaction is a reportable transaction. Regs. Sec. 1.6011-4 requires taxpayers that participate in reportable transactions to disclose those transactions. One category of reportable transaction is a loss transaction, which is defined
Guidance issued on additional Medicare tax
The IRS issued proposed regulations concerning the 0.9% Medicare surtax, which takes effect next year (REG-130074-11). The proposed regulations contain guidance for employers and individuals on the implementation of the tax, including the requirement to file a return reporting the tax, the process for employers to make adjustments of underpayments
Year-end tax planning: Preparing for the tax cliff
Rarely has there been such a major difference between the laws in effect in one year and the next. The maximum income tax rates next year could be as high as 43.4% on ordinary income (44.6% if the potential impact of reinstated limitations on itemized deductions is taken into account)
No extended assessment period for innocent S shareholder
The Office of Chief Counsel (OCC) advised in Chief Counsel Advice (CCA) 201238026 that the assessment period is not extended for the personal tax liability of a shareholder who did not take part in the fraud reflected on his S corporation’s Form 1120S, U.S. Income Tax Return for an S
Online travel companies not liable for occupancy taxes
The Sixth Circuit affirmed a district court’s judgment in favor of defendant online travel companies (OTCs) for alleged violations of local tax laws. The district court had held that the OTCs were not liable for collecting occupancy taxes. It is common practice for OTCs such as Priceline.com, Expedia, and Travelocity
Income from partnership is self-employment income where taxpayer chose not to be a partner
The Eleventh Circuit Court of Appeals held that payments a taxpayer received from a nursing home business were taxable self-employment income despite the taxpayer’s convoluted attempts to characterize them as partnership distributions (Plotkin, No. 12-10620 (11th Cir. 11/27/12), aff’g T.C. Memo. 2011-260). The taxpayer operated nursing homes through various partnerships
How can the nonpayment testing period for COD income be improved?
In Notice 2012-65, the IRS asked for public comments on whether it should amend existing Regs. Secs. 1.6050P-1(b)(2)(i)(H) and (iv), which require applicable financial entities to issue Forms 1099-C reporting cancellation of debt (COD) income when a 36-month nonpayment testing period has expired. Under Sec. 6050P and its regulations, COD
IRS extends deadlines, provides relief for Hurricane Sandy victims
Late on Friday, the IRS announced various tax relief measures for individuals and businesses affected by Hurricane Sandy in Connecticut, New Jersey, and New York (e-News for Tax Professionals No. 2012-44). The relief applies to taxpayers in areas in those states declared a disaster area by the Federal Emergency Management
Schedule UTP: The early returns are in
The first two years of corporate income tax returns requiring Form 1120, Schedule UTP, Uncertain Tax Position Statement, have been filed, and the IRS has described first-year returns and provided guidance for the growing number of business taxpayers that will be required to file it. Schedule UTP was a required
Facing the tax cliff
You can’t pick up a newspaper or go online this fall without seeing stories about the coming “tax cliff” or “taxmageddon”—the time at the end of this year when the current tax rates for income, capital gains, gifts, and estates are scheduled to expire. Mostly overlooked by the news media
Corporation cannot deduct California business privilege tax in year paid
Banking corporation Wells Fargo, an accrual-basis taxpayer, could not deduct the California business privilege tax it paid in one year (year 1) for the privilege of doing business the next year (year 2), even though California law had since 1972 treated the tax as being incurred in year 1, a
Proposed amendments would change apportionment rules
The Multistate Tax Commission is considering significant changes to the rules that govern how multistate businesses are taxed. The goal of the proposed amendments is to modernize the Multistate Tax Compact so it conforms to shifting tax policy preferences and changes in the world economy. All but three states (Delaware,
IRS wins again on appeal of rehabilitation credit
In the IRS’s second successful appeal of historic rehabilitation credits for private investors in public projects, the Third Circuit reversed and remanded the Tax Court’s decision in Historic Boardwalk Hall LLC. The IRS victory follows earlier success in Virginia Historic Tax Credit Fund, 639 F.3d 129 (4th Cir. 2011). Prior
Fiscal worries to persist regardless of who wins election
The “fiscal cliff” and long-term government deficit issues are weighing heavily on the minds of finance professionals, and they do not expect business conditions to improve regardless of the results of the Nov. 6 presidential election. Three-fourths of 949 executives who responded to a survey at the annual conference of
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