The U.S. Supreme Court on Thursday declared the mandate in Sec. 5000A, requiring U.S. citizens and legal residents to maintain minimum essential health coverage, to be a permissible exercise of Congress’s taxing powers under the Constitution (National Federation of Independent Business v. Sebelius, Sup. Ct. Dkt. No. 11-393 (U.S. 6/28/12)).
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TOPICS / TAX
Business tax
Sample text for Sec. 83(b) election released by IRS
On Tuesday, the IRS released a ruling under Sec. 83(b), the election to include property received in connection with the performance of services in income in the year the property is received even if there is a substantial risk that the property will later be forfeited (Rev. Rul. 2012-29). The
Guidance clarifies when dividends are qualified performance-based compensation
In Rev. Rul. 2012-19, the IRS ruled on whether dividends and dividend equivalents paid on restricted stock were qualified performance-based compensation excluded from the applicable employee remuneration to which the $1 million limitation on the deduction for compensation by publicly held corporations applies. The revenue ruling addressed two situations involving
PTPs can use safe harbor to determine COD income that is “qualifying income”
In Rev. Proc. 2012-28, the IRS issued a safe harbor for publicly traded partnerships (PTPs) that want to avoid corporate taxation by qualifying under Sec. 7704(c) as partnerships with 90% or more of their income from qualifying sources. Under the safe harbor, the IRS will not challenge a PTP’s determination
Proposed regs. on basis for S corporation shareholders from bona fide indebtedness
On Monday, the IRS issued proposed regulations on the contentious subject of when an S corporation shareholder can increase his or her basis in the S corporation’s stock, based on loans to the corporation, and thereby increase the amount of the corporation’s losses and deductions the shareholder can recognize (REG-134042-07).
IRS issues regulations on “expatriated entities” under Sec. 7874
On Thursday, the IRS issued temporary regulations governing whether a foreign corporation has “substantial business activities” in the foreign country in which, or under the law of which, the corporation is created or organized, compared to the total business activities of the expanded affiliated group (T.D. 9592). At the same
Pioneer specialists
CPAs have been the leaders in offering clients tax preparation, planning, and advice since the early 20th century, when landmark legislation instituted taxes on corporate and individual incomes. This article traces the history and development of the CPA tax practitioner over the past century.
Prop. regs. clarify meaning of “substantial risk of forfeiture” under Sec. 83
The IRS on Tuesday issued proposed regulations that would clarify when a substantial risk of forfeiture exists on the transfer of stock to an employee that is treated as compensation under Sec. 83 (REG-141075-09). When a substantial risk of forfeiture exists, the employee does not yet have to recognize the
Illinois “click-through nexus” law held unconstitutional
On Monday, the Circuit Court for Cook County in Illinois issued an eagerly awaited order explaining its bench decision on April 25, which declared Illinois’s “click-through nexus” law unconstitutional (Performance Marketing Ass’n v. Hamer, No. 2011 CH 26333 (Ill. Cir. Ct. Cook Cty. 5/7/12)). The order found that the law
Basis reporting rules for debt instruments and options postponed for one year
In Notice 2012-34, the IRS postponed the basis and gain reporting rules under Secs. 6045(g), 6045(h), 6045A, and 6045B for debt instruments and options, so they will apply to those acquired on or after Jan. 1, 2014. The postponement was in response to the many comments the IRS received on
Partnerships can issue Schedules K-1 electronically
The IRS issued Rev. Proc. 2012-17, which contains rules partnerships must follow to supply Schedules K-1, Partner’s Share of Income, Deductions, Credits, etc., electronically. The guidance was effective Feb. 13. A person required to furnish Schedules K-1 to partners (furnisher) can do so in an electronic format, provided the recipient
Tax Court respects stock sale, denies transferee liability
In Norma L. Slone, the petitioners prevailed when the Tax Court refused to apply the substance-over-form doctrine to recast a sale of a company’s stock following an asset sale as a liquidating distribution. The court further found that the taxpayers were not liable as transferees under Sec. 6901 for taxes
Hire a hero, enjoy the benefits
Most provisions of the work opportunity tax credit (WOTC) expired on Jan. 1, 2012, but the program was modified and partially extended by the VOW to Hire Heroes Act of 2011, P.L. 112-56, to cover military veteran hires. Under Sec. 51, as amended, employers may be eligible for a credit
Eighth Circuit agrees that CPA was underpaid
The Eighth Circuit Court of Appeals held that a portion of the dividends paid by an S corporation to its CPA sole shareholder/employee was compensation. In upholding the decision by the District Court of Southern Iowa, the Eighth Circuit agreed that the salary to the sole shareholder/employee used to compute
Reasonable salary for S corporation owners
Besides its single level of taxation as a passthrough entity, an advantage of an S corporation over a C corporation is that a shareholder’s share of the corporation’s net income is not considered self-employment earnings and therefore is not subject to self-employment tax (13.3% in 2011 and 2012). This treatment
Congressional subcommittee hearing centers on expiring tax provisions
The term “winners and losers” sprang up several times on Thursday in a congressional subcommittee hearing on expired or soon-to-expire tax provisions. Congress should not pick them, witnesses contended. However, they also lined up to tell the House Ways and Means Select Revenue Subcommittee why a particular tax credit or
Supreme Court affirms Home Concrete, says 6-year limitation period does not apply to overstated basis
On Wednesday, the U.S. Supreme Court affirmed the Fourth Circuit’s decision in Home Concrete & Supply, LLC, which had ruled that the extended six-year statute of limitation under Sec. 6501(e)(1)(A), which applies when a taxpayer “omits from gross income an amount properly includible” in excess of 25% of gross income
Proposed regs. would require E&P to be allocated to acquiring corporations in corporate reorganizations
The IRS has proposed amending existing regulations under Sec. 312 (effect on earnings and profits (E&P) of corporate distributions) and Sec. 381 (carryovers of tax attributes in certain corporate acquisitions) to clarify that in certain corporate reorganizations, the “acquiring corporation” succeeds to the full E&P account of the transferor corporation
Colorado’s “Amazon” law requiring out-of-state retailers to report sales held to be unconstitutional
The U.S. District Court for the District of Colorado has held that the Colorado law requiring out-of state retailers to report information about customers’ purchases to each customer and to the Colorado Department of Revenue (DOR) violated the Commerce Clause of the United States Constitution (Direct Marketing Ass’n v. Huber,
IRS wins second appeal of TIFD III-E
The Second Circuit Court of Appeals for a second time reversed the judgment of a district court against the IRS in the long-running Castle Harbour/TIFD III-E case involving the characterization of two foreign banks’ interests in a partnership. The Second Circuit again held that the foreign banks’ interests in the
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Preparing clients for new provisions next tax season
As the 2025 filing season approaches, H.R. 1 introduces significant tax reforms that CPAs must be prepared to navigate. These legislative changes represent some of the most comprehensive tax updates in recent years, affecting both individual and corporate taxpayers. This report provides in-depth analysis and guidance on H.R. 1.
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