The AICPA testified at a hearing May 18 to voice its opposition to a model statute drafted by the Multistate Tax Commission (MTC) that would authorize states to require nonresident companies to report sales transactions with in-state consumers in an effort to increase use tax compliance. The MTC is an
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TOPICS / TAX
Business tax
New “Killer B” Regulations Issued
The IRS has issued new final regulations on cross-border reverse triangular reorganizations, popularly known as “Killer B” transactions (TD 9526). The regulations finalize with some modifications proposed regulations that were issued in 2008 (REG-136020-07). Killer B transactions are designed to allow corporations to repatriate foreign subsidiary earnings tax-free, in violation
IRS Responds to AICPA Accounting Software Examination Letter
In a March 29 letter from Patricia Thompson, chair of the AICPA’s Tax Executive Committee, to Chris Wagner, commissioner of the IRS’ Small Business/Self-Employed Division, the AICPA communicated its concerns regarding the Service’s program to request the accounting software files of certain small business taxpayers under examination; the letter cites
Wagering Losses Not Deductible, Gambling Business Expenses Deductible
The Tax Court held that a taxpayer engaged in the trade or business of gambling could not deduct wagering losses in excess of his wagering gains but could deduct ordinary, nonwagering business expenses incurred while pursuing his gambling business. Section 165(d) limits losses from wagering transactions to the amount of
“Too Good to Be True” Arrangement Lacks Business Purpose
The Tax Court disregarded for tax purposes a multilevel-entity structure for a taxpayer’s psychiatry practice, holding the taxpayer liable for unpaid self-employment taxes on the practice’s net income. Tony Robucci had conducted his practice in Colorado as a sole proprietorship until 2001, when, at his request to minimize his
Circuit Split Deepens on Six-Year Period for Basis Overstatements
The Federal Circuit Court of Appeals joined the Seventh Circuit in holding that an overstatement of basis can be construed as an omission from gross income for purposes of the extended six-year limitation period for assessment of tax, while the Fourth and Fifth circuits reached the opposite conclusion, ruling in
IRS Allows Deduction for Payments for Preferred Stock Used to Settle Bank’s Lawsuits
In a private letter ruling released on Friday, the IRS’ Office of Chief Counsel allowed a private bank catering to high-wealth individuals to deduct as ordinary and necessary trade or business expenses the payments it made to settle lawsuits arising from criminally fraudulent activities by one of the bank’s fund
AICPA Recommends Ways IRS Could Reduce Schedule M-3 Burdens
In a letter to Heather Maloy, commissioner of the IRS’ Large Business and International Division, Patricia Thompson, chair of the AICPA’s Tax Executive Committee, encouraged the IRS to collaborate with external stakeholders in revising Schedule M-3, Net Income (Loss) Reconciliation, and suggested some revisions to reduce taxpayers’ compliance burdens. The
IRS Issues Proposed Regulations on Controlled Group Deferred Losses
On Wednesday, the IRS issued proposed regulations on the time for taking into account deferred losses on the sale or exchange of property between members of a controlled group (REG-118761-09). Generally, for any loss on the sale or exchange of property between certain related persons, no deduction is allowed, except
AICPA’s Call for AMT Repeal, Simplification Strikes Chord With Lawmakers
Annette Nellen, chair of the AICPA Individual Income Taxation Technical Resource Panel, pleased some members of Congress when she repeated the AICPA’s support for repeal of the alternative minimum tax (AMT) in testimony before the House Ways and Means Committee on April 13. “That’s music to my ears,” veteran congressman
President Signs Repeal of Expanded 1099 Requirements
On Thursday, President Barack Obama signed into law the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (HR 4; 1099 Act), which repeals both the expanded Form 1099 information reporting requirements mandated by last year’s health care legislation and also the 1099 reporting requirements imposed
IRS Extends Guidance on Trustee Fees
The IRS announced that it is extending interim guidance on the treatment of investment advisory fees and other costs subject to the 2% floor under IRC § 67(a) (Notice 2011-37). Under the notice, nongrantor trusts and estates will not be required to unbundle their fiduciary fees to determine what portion
Discharge of Indebtedness Rules Clarified for Grantor Trusts and Disregarded Entities
On Tuesday, the IRS issued proposed regulations (REG-154159-09) that provide rules regarding who is the “taxpayer” for purposes of applying the IRC § 108 discharge of indebtedness rules to a grantor trust or disregarded entity. IRC §§ 108(a)(1)(A) and (B) exclude discharged debt from a taxpayer’s income if the discharge
IRS Prepared to Process Returns If Government Shuts Down
IRS Commissioner Doug Shulman addressed the National Press Club on Wednesday, and after his prepared remarks he answered questions regarding the IRS’ preparations for a possible shutdown of the federal government, which could happen Friday. The first question asked what people can expect if the government shuts down. Shulman said
Transfer of Rehab Credit Validated
The Tax Court held that a partnership created to transfer a historic rehabilitation credit to a taxable corporation was valid and that the transfer and the corporation’s participation in the partnership had objective economic substance. The state of New Jersey in 1992 authorized the New Jersey Sports and Exposition Authority
Guidance Issued on 100% Bonus Depreciation Rules
The IRS issued guidance on how taxpayers can deduct 100% of the cost of qualified business property placed in service in 2011 under rules enacted last year (Revenue Procedure 2011-26). The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (PL 111-312) allows taxpayers to deduct 100% of
Tax Filing Season Resources—Tax Year 2010
This is the one-stop shop for all the updates you need to know for this year’s tax filing season. Find resources from the Journal of Accountancy, plus tax return checklists and tax savings tips from the AICPA, categorized by tax topic. INDIVIDUAL TAX Free File Program Expanded to Include Returns Filed
Uncertain Tax Position FAQs Posted
The IRS has posted a series of questions and answers (FAQs) about the new requirement for large corporations to report their uncertain tax positions. The seven FAQs address both reporting requirements for Schedule UTP, Uncertain Tax Position Statement, and the IRS’ policy of restraint. For the 2010 tax year, corporations
Pass-Throughs Dominate Tax Reform Conversation
While lawmakers and the Obama administration both support simplifying an Internal Revenue Code described by one witness as “grotesque in its complexity,” lines in the sand are quickly being drawn on how it should be done. These lines were evident in a March 3 House Ways and Means Select Revenues
House Passes 1099 Repeal
On Thursday, the House of Representatives passed the Small Business Paperwork Mandate Elimination Act of 2011 (HR 4) by a 314–112 vote. The bill would repeal the expanded Form 1099 information reporting requirements mandated by last year’s health care legislation. It would also repeal the new 1099 reporting requirements imposed
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