The Fifth Circuit held that IRC § 6229(a) sets no deadline by which the IRS must issue an FPAA (final partnership administrative adjustment). Its interpretation of the relationship between the limitations period in sections 6501(a) and 6229(a) mirrors that of the Tax Court, the D.C. Circuit and the Federal Circuit
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TOPICS / TAX
Business tax
Highlights
FASB issued Accounting Standards Update (ASU) 2009-06 to provide additional implementation guidance on accounting for uncertainty in income taxes and to eliminate the disclosures required by FASB Accounting Standards Codification (ASC) Paragraphs 740-10-50-15(a) through (b) for nonpublic entities, including pass-through and not-for-profit entities. The new guidance involves requirements under what
Final Regulations Issued on S Corporation COD Income Exclusion and Tax Attributes
The IRS and Treasury Department issued final regulations (TD 9469) this week governing how an S corporation reduces its tax attributes under IRC § 108(b) when the S corporation has discharge of indebtedness (COD) income that is excluded from gross income under section 108(a). The regulations address situations in which
Government Loses LILO Case
In a rare setback for the IRS in its litigation against lease-in, lease-out (LILO) tax shelters, the Court of Federal Claims held that an arrangement Consolidated Edison Co. of New York (Con Ed) had with an electric utility in the Netherlands should be respected for federal tax purposes because it
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
Related Parties Must Share Employee Stock Option Costs
A panel of the U.S. Court of Appeals for the Ninth Circuit held that employee stock option (ESO) costs incurred by one company participating with related companies in a cost-sharing agreement (CSA) in the late 1990s must be allocated among the research and development (R&D) costs of all the participants
Losses From Interests in LLCs and LLPs Not Presumptively Passive
The Court of Federal Claims recently ruled that an interest in a Texas limited liability company (LLC) was not a limited partnership interest held as a limited partner for purposes of the passive loss rules and therefore losses from the interest should not be treated as presumptively passive. The Tax
Fifth Circuit Remands Research Credit Case
The U.S. Court of Appeals for the Fifth Circuit vacated a district court decision that had disallowed a taxpayer’s research tax credit. The Fifth Circuit held the lower court had not used the proper definitions of “discovering information” and “process of experimentation” when deciding whether the taxpayer had qualified research
IRS Updates Travel Expense Per Diem Rates
On Wednesday, the IRS released Revenue Procedure 2009-47, which is its annual update to the substantiation rules for business travel expenses when an employer provides a per diem reimbursement allowance. It sets the per diem rate for travel to high-cost localities and for travel to other localities in the continental
IRS Issues Regs on Six-Year Limitations on Basis Overstatement
The IRS issued proposed and temporary regulations (TD 9466, REG-108045-08) Thursday to clarify that an overstatement of basis can create a substantial omission of gross income under IRC §§ 6229(c)(2) and 6501(e) for purposes of the six-year extended period for assessments and collections of tax attributable to partnership items. In
IRS Finalizes Rules on COD Reporting
The IRS on Thursday issued final regulations regarding information returns for cancellation of indebtedness by certain entities (T.D. 9461). The regulations are designed to avoid premature reporting by certain entities that are currently required to file information returns and to reduce the number of returns required to be filed. They
IRS Provides Guidance on Late Entity Classification Elections
The IRS on Thursday released Revenue Procedure 2009-41, giving eligible entities guidance on how to obtain relief when they make a late entity classification election. The relief is available for three years and 75 days after the requested effective date of the eligible entity’s classification election. Under the check-the-box regulations,
Ninth, Federal Circuits: Basis Overstatement Not Income Omission
An overstatement of basis does not constitute a substantial omission of gross income that would extend the deficiency statute of limitations to six years, the Ninth Circuit Court of Appeals ruled, upholding the Tax Court. The decision in Bakersfield Energy Partners v. Commissioner puts the Ninth Circuit in line with
Gifting Shares of Stock in a Closely Held Business
With the current economic downturn causing dislocations and struggles for businesses of all sizes, family-owned businesses may find their values diminished along with their immediate prospects. But with these challenges come opportunities for succession planning. Because closely held businesses may now be worth less than formerly, this might be a
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
The Readable Code and Regs: Partnerships, 2009 Edition
edited by Glenn L. Madere, J.D., LL.M. Readable Press, 2009, 1,078 pp. (vol. 1) and 1,382 pp. (vol. 2) Every neophyte in tax practice has no doubt wondered why someone couldn’t publish a plain-language gloss of the Internal Revenue Code and associated regulations. Let’s face it: Tax statutes and
Taxpayer Wins Lawsuit on Valuing Transfers of LLC Interests
In a case involving the proper valuation of LLC interests that were transferred by a taxpayer into trusts set up for the benefit of her children, the Tax Court has held that transfers should be valued as transfers of LLC interests and not, as the IRS had argued, as transfers
Comments Sought on Partnerships, Combined Pension Plans
The IRS requested public comment Wednesday on proposed regulations issued earlier on allocation of gain or loss in partnership mergers. In a separate notice, the Service invited comment on combined defined contribution and defined benefit plans under IRC § 414(x), on which the Service plans to issue guidance before it
Pre-2004 Termination Fee to “White Knight” Held Deductible
The Tax Court concluded that $65 million paid to terminate a merger contract was deductible under IRC § 162 or IRC § 165 and did not require capitalization under IRC § 263. IRC § 162 allows a deduction for the ordinary and necessary expenses paid or incurred during the tax
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
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