In the long-running case of three taxpayers at the center of an alleged kickback and tax avoidance scheme, the Seventh Circuit held that the Tax Court did not give proper deference to the findings of its special trial judge (STJ) 12 years ago. In so finding, the court remanded to
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TOPICS / TAX
Individual income taxation
Tax Treatment of Adoption Expenses
Of the family-related “life events” with significant implications for taxes, adoption of a child ranks among the potentially most expensive. Most readers of Adoptive Families who answered the magazine’s request to report the costs of a completed adoption gave figures between $25,000 and $30,000 (tinyurl.com/yjxlvre). International adoptions tend to be
Adoption Credit Increased, Made Refundable by Health Care Act
The Patient Protection and Affordable Care Act (PL 111-148) temporarily increased the adoption expense credit and fringe benefit exclusion limit for adoption assistance programs and made the credit refundable. The changes are effective for tax years beginning after Dec. 31, 2009. The act increased the statutory maximum credit and exclusion
Tax Provisions in the Health Reconciliation Act
Late Thursday, Congress passed the Health Care and Education Reconciliation Act of 2010 (HR 4872). The bill now goes to the president for his signature. The Reconciliation Act amends various provisions of the Patient Protection and Affordable Care Act (PL 111-148), the large health care reform act that was enacted
Refunds Up, Returns Down in 2010
The IRS reports that the size of the average refund is almost 10% bigger this tax season compared with last year. The average refund, through March 12, is $3,036, up from $2,770 at the same time last year. The IRS says this increase is due to various new credits and
Tax Provisions in the Health Care Act
The Patient Protection and Affordable Care Act (H.R. 3590), passed by Congress on Sunday, contains numerous tax provisions. The Reconciliation Act of 2010 (H.R. 4872), which also passed the House on Sunday, contains many other tax items, including extending the general exclusion for reimbursements for medical care expenses under an
IRS Issues 2010 List of “Dirty Dozen” Tax Scams
The IRS released its annual list of scams that taxpayers should watch out for. The IRS uses the list to alert taxpayers both to potential swindles as well as areas where the IRS is aware that taxpayers will try to cheat. The list, which the IRS dubs the “dirty dozen,”
Growing Opportunities: The Agricultural Chemical Security Credit
During these depressed economic times, taxpayers are increasingly confronted with issues related to cash flow management and the need to reduce taxes. In many cases, taxpayers are looking at all possible tax-saving opportunities. There is a little-known tax credit opportunity that may bring additional benefit to taxpayers that deal with
Web Lookup for Recovery Payments Coming Soon; Automated Phone Service Now Available
The IRS has established an automated telephone service to confirm whether taxpayers received an economic recovery payment in 2009. The Service also said on its Web site that it will provide a Web-based service, “Did I Receive a 2009 Economic Recovery Payment?” for looking up the information, starting March 23.
IRS Designates Chile Earthquake a “Qualified Disaster”
On Tuesday, the IRS designated the Feb. 27 earthquake in Chile as a “qualified disaster” for purposes of IRC § 139 (Notice 2010-26). As a result, victims of the earthquake who receive qualified disaster relief payments will be able to exclude those payments from income. The notice also allows employer-sponsored
IRS Provides Guidance on Deemed Dispositions by Canadian Emigrants
The IRS has issued guidance for individuals who emigrate from Canada and wish to make an election under the U.S.-Canada income tax treaty regarding Canadian departure tax (Revenue Procedure 2010-19). Under Article XIII(7) of the U.S.-Canada treaty, if an individual is treated for purposes of taxation by one of the
Safe Harbor for Failed Like-Kind Exchanges Where Qualified Intermediary Goes Bankrupt
The IRS has provided a safe harbor for taxpayers who start a like-kind exchange but fail to complete the exchange because the qualified intermediary (QI) goes bankrupt and defaults on its obligation to acquire replacement property (Revenue Procedure 2010-14). Taxpayers often use QIs to help them complete a tax-free like-kind
IRS Will Process Medical Residents’ FICA Refund Claims for Periods Before April 1, 2005
The IRS has announced that it will accept that medical residents are exempt from FICA taxes under the student exception in IRC § 3121(b)(10) for periods ending before April 1, 2005 (IR-2010-25). The Service said it will start contacting hospitals, universities and medical residents who have filed FICA refund claims
Toward a (More) Paperless Tax Practice
Nearly all CPA firms prepare tax returns electronically. However, many still also use some old-fashioned methods, such as sending out tax organizers manually. Here are tips to more fully realize what it means to go paperless. First, understand and share the goal: A more efficient, digital tax process can help
IRS to Register and Test Signing Preparers
The IRS on Jan. 4 said it will require registration of paid, signing tax return preparers as well as competency testing and continuing education for preparers other than practitioners (CPAs, attorneys and enrolled agents and others authorized to practice before the IRS). The plan also calls for extending the requirements
NOL Carrybacks and the Statute of Limitation
With the introduction of the five-year net operating loss (NOL) carryback in IRC § 172(h) many taxpayers are now examining their tax situations to determine how to best take advantage of the new rules. However, as taxpayers evaluate their situations, they should also consider the impact that carryingback an NOL
Voluntary Tax Payment Not Exempt From Early Withdrawal Penalty
Although paying a tax levy can exclude early IRA withdrawals from an otherwise applicable 10% penalty, a notice of intent to levy does not have the same effect, the Tax Court held. If a taxpayer is under 59½ years old, IRC § 72(t) generally imposes an additional penalty tax of
Allowed Uses of Taxpayer Info Widened
The IRS in late December issued temporary and proposed regulations under IRC § 7216 clarifying and expanding the ways in which tax return preparers may disclose or use certain tax return information without taxpayer consent (TD 9478 and REG-131028-09). The IRS also issued two revenue rulings approving several scenarios involving
Taxpayers Have Until Feb. 28 to Make Haiti Donations and Deduct Them on 2009 Returns
Taxpayers have until midnight on Sunday, Feb. 28, to make cash contributions to charities providing earthquake relief in Haiti and deduct them on their 2009 tax returns, under the provision of the Haiti Assistance Income Tax Incentive Act, PL 111-126. Contributions made after that date and before the end of
IRS Issues 2010 Updates for Automobile Depreciation Deduction Limits
The IRS provided the 2010 inflation adjustments to the depreciation limitations and lease inclusion amounts for certain automobiles under IRC § 280F (Revenue Procedure 2010-18). For passenger automobiles (other than trucks or vans) placed in service during calendar 2010, the depreciation limit under IRC § 280F(d)(7) is $3,060 for the
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