Starting in 2010, taxpayers can make rollovers from non-Roth retirement accounts to Roth individual retirement accounts (IRAs) without regard to the former $100,000 modified adjusted gross income (AGI) limit and (in 2010 only) can benefit from a special two-year averaging provision (the taxable portion of the rollover is taxed in
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TOPICS / TAX
Individual income taxation
Request for Audit Reconsideration
IRC § 6404(a) allows the IRS to abate any assessment of tax and applicable interest and/or penalties if the assessment is excessive, erroneously or illegally made, or made after the statute of limitation has expired. If an erroneous assessment has been made and a taxpayer has not paid it, under
Obtaining a Power of Attorney Through IRS E-Services
E-services is a suite of Internet-based products that allows tax professionals to conduct client business with the IRS 24 hours a day, 7 days a week. Compared with mailing or faxing a Form 2848, Power of Attorney and Declaration of Representative, the e-services application is a much faster way for
Tax Court Allows Medical Deduction for Sex Change Operation
In a case of first impression, the Tax Court has held that a taxpayer can take a medical expense deduction for the costs of a sex change operation (O’Donnabhain, 134 TC no. 4). However, the taxpayer’s expenses for breast augmentation surgery were disallowed by the court as cosmetic surgery. The
Solar Energy Systems: Incentives Are Better Than Ever
The 30% federal tax credit available to homeowners and businesses to install solar energy systems was recently expanded and extended. A dollar-amount cap was removed from the credit for residential solar water heating systems, and the availability of the credit for all systems was extended through the end of 2016.
Alimony Determined
The doctrine of collateral estoppel did not bar the IRS from assessing a deficiency for an underpayment it had conceded in a Tax Court stipulated decision concerning the same issue in the immediate prior tax year, the Tax Court held. The underpayment stemmed from what the IRS ultimately claimed, and
Line Items
FINAL REGS CLARIFY INSTALLMENT TAX PAYMENTS The IRS issued final regulations governing the payment of tax liabilities in installments (TD 9473). The regulations reflect changes to the Tax Code made by acts going as far back as 1996. IRC § 6159 allows taxpayers who cannot pay their tax liabilities in
Improve Tax Tracking With Automated Workflow
“Why should we change the way we track tax work through the office? Isn’t the manual system better?” I have heard these types of questions many times over the years, and it never surprises me because accountants, like many of us, don’t like change. Firms that use a manual system
Equitable Relief Partially Granted
The Tax Court held that a taxpayer was entitled to equitable relief under IRC § 6015(f) for her husband’s half of the additional 2002 and 2003 federal income tax liabilities reported on court-ordered amended joint tax returns, since she had no reason to believe her ex-husband would not pay his
Obama Outlines Proposed Tax Credits, Other Changes
President Barack Obama, in a State of the Union address Wednesday that focused heavily on job creation, proposed several business and individual tax credits. Obama called for a new tax credit for small businesses that hire workers or raise wages as well as the elimination of all capital gains tax
IRS Updates Rules on Adequate Disclosure
The IRS has updated its guidance on the rules governing when disclosure of an item or position on a tax return constitutes “adequate disclosure” for purposes of reducing an understatement of income tax or avoiding certain tax return preparer penalties (Revenue Procedure 2010-15). The guidance applies only to the substantial
IRS Designates Haiti Earthquake as “Qualified Disaster”; President Signs Haiti Donation Bill
On Friday, the IRS designated the earthquake in Haiti as a “qualified disaster” for purposes of IRC § 139 (Notice 2010-16). 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 private foundations
Senate Passes Haiti Assistance Income Tax Relief
The Senate on Thursday passed by unanimous consent the Haiti Assistance Income Tax Relief Act (S. 2936). The Senate bill was identical to H.R. 4462, passed by the House on Wednesday. The legislation now goes to President Barack Obama for his signature; he is expected to sign it this week.
House Unanimously Passes Haiti Donation Bill
The House of Representatives on Wednesday unanimously passed a bill that would allow taxpayers to accelerate deductions for charitable contributions made for relief of victims of the earthquake in Haiti (HR 4462). Under the bill, taxpayers could deduct donations made in 2010 on their 2009 returns. Donations covered by the
Tax Season Starts; IRS Releases Homebuyer Credit Form
The IRS started accepting e-filed tax returns on Jan. 15, marking the official start of tax season. The IRS’ popular Free File program also started accepting returns on Friday. However, as usual, W-2 and 1099 forms are generally not due to taxpayers before Feb. 1, so many taxpayers will not
Taxpayer Advocate Urges Better IRS Service
A report examining problems taxpayers encounter with the IRS found that the Service’s collection practices may harm long-term taxpayer compliance and are not supported by reliable data. The IRS also faces challenges in providing core services such as meeting the demand for telephone assistance, National Taxpayer Advocate Nina Olson said
IRS Proposes New Requirements for Return Preparers
The IRS on Monday announced plans to require mandatory registration of all paid, signing tax return preparers as well as competency testing and CPE requirements for preparers other than CPAs, attorneys or enrolled agents. The plan also calls for extending Circular 230’s ethics rules to all return preparers. Following a
Tax Season Kicks Off
Following a flurry of tax legislation that enacted changes for tax years beginning in 2009, this tax season requires heightened attention to make sure your clients don’t miss any of the new and extended deductions and credits to which they’re entitled. Most of the changes for 2009 were directed at
Post-Mortem Tax Lien Is Valid
The IRS may recover a 100% IRC § 6672 trust fund penalty from any responsible person who acts willfully in failing to pay over to the government taxes withheld from employees. If the responsible person dies after the assessment but before the penalty is paid, the Tax Court held, a
Applying for a Private Letter Ruling
When a transaction requires greater certainty or when relief is sought for a difficult tax situation, applying to the IRS for a private letter ruling (PLR) can provide interpretation and application of law and regulation with respect to that taxpayer the Service will follow, within certain conditions and limitations. Here’s
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From The Tax Adviser
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Current developments in taxation of individuals: Part 1
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