Onerous consequences can result when taxpayers fail to follow through with an IRA tax-free rollover. Generally, the entire amount distributed from an IRA or other qualified trust or eligible retirement plan must be deposited in another such account within 60 days. Otherwise, it is included in the taxpayer’s gross income
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Individual income taxation
2010: The Year of the Roth Conversion?
This year will be the Year of the Tiger, according to Chinese custom, but it also could be remembered by investors as the Year of the Roth Conversion, a decision that can have a large impact on investors’ ability to build wealth during their lifetime and preserve wealth for beneficiaries.
IRS Issues Regulations on Disclosure of Tax Return Information
On Tuesday, the IRS issued temporary and proposed regulations under IRC § 7216 that increase the circumstances in which tax return preparers can disclose or use certain limited tax return information (TD 9478 and REG-131028-09). The temporary regulations amend final regulations that were issued in 2008 and were effective Jan.
IRS Provides Guidance on Return Preparer Liability Under IRC Section 7216
On Wednesday, the IRS issued two revenue rulings (Rev. Ruls. 2010-4 and 2010-5) that provide guidance to tax return preparers on situations in which they will not be liable for civil or criminal penalties under IRC § 7216 for disclosing or using tax return information. IRC § 7216 prohibits a
IRS Issues 2010 Mileage Rates
The IRS announced Thursday (Revenue Procedure 2009-54) the standard mileage rates for computing deductible costs of operating an automobile that are paid or incurred on or after Jan. 1, 2010. For business use of an automobile, the rate is 50 cents a mile. For medical or moving expenses, it is
2009 Tax Software Survey
The JofA and The Tax Adviser conducted a survey of their readers to determine what aspects of their tax preparation software they like and what they dislike. The survey, which received 9,776 responses, was carried out in late June and early July 2009. Of the 13 products identified for the
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IRS ISSUES REGS ON SIX-YEAR LIMITATIONS ON BASIS OVERSTATEMENT The IRS issued proposed and temporary regulations (TD 9466, REG-108045-08) Sept. 24 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
IRS Expands Electronic Payment Options
With tax season about to start, practitioners should be aware of the various electronic payment options the IRS has introduced in recent years. EFTPS The IRS’ free Electronic Federal Tax Payment System (EFTPS) allows businesses and individuals to pay federal taxes via the Internet or over the phone. Tax payments
Two Easements, Two Outcomes
The Tax Court decided two cases involving conservation easements with mixed results for the taxpayers. In one case, the court held that the taxpayer was entitled to a charitable deduction for easements on two properties, since the easements were exclusively for conservation purposes. According to the court, the easements preserved
UBS Targets Come Into Focus
The IRS has released the selection criteria for identifying holders ofaccounts with Swiss bank UBS under a U.S. settlement agreement with the Swiss government negotiated in August. Under the agreement, UBS will turn over information concerning approximately 4,450 accounts for investigation. IRS Commissioner Doug Shulman also recently announced that about
IRS Pilot Program Will Allow Truncated Social Security Numbers on Information Returns
The IRS on Thursday announced a pilot program aimed at deterring identity theft (Notice 2009-93). Under the program, filers of certain paper information returns will be allowed to truncate the payee’s Social Security number on the payee statement. The change affects statements for 2009 and 2010. Only paper payee statements
President Signs Military Spouses Residency Relief Act
President Barack Obama signed into law the Military Spouses Residency Relief Act (PL 111-97), which will ensure that the spouses of military personnel who move because their spouse is posted for military duty will be treated as not having changed residency for tax purposes. Under the act, the fact that
President Signs Unemployment Bill With Tax Items
On Friday, President Obama signed into law a bill that includes changes to the first-time homebuyer credit, increased NOL carrybacks for small businesses, and mandatory e-filing for most tax return preparers. The bill cleared Congress on Thursday. The Senate had unanimously agreed to the bill, the Worker, Homeownership, and Business Assistance
Application of Six-Year Statute of Limitations Denied Again
The Tax Court, whose denial of a six-year statute of limitations in Bakersfield Energy Partners had been recently upheld by the Ninth Circuit, held in two more cases that an overstatement of basis did not allow the extended assessment period for a substantial omission of gross income under IRC §
Qualifying Child Definition Amended
The Fostering Connections to Success and Increasing Adoptions Act of 2008, PL110-351, made several changes to the qualifying child (QC) definitions effective for tax years beginning after Dec. 31, 2008. Section 501(a) of the act amended the age requirement (IRC § 152(c)(3)) to also require the QC to be younger
“Unforeseen Circumstances” Exclusion From Gain on Sale of Home
Despite the recent downturn in the American housing market, one of the highest-value assets owned by most taxpayers remains their home. While many taxpayers have seen the value of their home decline, those in locales where home values have remained relatively strong—such as parts of some Southern and Midwestern states—could
Unrelated Child as a Qualifying Relative
One requirement for claiming a qualifying child (QC) for purposes of the dependency exemption deduction is that the child must be related to the taxpayer, that is, the taxpayer’s child (including stepchild or foster child), sibling, half-sibling, step-sibling or descendant of any of them (IRC § 152(c)(2)). However, dependents alternatively
Shulman: ‘Big Shift’ Possible in Preparer Standards, But No Details Yet
IRS Commissioner Douglas Shulman discussed return preparer standards, enforcement in a globalized economy and a new IRS initiative focused on high-wealth individuals’ tax compliance during a speech to the AICPA’s National Tax Conference in Washington on Monday. Return Preparer Oversight In June, Shulman announced during a hearing of the House
IRS Releases Annual Inflation Adjustments, Many Unchanged for 2010
The IRS has released its annual revenue procedure updating the tax bracket amounts and making inflation adjustments for various credits and other tax items (Revenue Procedure 2009-50). Because inflation has been minimal, many of the numbers are unchanged from 2009 or have only been adjusted slightly. The Social Security Administration
IRS Memo Allows Taxpayer to Deduct Interest on $1.1 Million Mortgage
The IRS Office of Chief Counsel has issued a memorandum in which it reinterprets the definition of “acquisition indebtedness” under IRC § 163(h)(3) to allow a taxpayer to deduct interest on the first $1.1 million of his or her mortgage instead of the usual $1 million limit (CCA 200940030). This
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