On Wednesday, the IRS announced that it is reorganizing and changing the name of its Large and Mid-Size Business (LMSB) division as part of its ongoing effort to focus more on international tax compliance (IR-2010-88). Starting Oct. 1, the division will be known as the Large Business and International (LB&I)
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TOPICS / TAX
IRS practice & procedure
Beware of State-Federal NOL Differences
State net operating loss (NOL) rules generally differ from federal NOL rules, and state NOL rules often differ from one another. This is especially true with respect to carrybacks of NOLs—which, unlike for federal returns, the majority of states do not allow—and carryforwards. This lack of consistency can lead to
Is Your College Student Still a Dependent?
College students combine many sources of funds to pay for their education, including personal savings, family savings, income from jobs, scholarships and/or student loans. As the percentage of funds from the student’s sources increases, parents risk losing the student as a dependent on their tax return. Not only do the
IRS Provides Relief for Small Tax-Exempt Nonfilers
The IRS announced that is providing relief for small tax-exempt organizations that are supposed to automatically lose their tax-exempt status because they failed to file Forms 990-EZ or 990-N for the years 2007, 2008 and 2009. Under a special one-time program, the IRS is giving those organizations until Oct. 15
Appeals Court Overturns Taxpayer Win in Tax Shelter Case
The U.S. Court of Appeals for the Tenth Circuit has held that a taxpayer’s investment in a “Son of BOSS” tax shelter lacked economic substance and therefore did not generate deductible losses (Sala, No. 08-1333 (10th Cir. 7/23/10)). This holding reverses a rare taxpayer win on the issue of Son
Regulations Issued on Preventive Services
As part of ongoing guidance on this spring’s health reform legislation, the IRS, Department of Labor, and Department of Health and Human Services have issued interim final and proposed regulations implementing the preventive health services rules in the acts (TD 9493; REG-120391-10). The Patient Protection and Affordable Care Act (PL
Line Items
UNCERTAIN TAX POSITIONS DRAFT SCHEDULE RELEASED The IRS released a draft of new Schedule UTP, Uncertain Tax Position Statement, (tinyurl.com/27jmhm7) and instructions (tinyurl.com/25uorpf) as part of its initiative to require certain business taxpayers to report uncertain tax positions on their returns (Announcement 2010-30). (For previous JofA coverage of the initiative,
High Court Denies Business-Method Patent
The U.S. Supreme Court ruled Monday that a method of hedging against fluctuations in the price of energy or other commodities was an unpatentable abstract idea. The court, however, rejected the idea that a business method could never be patentable. The case, Bilski v. Kappos (08-964), has been widely followed
Health Care Regulations Issued
The IRS and Treasury Department issued proposed regulations (TD 9491, REG-120399-10) Tuesday implementing rules for health care insurance coverage and group health plans under the Patient Protection and Affordable Care Act (PL 111-148) and the Health Care and Education Reconciliation Act (PL 111-152). The text of the proposed regulations is
Go Easy on E-File Mandate, Committee Suggests
The IRS should phase in over the next three years a requirement that tax return preparers filing more than 10 returns do so electronically—a mandate that otherwise will take effect next year, an advisory panel said Friday. The recommendation was among nine by the Electronic Tax Administration Advisory Committee in
Regulations Issued on Grandfathered Health Plans
The IRS, the Department of Labor, and the Department of Health and Human Services issued interim final regulations on June 14 regarding grandfathered health plans under the health reform legislation enacted in March (TD 9489). The Patient Protection and Affordable Care Act (PL 111-148) incorporated the provisions of part A
IRS Issues Regulations on New Indoor Tanning Tax
On Friday, the IRS issued final, temporary and proposed regulations to provide guidance on the new 10% indoor tanning services excise tax (TD 9486; REG-112841-10). The Patient Protection and Affordable Care Act (PL 111-148) created a new 10% excise tax on amounts paid for indoor tanning services after June 30,
IRS Issues Partnership Anti-Abuse Rule Regulations
The IRS and the Treasury Department issued final regulations on June 8 to provide that the IRC § 704(c) anti-abuse rule takes into account the tax liabilities of both partners and certain owners of partners (TD 9485). The regulations also provide that partnerships cannot use an allocation method to achieve
Spouse Had “Reason to Know” of Disallowed Deductions
The Sixth Circuit joined the Second, Fifth, Seventh, Eighth, Ninth and Eleventh circuits in adopting the “knowledge of the transaction” test of Price v. Commissioner (887 F.2d 959 (9th Cir., 1989)) in innocent spouse cases, upholding a Tax Court finding of ineligibility for relief. IRC § 6015(b)(1)(C) requires taxpayers seeking
IRS Provides Guidance, Steps Up Exams of Sec. 199 Issues
Code § 199 provides a deduction equal to a specified percentage (9% for 2010 and subsequent years) of the lesser of qualifying production activity income (QPAI) or taxable income. In brief, QPAI equals eligible receipts, or domestic production gross receipts (DPGR), less allocable cost of goods sold and other deductions.
Request for Replacement Estate Tax Check Denied
The U.S. Court of Federal Claims held it did not have jurisdiction to issue a replacement check to a U.S. executor after a foreign executor named to the same estate cashed a refund check from the IRS. The issue arose after a U.S. citizen died in 2006 while living in
Tax Return Preparation Mistakes
Errors and omissions in preparing tax returns can occur easily. You might accidentally enter a number incorrectly, misinterpret a law, or misconstrue the client’s facts. Later, before an IRS audit, you might discover the mistake, raising gut-wrenching questions: Do you call the mistake to your client’s attention? Do you advise
Supreme Court Declines to Hear Textron Work Product Privilege Case
The U.S. Supreme Court on Monday declined to review the case of Textron Inc. v. United States, Sup. Ct. docket no. 09-750 (5/24/10). The decision not hear the case lets stand the First Circuit Court of Appeals’ decision that a corporation’s tax accrual workpapers were not protected from an IRS
Automatic Revocation of Tax-Exempt Status to Start Monday
Monday, May 17, is the deadline for calendar-year tax-exempt organizations to file a Form 990 for 2009. It also marks the third filing deadline under the mandatory filing requirement instituted by the Pension Protection Act of 2006 (PL 109-280). Under the terms of that mandatory filing requirement, tax-exempt organizations that
AICPA Testifies About Tax Return Preparer ID Plan
Patricia Thompson, CPA/PFS, vice chair of the AICPA’s Tax Executive Committee, spoke Thursday at an IRS hearing on the IRS’ plan to require all paid tax return preparers to obtain and use a preparer tax identification number (PTIN). She said the IRS’ PTIN proposal, along with its proposal to make
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Preparing clients for new provisions next tax season
As the 2025 filing season approaches, H.R. 1 introduces significant tax reforms that CPAs must be prepared to navigate. These legislative changes represent some of the most comprehensive tax updates in recent years, affecting both individual and corporate taxpayers. This report provides in-depth analysis and guidance on H.R. 1.
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