On Thursday, the IRS announced plans to phase in the requirements of the Foreign Account Tax Compliance Act (FATCA) (Notice 2011-53). The IRS has received numerous comments about the difficulty of implementing aspects of the FATCA requirements. The notice’s phased implementation is designed to give both foreign financial institutions and
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IRS practice & procedure
Final Regulations Issued on Determining Amount of Tax Paid for Foreign Tax Credit Purposes
Final regulations issued on Wednesday provide guidance on determining the amount of taxes paid for purposes of determining the foreign tax credit (TD 9535). The regulations are designed to curb certain transactions that, the IRS says, “produce inappropriate foreign tax credit results.” The final regulations adopt proposed regulations issued in
100,000 Preparers Did Not Comply With PTIN Rules
The IRS announced on Tuesday that it has identified approximately 100,000 tax return preparers who did not comply with the new rules for preparer tax identification numbers (PTINs), and it is sending them letters informing them of the problem (IR-2011-74). All tax return preparers (including CPAs, attorneys and enrolled agents)
Section 179 Expensing for Noncorporate Lessors
While 100% bonus depreciation may be the “flavor of the month” when it comes to accelerated depreciation, it is limited to original-use property and is currently scheduled to sunset for most property at the end of 2011. IRC § 179 expensing therefore remains a prime option for small businesses, especially
State Income Tax Credit Is a Capital Asset
The Tax Court held that a taxpayer’s sale of a state income tax credit resulted in a capital gain, not ordinary income, since the payments received from the sale were not a substitute for ordinary income. Capital assets consist of all assets except those listed in eight categories in IRC
Loan Loss Held Not Personal
The Tax Court ruled that a taxpayer’s loan to a business associate was made in connection with the taxpayer’s trade or business, and therefore, the forgiveness of that loan was a bad-debt loss under IRC § 166(a). The IRS had argued that the loan was personal and therefore subject to
“Associated-Property” Regs Survive “Strong” Challenge
The U.S. Court of Federal Claims upheld regulations requiring imputed interest on the basis of business property temporarily removed from service to be included in capitalized costs of property improvements. Virginia electric and natural gas utility Dominion Resources Inc. replaced coal burners in two of its electric generating plants, which
IRS Addresses Accounting Software Audit Concerns
In a March 29 letter from Patricia Thompson, chair of the AICPA’s Tax Executive Committee, to Chris Wagner, commissioner of the IRS’ Small Business/Self-Employed Division, the AICPA communicated its concerns regarding the Service’s program to request the accounting software files of certain small business taxpayers under examination; the letter cites
IRS Finalizes Automatic Five-Month Extension for Partnership, Trust and Estate Returns
Final regulations set the time for automatic extensions of partnership, trust and estate income tax returns at five months (TD 9531). Under this rule, the extended returns and Schedules K-1 for partners and beneficiaries will generally be due Sept. 15. The regulations also provide for an automatic six-month extension for
IRS Publishes Interim Guidance on Stock Basis Reporting
On Wednesday, the IRS issued interim guidance on issues relating to the basis of stock subject to broker reporting (Notice 2011-56). The guidance responds to stakeholder comments received in response to final regulations on the topic issued last year (TD 9504). The IRS says it plans to issue proposed regulations
IRS Suspends Foreign Asset, Passive Foreign Investment Company Information Reporting Rules
The IRS announced on Tuesday that it is suspending the information reporting requirements for certain individuals with foreign assets and shareholders of passive foreign investment companies (PFICs) under IRC §§ 6038D and 1298(f) (Notice 2011-55). The requirement will be suspended until the IRS releases Form 8938, Statement of Specified Foreign
FinCEN Grants Another FBAR Extension for Some Individuals
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) on Friday released Notice 2011-2, which gives another small subset of individuals with only signature authority over certain foreign financial accounts who are required to file Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), with respect to those
IRS Further Extends Deadline for Certain 2009 and Earlier FBARs
The IRS has further extended the deadline for certain persons to file Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), for 2009 and earlier years (IRS Notice 2011-54). The new filing deadline is Nov. 1, 2011. The extension applies to persons with signature authority over a
Fourth Circuit Upholds Two-Year Innocent Spouse Limitation Period
The United States Fourth Circuit Court of Appeals overturned a Tax Court decision and upheld a Treasury regulation that sets a two-year statute of limitation on claims for innocent spouse relief (Jones v. Commissioner, docket no. 10-1985 (4th Cir. 6/13/11)). This marks the third time the Tax Court has been
IRS Finalizes Alternative Simplified R&D Credit Rules
On Friday, the IRS issued final regulations governing the election and calculation of the alternative simplified research and development credit under IRC § 41(c)(5) (TD 9528). The new rules are effective for tax years ending after June 9, 2011. The final regulations extend the election procedures for the alternative incremental
FinCEN Clarifies Parties Entitled to FBAR Filing Extension
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued a revised notice Monday that clarified that a small subset of individuals are entitled to a one-year extension of the June 30, 2011, filing deadline to file Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR). The notice
Regulators Extend FBAR Filing Deadline for Certain Financial Professionals
The IRS and the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced Tuesday that a small group of individuals required to file the Report of Foreign Bank and Financial Accounts (FBARs) will receive a one-year extension beyond the upcoming filing date of June 30, 2011. FinCEN issued Notice 2011-1 that
IRS Announces “Good Faith” Extension of Voluntary Disclosure Deadline
The IRS said on Thursday that it is making available to taxpayers a 90-day deadline extension to participate in the 2011 offshore voluntary disclosure initiative (OVDI). The extension would be available to taxpayers who have made a good faith attempt to fully comply by Aug. 31, but are unable to
Schedule UTP Answers Posted
The IRS posted a series of questions and answers about the new requirement for large corporations to report their uncertain tax positions. The seven FAQs address both reporting requirements for Schedule UTP, Uncertain Tax Position Statement, and the IRS’ policy of restraint. For the 2010 tax year, corporations filing Form
Co-ops and Casualties
The Tax Court held that a resident of a coop apartment complex could not claim a casualty loss deduction for an assessment to repair a common area in which she held no property interest beyond a right to use it. Christina Alphonso owned stock in Castle Village Owners Corp., a
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