This column addresses a CPA’s professional liability exposures as well as ethical and legal obligations related to the use of tax software.
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2014 tax software survey
Learn how CPAs in our annual survey assessed the performance, features, and technical support of eight major tax preparation software products.
Success-based fees and milestone payments
When taxpayers incur costs that relate to an acquisition or restructuring, they generally must capitalize any costs incurred to facilitate (i.e., investigate or otherwise pursue) the transaction (Regs. Sec. 1.263(a)-5). When fees paid to service providers are contingent upon the successful closing of a transaction, taxpayers can use a facts-and-circumstances
Rules for written tax advice finalized
Circular 230 final regs. make ubiquitous email disclaimer no longer necessary. The IRS issued final regulations under Circular 230, Regulations Governing Practice Before the Internal Revenue Service (31 C.F.R. Part 10), on the rules for practitioners to provide written tax advice and certain other related provisions, adopting the proposed regulations
Tax Court foils transferee liability of Reynolds family trusts
State law is applied to determine whether a transferee is liable for a transferor’s tax liability. The Tax Court held that four trusts were not required to pay their former personal holding company’s tax liability. Virginia state law does not contain a corollary to the federal substance-over-form doctrine, and federal
Madoff account value must be determined at trial
The IRS is denied summary judgment on an estate’s valuation of its account in an infamous Ponzi scheme. Whether an account managed by Madoff Investments or its claimed holdings are considered property included in a gross estate and whether a willing buyer or seller of the account could reasonably know
Expanded OVDP a chance to reduce penalties
The new information-reporting requirements of the Foreign Account Tax Compliance Act (FATCA), P.L. 111-147, took effect on July 1. Among other things, FATCA requires foreign financial institutions (FFIs) to report on their accounts held by U.S. taxpayers. More than 77,000 FFIs signed on and acquired approved status in the initial
Supreme Court: Inherited IRAs are not retirement funds
The decision resolving a circuit split allows an inherited IRA to be included in a bankruptcy estate. The U.S. Supreme Court in Clark v. Rameker held that funds in an inherited individual retirement account (IRA) were not retirement funds that were exempt from a husband-and-wife debtors’ bankruptcy estate. Facts: The
Know when to hold ’em (and when to report ’em)
A district court holds that online gambling and payment accounts managed by foreign companies are subject to FBAR reporting. The U.S. District Court for the Northern District of California held that a taxpayer’s online poker and payment accounts with companies located overseas were subject to reporting on FinCEN Form 114,
New IRS appeals process starts Sept. 2
Starting Sept. 2, the IRS Office of Appeals is changing the way it handles appeals to examination decisions. Under the new Appeals Judicial Approach and Culture (AJAC) project, appeals officers are “no longer going to be examiners or investigators,” Appeals Team Manager Philip A. Oyoto told preparers at the IRS
SEC will scrutinize municipal advisers’ rules compliance
A new SEC examination initiative will scrutinize municipal advisers’ compliance with new rules and regulations that are under implementation. The SEC announced Tuesday that its Office of Compliance Inspections and Examinations (OCIE) will examine a significant percentage of municipal advisers for compliance. “The municipal adviser examination initiative will focus on
Final rules clarify retailers’ treatment of vendor discounts in inventory valuation
Final regulations issued Thursday restate and clarify retailers’ computation of ending inventory value, including the application of common vendor discounts (T.D. 9688). The amendments to Regs. Sec. 1.471-8 are intended to render that section’s provisions in plainer language and provide rules for how sales-based vendor allowances and vendor markdown allowances
Regs. govern dispositions of depreciable property
The IRS issued final regulations providing rules for how to determine gain or loss when property subject to depreciation is disposed of, how to determine the asset disposed of, and how to account for partial dispositions of depreciated property (T.D. 9689). The regulations apply to property that is subject to
Whistleblower final rules expand definition of collected proceeds
Comprehensive final regulations issued Thursday provide rules for whistleblower awards under Secs. 7623(a) and (b), as well as rules governing the disclosure of return information under Sec. 6103(h) to pursue these claims (T.D. 9687). The regulations provide the rules for submitting information to the IRS, define key terms, provide rules
IRS introduces voluntary certification program for tax preparers
After failing to win court approval for its mandatory tax return preparer regulation program, the IRS introduced a voluntary certification program to take its place.
QDROs demand the attention of CPAs
Expertise in qualified domestic relations orders and dividing retirement benefits in divorce can be a valuable accounting and tax specialty.
Treating partners as employees: Risks to consider
Partnerships often grant equity interests to valued employees but often mistakenly continue to treat them as employees for employment tax and other purposes. This article examines the risks a partnership and the partner run in continuing this treatment and suggests a few solutions.
Gain exclusion lost upon reacquisition of former principal residence
A repossession of a former principal residence pursuant to default on a contract for deed results in the partial recognition of gain previously excluded under Sec. 121. The Tax Court held that the portion of a taxpayer’s gain excluded under Sec. 121 was properly recognized when he repossessed his former
Exemption from PFIC regime for indirect ownership expanded
The IRS clarifies that shares held through a variety of tax-exempt organizations, plans, and accounts are generally excluded. On April 14, Treasury and the IRS announced they will amend the regulations under Sec. 1291 to provide that a U.S. person who indirectly owns stock of a passive foreign investment company
Final rules on fiduciary fees keep “unbundling” requirement
Controversial rules prompted by the Knight decision parse certain income tax deductions of estates and trusts. The IRS issued final regulations on the controversial question of which costs incurred by trusts and estates are subject to the 2% floor on miscellaneous itemized deductions under Sec. 67(a). The regulations apply to
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From The Tax Adviser
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Current developments in taxation of individuals: Part 1
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