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
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Tax
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
Inherited home triggers denial of first-time homebuyer credit
A home in which a taxpayer inherited an ownership interest was his principal residence, even though he lived there only a few months, the Tax Court holds. The Tax Court held that a home inherited by a taxpayer disqualified him from a first-time homebuyer credit for a new residence. The
High-functioning firms
High-functioning firms have leadership teams that assess situations, develop strategies, and make and execute decisions with relative ease, speed, and success. Others, however, function with a drag that pulls against their momentum, causing the business of leading, managing, and executing to take longer and produce less-than-stellar results. High-functioning firms seem
Taxpayer wins partial IRA rollover contribution issue on appeal
Partially reversing the Tax Court, the Eighth Circuit holds that a taxpayer made a timely partial rollover contribution to his IRA. The Eighth Circuit held that the IRS and Tax Court improperly denied a taxpayer’s claim of a partial qualifying rollover contribution to his individual retirement account (IRA) by ignoring
Electing to aggregate rental activities: Better late than never
Taxpayers that own several rental properties have to make many decisions when it comes to reporting income or loss from those properties. Among them is whether it would be more beneficial for the income or loss to be characterized as active rather than passive. If the taxpayer wants active characterization
Most qualified plan distributions to pay accident or health premiums are taxable
Final regulations exclude amounts to pay for disability insurance replacing retirement contributions. The IRS finalized regulations providing that distributions from qualified retirement plans to pay accident or health insurance premiums are taxable unless a statutory exclusion applies. However, arrangements where amounts are used to pay premiums for disability insurance to
New treatment of disguised sales and partnership liabilities
The IRS issued proposed regulations in January dealing with disguised sales of property to or by a partnership under Sec. 707 and the treatment of partnership liabilities under Sec. 752 (REG-119305-11). According to the IRS, the proposed regulations are designed to address “deficiencies and technical ambiguities” in the current regulations.
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