As the 2012 elections draw near, the IRS is once again increasing its oversight of the ban on political campaign activities by Sec. 501(c)(3) charitable organizations. An IRS work plan (Exempt Organizations 2011 Annual Report & 2012 Work Plan, available at tinyurl.com/bos7pb4) states that, in enforcing the ban this year,
Advertisement
TOPICS
Tax
Proposed regs. on basis for S corporation shareholders from bona fide indebtedness
On June 11, the IRS issued proposed regulations on when an S corporation shareholder can increase his or her basis in the S corporation’s stock based on loans to the corporation (REG-134042-07). S corporation shareholders, unlike partners, generally are not permitted to increase their basis by guaranteeing a loan made
Successor tax liability in business purchases
A purchaser of assets generally expects that it will not be liable for the income tax liabilities of the seller. While sophisticated buyers may anticipate that they will be liable for so-called trust fund taxes (e.g., withholding, sales tax, etc.), few buyers expect that they will be liable for the
IRS compliance and enforcement trends
The IRS and state and local taxing authorities are developing compliance goals and strategies that are affecting CPAs and will continue to do so in new ways in the coming decade. Jim Buttonow and Brian Howell described them in a presentation at the AICPA Practitioners Symposium and TECH+ Conference in
2012 tax software survey
In this year’s survey by the JofA and The Tax Adviser, more than 6,000 CPAs assessed the software they used to prepare 2011 tax returns, revealing what they liked and disliked about their software. Overall, respondents were pleased with their software: On average, the products rated 4.3 out of 5.
No exclusion for former spouse from assignment of disability income
The Tax Court recently clarified that disability retirement benefits assigned to a former spouse under a divorce agreement are ineligible for exclusion from income, even though the benefits would qualify for exclusion as compensation for personal injury had the other ex-spouse received them. The former spouse’s argument that she was
IRS issues rules on portability election
The IRS issued temporary regulations on how to elect to use a deceased spouse’s unused exclusion from estate taxes, also known as the portability election (T.D. 9593). The rules apply to married spouses where the death of the first spouse occurs on or after Jan. 1, 2011, and are therefore
Shifting receivables between S corps. increases basis
The Tax Court held that taxpayers could increase the basis of their stock in an S corporation by contributing accounts receivable to it after they had received those receivables in a distribution from a related S corporation. The increased basis in their stock in the first S corporation enabled them
IRS launches redesigned website; temporarily takes down some services
Taxpayers and tax practitioners vising the IRS online will find a redesigned IRS.gov website, which is scheduled to go live on Aug. 30; however, the IRS also announced that it is taking down several of its online services during the Labor Day weekend. Shutdown of web services Certain services will
IRS changes stance on application of Sec. 6662 penalty to frozen refundable credits
The IRS announced, in Program Manager Technical Advice (PMTA) 2012-16, that it would no longer impose a penalty under Sec. 6662 for a substantial understatement of tax when a taxpayer claims a refundable tax credit he or she is not entitled to, but the IRS does not pay the refund
AICPA provides guidance on FSA certification letters
In response to a Farm Service Agency (FSA) initiative requesting that CPAs certify some clients’ income, the AICPA has worked with the FSA to create a certification letter CPAs can use and is providing its members with sample engagement and disclosure letters to be used in connection with providing a
Federal law preempts Alabama statute denying tax deduction for illegal alien employees
The Eleventh Circuit Court of Appeals held that the section of Alabama House Bill 56 that disallowed an employer a state tax deduction for wages and compensation paid to an alien unauthorized to work in the United States was preempted by federal immigration law (United States v. Alabama, No. 11-14532
IRS Chief Counsel’s office issues advice on identity theft returns
In Program Manager Technical Advice 2012-13, the IRS Office of Chief Counsel explained in a memorandum to Small Business/Self-Employed Division attorneys what the IRS can do when a return is filed by an identity thief in order to generate a fraudulent refund and the IRS has issued a statutory notice
IRS announces the end of tiered issues
Effective Aug. 17, 2012, the IRS will no longer use the tiered management process to set examination priorities and address important issues in the Large Business & International division (LB&I). Instead, it will examine the former Tier I, II, and III issues and assess risk in the same manner as
Draft Form 706 provides check box to not elect portability
The IRS posted a draft version of Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, on Friday. The draft form for the first time addresses portability of a deceased spouse’s unused estate and gift tax exclusion amount and provides a check box for the executor to opt out
Corporation cannot deduct California business privilege tax in year paid
Wells Fargo, an accrual-basis taxpayer, could not deduct the California business privilege tax it paid in one year (year 1) for the privilege of doing business the next year (year 2), even though California law had, since 1972, treated the tax as being incurred in year 1, a federal district
Removal of two-year limit on innocent spouse claims does not revive taxpayer’s case
The U.S. District Court for the District of Massachusetts dismissed a taxpayer’s claim that she was entitled to innocent spouse relief under Notice 2011-70, which announced the removal of the two-year limitation period for claims for equitable innocent spouse relief under Sec. 6015(f) (Haag, No. 11-CV-11591-PBS (D. Mass. 8/13/12)). The
TIGTA: IRS encourages employees to ignore ITIN fraud
The Treasury Inspector General for Tax Administration (TIGTA) released a report on Wednesday in which it confirmed allegations from IRS employees that their supervisors were urging them to ignore potential fraud in a program that reviews and verifies applications for individual taxpayer identification numbers (ITINs) (TIGTA Rep’t No. 2012-42-081). ITINs allow
Fraud convicts cannot argue in Tax Court that payments did not result from fraud
Taxpayers who had been convicted of fraud were precluded from later arguing that payments they received were not the result of fraud, the Tax Court held in two related cases (Atkinson, T.C. Memo. 2012-226, and Boultbee, T.C. Memo. 2012-227). The court invoked the doctrine of collateral estoppel to prevent the
Notice permits charitable contributions to single-member LLCs
In Notice 2012-52, the IRS explained that contributions to disregarded single-member limited liability companies (SMLLCs) wholly owned and controlled by a U.S. charity (as defined in Sec. 170(c)(2)) will be treated as if made directly to the U.S. charity. This rule applies for purposes of the substantiation requirements under Sec.
Features
FROM THIS MONTH'S ISSUE
Flip out with the latest Tech Q&A
The September Technology Q&A column shows how to create dynamic to-do lists with Excel's checkboxes and also how to set up multifactor authentication texts that don't rely on phones. Flip through both items and view a video walkthrough in our digital format.
From The Tax Adviser
August 30, 2025
2025 tax software survey
July 31, 2025
