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Tax

AICPA recommends changes to net investment income tax

Jeffrey Porter, chair of the AICPA’s Tax Executive Committee, submitted comments to the IRS on behalf of the AICPA on Monday, recommending many changes to the proposed regulations on the new net investment income tax. Starting in 2013, Sec. 1411(a)(1) imposes a tax equal to 3.8% of the lesser of

Oral surgeon cannot deduct expenses for traveling between home and job

The Tax Court upheld IRS-assessed deficiencies caused by the disallowance of a number of travel expenses an oral surgeon deducted on his Schedules C, Profit or Loss From Business, for 2008 and 2009, and its imposition of a negligence penalty under Sec. 6662(a) (Bigdeli, T.C. Memo. 2013-148). Javad Bigdeli lived

Proposed PFP services standards available for public comment

The AICPA released an exposure draft of a Proposed Statement on Standards in Personal Financial Planning Services on Tuesday as part of an initiative that’s expected to help boost the profile of CPA personal financial planning (PFP) practitioners.  The proposal outlines members’ responsibilities in PFP engagements. These responsibilities include: General

Indoor tanning tax final regulations issued

On Monday, the IRS issued final regulations on the 10% excise tax that has been in effect for amounts paid for indoor tanning services since July 1, 2010 (T.D. 9621). The regulations, which apply to amounts paid on or after June 11, 2013, finalize proposed rules issued in 2010 when

How have CPAs responded to regulatory overload?

Andrew Barbe, CPA, CGMA, wishes he had more time to devote to strategic planning and development as vice president for accounting and senior controller of NorTex Midstream Partners LLC, a natural gas midstream service company. But as the senior manager in charge of finance, accounting, treasury, tax, human resources, information

TIGTA criticizes the IRS on conference overspending

In the latest in a series of bad news days for the IRS, the Treasury Inspector General for Tax Administration (TIGTA) issued a report Tuesday on the IRS’s wasteful spending on conferences (TIGTA, Review of the August 2010 Small Business/Self-Employed Division’s Conference in Anaheim, California, Rep’t No. 2013-10-037). TIGTA focused

Partner cannot avoid valuation penalty by conceding on other grounds

In a big win for the IRS, the Tax Court refused to grant partial summary judgment to a partner who had conceded his tax shelter case on grounds other than valuation in an attempt to avoid the 40% gross valuation misstatement penalty under Sec. 6662(a). This has been a common

Courts diverge on basis in shares received in demutualization

Two district courts reached opposite conclusions on whether stock received by policyholders in connection with demutualization of insurance companies had a cost basis greater than zero. They agreed, however, that the “open transaction doctrine” did not apply. The first case is Dorrance, in the District of Arizona. The second is

Planning for “play or pay”

Near the end of 2012, the IRS issued proposed regulations (REG-138006-12) on the employer shared-responsibility provisions under Sec. 4980H enacted by the Patient Protection and Affordable Care Act, P.L. 111-148 (PPACA), sometimes referred to as the “play-or-pay” rules. The proposed regulations address many questions that prior IRS guidance had not

Potential income tax benefits for families with special needs children

As the number of children diagnosed with autism, Asperger’s syndrome, and other neurological disorders continues to skyrocket, the disruption it causes in the lives of all those concerned is unmistakable—as are the costs of providing care for the special needs child. As reported by the Autism and Developmental Disabilities Monitoring

Image rights create royalty payments

The Tax Court held that fees received by foreign professional golfer Sergio Garcia under an endorsement agreement should be treated as 65% royalty compensation and 35% personal service compensation, based on the facts and circumstances of the agreement. The court also held that Garcia’s U.S. image rights payments were royalties

Proposed Statement on Standards in Personal Financial Planning

This spring, following a two-year drafting process involving practitioners from across the AICPA, the AICPA Personal Financial Planning Executive Committee issued an exposure draft for public comment on a Proposed Statement on Standards in Personal Financial Planning Practice. The proposed statement addresses the responsibilities of AICPA members when providing personal

IRS extends suspension of examinations of “repair reg.” issues

The IRS updated its Large Business & Industry (LB&I) directive on the repair vs. capitalization issue that extends the suspension of field examinations (LB&I-04-0313-001) in keeping with its previous postponement of the effective date of the tangible property temporary regulations (T.D. 9564) (in amendments published Dec. 17, 2012) to tax

CPA’s nonfiling ruled inadmissible for abusive shelter promotion penalty

Evidence of a CPA’s failure to file and pay his own taxes was not properly admissible in determining his penalty for promoting an abusive tax shelter, the Fourth Circuit held. The appellate court thus vacated a $2.6 million penalty and liability verdict against CPA Robert Nagy and reversed and remanded

Automated substitutes for return drop by half

After increasing eightfold from fiscal 2002 to 2011, the number of returns generated by the IRS’s Automated Substitute for Return (ASFR) program fell by half in fiscal 2012, and tax assessments under the program decreased by 54% (see related graphic, “Automated Substitutes for Return Decline”). The ASFR program uses information

Global R&D incentives compared

The American Taxpayer Relief Act of 2012, P.L. 112-240, extended the research and development (R&D) credit under Sec. 41 for two years to cover qualified research expenditures paid or incurred on or before Dec. 31, 2013. Though U.S. business taxpayers welcomed the extension of this tax credit, the benefit is

Supreme Court declines to hear Historic Boardwalk rehabilitation credit case

The U.S. Supreme Court on May 28 declined to hear an appeal of the Third Circuit’s decision denying historic rehabilitation credits for a state authority’s partnership with Pitney Bowes Inc. to redevelop the Atlantic City, N.J., historic Boardwalk Hall (Historic Boardwalk Hall, LLC, No. 11-1832 (3d Cir. 8/27/12), cert. denied,

Switzerland proposes allowing banks to resolve U.S. tax evasion cases

The government of Switzerland would allow its banks to disclose data about account holders to the U.S. Department of Justice, circumventing its own bank secrecy law, under a bill that will be introduced in the Swiss parliament. The bill aims to create a legal basis under Swiss law to resolve

Supreme Court resolves circuit split on creditability of U.K. tax

In a unanimous decision, the U.S. Supreme Court held that the United Kingdom’s windfall profits tax imposed on newly privatized businesses was creditable against U.S. taxes under Sec. 901 (PPL Corp., No.12-43 (U.S. 5/20/13)). In doing so, the Court reversed the Third Circuit’s decision (665 F.3d 60 (3d Cir. 2011))

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