The IRS has 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 to die occurs on or after Jan. 1, 2011,
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Proposed regs. on basis for S corporation shareholders from bona fide indebtedness
On Monday, the IRS issued proposed regulations on the contentious subject of when an S corporation shareholder can increase his or her basis in the S corporation’s stock, based on loans to the corporation, and thereby increase the amount of the corporation’s losses and deductions the shareholder can recognize (REG-134042-07).
Eleventh Circuit says PTIN user fees are valid
The Eleventh Circuit held that the fee the IRS charges to issue preparer tax identification numbers (PTINs) to tax return preparers, who are required to use the PTINs on returns they prepare, is valid because the PTIN confers a special benefit on the preparers: the privilege to prepare tax returns
IRS issues regulations on “expatriated entities” under Sec. 7874
On Thursday, the IRS issued temporary regulations governing whether a foreign corporation has “substantial business activities” in the foreign country in which, or under the law of which, the corporation is created or organized, compared to the total business activities of the expanded affiliated group (T.D. 9592). At the same
Refusal to refund sewer assessments is not Equal Protection violation, Supreme Court holds
On Monday, the U.S. Supreme Court held that Indianapolis’s refusal to refund sewer assessments paid in a lump sum by residents to fund a sewer project did not violate the Equal Protection Clause of the U.S. Constitution because the city had a rational basis for distinguishing between those who had
Pioneer specialists
CPAs have been the leaders in offering clients tax preparation, planning, and advice since the early 20th century, when landmark legislation instituted taxes on corporate and individual incomes. This article traces the history and development of the CPA tax practitioner over the past century.
Appeals court invalidates associated property rule in capitalization regulations
In a case of first impression, the Court of Appeals for the Federal Circuit (reversing the Court of Federal Claims) held that the “associated property” rule requiring capitalization of interest expense under Sec. 263A was invalid insofar as it applies to property temporarily withdrawn from service (Dominion Resources, Inc., No.
First Circuit strikes down Defense of Marriage Act but stays tax remedies
The First Circuit Court of Appeals declared part of the federal Defense of Marriage Act unconstitutional on Thursday, upholding a Massachusetts federal district court decision (Massachusetts v. United States Dep’t of Health and Human Servs., No. 10-2204 (1st Cir. 5/31/12), aff’g Gill v. Office of Personnel Management, 699 F. Supp.
Guidance issued on new $2,500 FSA limit
The IRS on Wednesday released Notice 2012-40 providing guidance on implementation by employers of the $2,500 annual limit on employee salary reduction contributions to health flexible spending arrangements (health FSAs). The notice also requests comments on possible changes to the current “use-or-lose” rules for health FSAs. The $2,500 limit, enacted
Prop. regs. clarify meaning of “substantial risk of forfeiture” under Sec. 83
The IRS on Tuesday issued proposed regulations that would clarify when a substantial risk of forfeiture exists on the transfer of stock to an employee that is treated as compensation under Sec. 83 (REG-141075-09). When a substantial risk of forfeiture exists, the employee does not yet have to recognize the
IRS issues guidance, requests comments on smart cards and debit cards used for transit fares
The IRS asked for comments on Friday on issues regarding the use of smart cards and debit or credit cards to pay transit fares (Notice 2012-38). It also announced that its previous guidance on the use of electronic media to provide employees with qualified transportation fringe benefits (Rev. Rul. 2006-57)
IRS to close offices as part of administration’s cost-cutting efforts
In a cost-cutting move projected to save $17.2 million in FY 2012 and $23.5 million in FY 2013, the IRS announced on Tuesday that 43 smaller offices will be closed and space in many larger facilities will be reduced (IR-2012-54). IRS Commissioner Douglas Shulman, in announcing the reductions, said, “Cutting
Offer in compromise rules made more flexible in expansion of Fresh Start program
The IRS on Tuesday announced that it is making the terms under which it will accept offers in compromise more flexible (IR-2012-53). The changes are part of the IRS’s expansion of its Fresh Start program and are designed to help financially distressed taxpayers clear up tax problems more quickly. The
Final regs. issued on health insurance premium tax credits
The IRS issued final regulations governing the Sec. 36B health insurance premium tax credit enacted by 2010’s health care legislation (T.D. 9590). They are scheduled to be published in the Federal Register on May 23. The final regulations provide guidance to individuals who enroll in qualified health plans through Affordable
Accounting firm payments to owners flunk independent investor test
The Seventh Circuit held that an accounting and consulting firm organized as a C corporation could not deduct payments to related entities because they were dividends, not compensation for services rendered by the company’s owners (Mulcahy, Pauritsch, Salvador & Co., No. 11-2105 (7th Cir. 5/17/12), aff’g T.C. Memo. 2011-74). The
Entrepreneur brings attitude to economic discussion
When panelists at the AICPA’s spring Council meeting in Washington were asked Wednesday how to fix the economy, business leaders and politicians talked about familiar themes: balancing the federal budget and avoiding deficit spending. They said complex regulations are crippling some businesses. But Traci Lynn, CEO and founder of Traci
Farm debtors must pay capital gain tax in full, the Supreme Court holds
The U.S. Supreme Court ruled on Monday that farmers who sold farm assets during a bankruptcy reorganization under Chapter 12 of the Bankruptcy Code were liable for the full amount of the capital gains tax that resulted from the sale (Hall, Sup. Ct. Dkt. No. 10-875 (U.S. 5/14/12), aff’g 617
Obligations arising from certain upfront payments made by CFCs are not U.S. property
The IRS issued temporary regulations relating to the treatment of upfront payments made pursuant to certain notional principal contracts (NPCs) for U.S. federal income tax purposes (T.D. 9589). The temporary regulations establish an exception to the definition of U.S. property for obligations of U.S. persons arising from upfront payments made
Illinois “click-through nexus” law held unconstitutional
On Monday, the Circuit Court for Cook County in Illinois issued an eagerly awaited order explaining its bench decision on April 25, which declared Illinois’s “click-through nexus” law unconstitutional (Performance Marketing Ass’n v. Hamer, No. 2011 CH 26333 (Ill. Cir. Ct. Cook Cty. 5/7/12)). The order found that the law
TIGTA and Congress focus on identity theft and tax fraud
On the same day the House Ways and Means Oversight and Social Security Subcommittees held a hearing on tax fraud involving identity theft, the Treasury Inspector General for Tax Administration (TIGTA) released a report saying the IRS does not handle identity theft issues well (TIGTA Rep’t No. 2012-40-050). Tuesday’s congressional
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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.
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