The IRS on Friday issued final regulations governing the allocation of prepaid mortgage insurance premiums for periods after Dec. 31, 2010 (T.D. 9588). The final regulations adopt rules that were issued as proposed and temporary regulations in 2009 (T.D. 9449; REG-107271-08). The deduction under Sec. 163(h)(3)(E) for mortgage insurance premiums,
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Terms in OIC agreement take meaning from Code, court holds
The Second Circuit Court of Appeals held on Wednesday that the terms “refund” and “overpayment” in an offer-in-compromise (OIC) agreement are specialized tax terms that take their meaning from the Internal Revenue Code and are not given their “plain English” meanings, despite the colloquial tone of the agreement (Sarmiento, No.
Basis reporting rules for debt instruments and options postponed for one year
In Notice 2012-34, the IRS postponed the basis and gain reporting rules under Secs. 6045(g), 6045(h), 6045A, and 6045B for debt instruments and options, so they will apply to those acquired on or after Jan. 1, 2014. The postponement was in response to the many comments the IRS received on
Partnerships can issue Schedules K-1 electronically
The IRS issued Rev. Proc. 2012-17, which contains rules partnerships must follow to supply Schedules K-1, Partner’s Share of Income, Deductions, Credits, etc., electronically. The guidance was effective Feb. 13. A person required to furnish Schedules K-1 to partners (furnisher) can do so in an electronic format, provided the recipient
The 10 most powerful postmortem planning pointers for trusts and estates
After a client passes away, there is much more to do than just prepare a final Form 1040, U.S. Individual Income Tax Return. Taking control of the postmortem planning process can be a powerful way to save tax dollars for the decedent’s estate and family. Postmortem planning also applies to
Tax Court respects stock sale, denies transferee liability
In Norma L. Slone, the petitioners prevailed when the Tax Court refused to apply the substance-over-form doctrine to recast a sale of a company’s stock following an asset sale as a liquidating distribution. The court further found that the taxpayers were not liable as transferees under Sec. 6901 for taxes
Hire a hero, enjoy the benefits
Most provisions of the work opportunity tax credit (WOTC) expired on Jan. 1, 2012, but the program was modified and partially extended by the VOW to Hire Heroes Act of 2011, P.L. 112-56, to cover military veteran hires. Under Sec. 51, as amended, employers may be eligible for a credit
FAF review of FIN 48 shows it meets its objectives
The Financial Accounting Foundation (FAF) issued a post-implementation review (PIR) of FIN 48 (FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes). The PIR is a new process designed to help the FAF trustees with efforts to evaluate the effectiveness of accounting standards as well as the standard-setting process.
Eighth Circuit agrees that CPA was underpaid
The Eighth Circuit Court of Appeals held that a portion of the dividends paid by an S corporation to its CPA sole shareholder/employee was compensation. In upholding the decision by the District Court of Southern Iowa, the Eighth Circuit agreed that the salary to the sole shareholder/employee used to compute
Tax-advantaged investing for an uncertain economy
Investors and their advisers have weathered several years of turmoil, with market conditions often upending conventional investing approaches and related tax strategies. As recently as summer 2010, Federal Reserve Board Chairman Ben Bernanke testified before Congress that the outlook for the U.S. economy remained “unusually uncertain.” Slightly more than a
Reasonable salary for S corporation owners
Besides its single level of taxation as a passthrough entity, an advantage of an S corporation over a C corporation is that a shareholder’s share of the corporation’s net income is not considered self-employment earnings and therefore is not subject to self-employment tax (13.3% in 2011 and 2012). This treatment
AICPA: Correspondence audits challenge taxpayers
The IRS’s use of correspondence audits to resolve issues with tax returns has mushroomed over the past decade—but taxpayer satisfaction with the program is fairly low. According to the Treasury Inspector General for Tax Administration (TIGTA), only 48% of those surveyed by the IRS said they were either somewhat or
FTC “splitter” rules issued
The IRS issued final regulations on determining who has the legal liability to pay the foreign tax for foreign tax credit (FTC) purposes (T.D. 9576) and temporary regulations on the application of the “anti-splitter” rules of Sec. 909 (T.D. 9577). The rules are related because the legal liability to pay
HSA inflation adjustments issued for 2013
On Friday, the IRS issued the inflation-adjusted figures for the annual contribution limitation for health savings accounts (HSAs) and the minimum deductible amounts and maximum out-of-pocket expense amounts for high-deductible health plans for calendar year 2013 (Rev. Proc. 2012-26). Under Sec. 223, individuals who participate in a health plan with
IRS proposes expanding tax return information it will disclose to HHS under health care acts
On Friday, the IRS issued proposed regulations relating to how it will release certain tax return information to the Department of Health and Human Services (HHS), as required by 2010’s health care legislation (REG-119632-11). The proposed regulations describe certain items the IRS will disclose in addition to those required by
Congressional subcommittee hearing centers on expiring tax provisions
The term “winners and losers” sprang up several times on Thursday in a congressional subcommittee hearing on expired or soon-to-expire tax provisions. Congress should not pick them, witnesses contended. However, they also lined up to tell the House Ways and Means Select Revenue Subcommittee why a particular tax credit or
Supreme Court affirms Home Concrete, says 6-year limitation period does not apply to overstated basis
On Wednesday, the U.S. Supreme Court affirmed the Fourth Circuit’s decision in Home Concrete & Supply, LLC, which had ruled that the extended six-year statute of limitation under Sec. 6501(e)(1)(A), which applies when a taxpayer “omits from gross income an amount properly includible” in excess of 25% of gross income
Taxpayers can deduct certain local lodging expenses under proposed rules
The IRS issued proposed regulations on Tuesday that permit employees to treat certain expenses paid or incurred for local lodging as deductible business expenses (REG-137589-07). Under Sec. 262(a), living expenses paid or incurred when not traveling away from home are considered nondeductible personal expenses. However, in certain circumstances, the proposed
Federal Circuit dismisses refund suit based on all-zero returns
A married couple who filed tax returns listing all income and tax due as “zero” were denied refunds in a decision by the U.S. Court of Appeals for the Federal Circuit (Waltner, No. 10-CV-225 (Fed. Cir. 4/19/12)). The court dismissed the couple’s tax refund suit for lack of jurisdiction, holding
Rules for reporting interest on deposits paid to foreign taxpayers are finalized
The IRS issued final regulations under Sec. 6049 outlining the rules requiring U.S. financial institutions to report interest payments to certain nonresident alien individuals of $10 or more per year paid after Dec. 31, 2012 (T.D. 9584). The IRS explained that the new rules are part of the process of
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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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