The first two years of corporate income tax returns requiring Form 1120, Schedule UTP, Uncertain Tax Position Statement, have been filed, and the IRS has described first-year returns and provided guidance for the growing number of business taxpayers that will be required to file it. Schedule UTP was a required
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Tax
Facing the tax cliff
You can’t pick up a newspaper or go online this fall without seeing stories about the coming “tax cliff” or “taxmageddon”—the time at the end of this year when the current tax rates for income, capital gains, gifts, and estates are scheduled to expire. Mostly overlooked by the news media
TIGTA: Appeals errors persist
The IRS Office of Appeals continues to make errors in classifying hearings and determining the statute of limitation on collections, the Treasury Inspector General for Tax Administration reported (TIGTA Rep’t No. 2012-10-077). The audit and report, required annually by statute, indicates that, based on statistical samples studied, the potential number
Charitable contributions of vehicles
Your clients may ask about donating used vehicles to charitable organizations. Donating a car is a good way to get a tax deduction, but increased scrutiny by the IRS means taxpayers need to have a good understanding of the rules related to the items claimed on their return. Clients should
Corporation cannot deduct California business privilege tax in year paid
Banking corporation 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
What is an item of property?
The Tax Court held the IRS properly recharacterized income generated from the rental of semi truck tractors and trailers as nonpassive under the self-rental rule, since each tractor or trailer was considered an item of property under Regs. Sec. 1.469-2(f)(6). Generally, taxpayers’ passive losses are currently deductible only to the
Proposed amendments would change apportionment rules
The Multistate Tax Commission is considering significant changes to the rules that govern how multistate businesses are taxed. The goal of the proposed amendments is to modernize the Multistate Tax Compact so it conforms to shifting tax policy preferences and changes in the world economy. All but three states (Delaware,
IRS wins again on appeal of rehabilitation credit
In the IRS’s second successful appeal of historic rehabilitation credits for private investors in public projects, the Third Circuit reversed and remanded the Tax Court’s decision in Historic Boardwalk Hall LLC. The IRS victory follows earlier success in Virginia Historic Tax Credit Fund, 639 F.3d 129 (4th Cir. 2011). Prior
IRS delays Oct. 31 deadlines for taxpayers and preparers affected by Hurricane Sandy
On Wednesday, the IRS announced it is granting taxpayers and tax preparers affected by Hurricane Sandy until Nov. 7 to file returns and accompanying payments normally due on Oct. 31 (IR-2012-82).The relief applies to taxpayers and tax preparers in an area affected by Hurricane Sandy or otherwise affected by the
Fiscal worries to persist regardless of who wins election
The “fiscal cliff” and long-term government deficit issues are weighing heavily on the minds of finance professionals, and they do not expect business conditions to improve regardless of the results of the Nov. 6 presidential election. Three-fourths of 949 executives who responded to a survey at the annual conference of
FATCA prop. regs. amended to extend various deadlines
The IRS is delaying various FATCA-related deadlines because it has received feedback that complying with the original deadlines and other requirements is proving to be impractical for some taxpayers (Announcement 2012-42). The announced changes modify the 388-page proposed regulations issued in February related to the Foreign Account Tax Compliance Act
IRS announces inflation adjustments for 2013
On Thursday, the IRS released its annual revenue procedure making inflation adjustments to the gift tax annual exclusion and other items for tax years beginning in 2013 (Rev. Proc. 2012-41). The gift tax annual exclusion will increase from $13,000 to $14,000 in 2013 and the amount of foreign earned income
TIGTA: IRS pays millions in unnecessary interest on NOL carrybacks
The Treasury Inspector General for Tax Administration (TIGTA) issued a report Monday in which it found that IRS delays in processing net operating loss (NOL) carrybacks result in the IRS’s paying millions of dollars in interest unnecessarily (TIGTA Rep’t No. 2012-40-111). According to TIGTA, the IRS pays these millions in
Dozens indicted on stolen identity tax refund fraud charges
On Wednesday, federal officials in Miami announced indictments of 40 people in 20 cases for stolen identity tax refund fraud. This type of fraud generally involves situations in which personal identification information is stolen from an innocent person and used to submit a fraudulent refund claim. The indictments included one
Whistleblower’s claim is not entitled to Tax Court review
In a case of first impression, the Tax Court held that it could not order the IRS to reopen an individual’s whistleblower claim under Sec. 7623(b), and the court dismissed his petition (Cohen, 139 T.C. No. 12 (2012)). Sec. 7623(b) authorizes an award to a whistleblower if the IRS proceeds
IRS issues interim ITIN procedures for 2011 tax returns on extension
The IRS has posted special instructions for certifying acceptance agents (CAAs) to use in certifying identification documents for 2011 tax year filers who are filing on extension—returns that are due by Oct. 15, 2012. The identification number issued under these special instructions will be valid until Oct. 15, 2013. A
Handling an inadvertent termination
The general definition of an S corporation includes restrictions on the type and number of shareholders as well as the type of corporation that may qualify for the election. If an S corporation violates any of these restrictions, its S status is automatically terminated. Inadvertent involuntary terminations should be addressed
No deduction for bringing down the house
The Tax Court disallowed the taxpayers’ charitable contribution deduction for the value of a donated house that would later be destroyed in a training exercise by a county fire department. The court held that a deduction should not be allowed since the taxpayers did not transfer an undivided portion of an
IRS’s “Fresh Start” program expands payment options
Clients should always be encouraged to file their returns on time and pay as much of the balance due as possible, but those that cannot pay in full are not out of options. Changes the IRS has made as part of its “Fresh Start” initiative over the past two years
Responding to a 90-day letter
Under Sec. 6212(a) the IRS can issue a statutory notice of deficiency, also known as a 90-day letter, when it determines a deficiency in an income or estate and gift tax liability. A 90-day letter is a formal legal notice, sent by certified or registered mail. Taxpayers have a statutory
Features
FROM THIS MONTH'S ISSUE
4 ways solo practitioners can stand out
Five years ago, a grieving Angel Zhen started his own CPA firm with no clients and no revenue. Today, he has 300 clients, $600,000 in revenue and 12 weeks of annual vacation. In this JofA article, he shares how he set up his firm and how you could do the same.
From The Tax Adviser
April 30, 2026
Current developments in taxation of individuals: Part 2
April 30, 2026
