The IRS released updated guidance identifying when a taxpayer’s disclosure of an item or position in an income tax return is adequate for purposes of reducing the understatement of tax penalty and the tax return preparer penalty for understatement due to unreasonable positions (Rev. Proc. 2012-15). The IRS regularly releases
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IRS issues regs on interest expense allocation and apportionment for partners
The IRS has issued temporary and identical proposed regulations that make four changes to the rules for allocating and apportioning interest expense for partners in partnerships (T.D. 9571; REG-113903-10). The first change is to the method for apportioning interest expense for corporate partners whose interest in the partnership is 10%
Tax season starts
Tuesday, Jan. 17, marks the start of tax season, as the IRS opens up its system to accept e-filed individual tax returns. It will also start accepting returns through its Free File program on Tuesday. Unlike last year, when the start of tax season was delayed for some taxpayers by
IRS gives transitional relief to Form 8937 filers
The IRS announced on Friday that, due to its late release of the required form, it will not impose penalties on issuers of stock who report incorrect 2011 information required under Sec. 6045B, as long as they make a good-faith effort to timely comply with the requirements (Notice 2012-11). The
Form debuts for Jan. 17 stock basis change reporting deadline
The IRS released new Form 8937, Report of Organizational Actions Affecting Basis of Securities, and its instructions. The deadline for filing the form for 2011 is next Tuesday, Jan. 17. Issuers of specified securities must file the form by that deadline to report organizational actions during 2011 that affect those
FAF releases “post-implementation review” of FIN 48
The Financial Accounting Foundation’s first formal “post-implementation review” of a FASB standard is complete with this morning’s report that FASB Interpretation no. (FIN) 48, Accounting for Uncertainty in Income Taxes, generally achieves its purpose. According to a FAF announcement, the review concluded that FIN 48 increases relevance and comparability in
Taxpayer advocate cites underfunding as cause of IRS’ most serious problems
The national taxpayer advocate, Nina Olson, in her annual report to Congress for 2011, cited the IRS’ lack of adequate funding, expanding workload and overreliance on automation as the most serious problems facing taxpayers. She said that, as a result, the IRS cannot adequately meet the needs of taxpayers, cannot
IRS PTIN system continues to accept 2011 renewals
The IRS online system to apply for a new preparer tax identification number (PTIN) is back up and running after a two-week hiatus for maintenance. In addition, the system is continuing to accept 2011 PTIN renewals even though the Dec. 31, 2011, renewal deadline has passed. The IRS has also
IRS announces third offshore voluntary disclosure program
In a press release trumpeting the successful collection of more than $4.4 billion in its 2009 and 2011 voluntary disclosure programs, the IRS announced it is starting its third program designed to help people hiding offshore accounts get current with their taxes in the U.S. (IR-2012-5). The new program, unlike
More-generous rules proposed for equitable innocent spouse relief
In response to court decisions and the IRS’ claim that its experience applying equitable relief has given it new insight, the IRS issued a proposed revenue procedure changing the way it will treat requests for equitable innocent spouse relief under Secs. 66(c) and 6015(f) (Notice 2012-8). The three most significant
The 20 most popular stories of 2011
We tallied the traffic on journalofaccountancy.com to determine 2011’s most popular JofA articles and news. Use the lists below to catch up on important news and professional developments you may have missed in the past year. Here are the most popular feature articles of 2011 from the JofA’s monthly print
IRS issues new guidance on W-2 reporting of health plan costs
The IRS released new guidance on the requirement that employers provide information to employees on the cost of employer-provided group health plan coverage (Notice 2012-9). The guidance comes in the form of 39 questions and answers. It supersedes Notice 2011-28 and makes changes to requirements that were issued in Notice
New tax provisions for 2012
With the ringing in of the new year, several new tax provisions took effect. While the list of new items does not compare with the number of tax provisions that expired at the end of 2011 (see “Many Tax Provisions Set to Expire at Year-End”), practitioners should be aware of
PTIN procedures detailed
Update: Since this item was published, the IRS started accepting renewals after the Dec. 31 deadline. See “IRS PTIN system continues to accept 2011 renewals,” Jan. 10, 2012. Return preparers who needed to renew their preparer tax identification number (PTIN) for the 2012 tax preparation season should have done so
IRS audits of small business software files
Tax practitioners have always been cautious with the records they provide to the IRS in an audit to control the depth of an IRS inquiry. But IRS agents are starting to request client backup files from small business accounting software such as QuickBooks and Peachtree, and many practitioners are concerned
The basics of S corporation stock basis
The concept of basis is simple, but calculating basis for S corporation stock takes much of many CPA tax practitioners’ time and energy. Why is this the case? Basis measures the amount that the property’s owner is treated as having invested in the property. At the start of the investment,
Tax relief and health care acts shape 2011 returns
As CPAs gear up for tax season, they’ll find the Form 1040 series for 2011 looking much the same as that of the previous year, but only because of Congress’ 11th-hour compromise late in 2010 to keep it so. Nonetheless, a number of new features affecting individuals and businesses, such
Home office deduction
With unemployment still near the highest rate in decades, it is not surprising to find many people working out of their homes. Now may be a good time to review the criteria for claiming a deduction for the business use of part of a person’s residence. You do not have
Qui tam award held taxable
The Eleventh Circuit Court of Appeals affirmed a Tax Court determination that a qui tam whistleblower award to a taxpayer under the federal False Claims Act (FCA) was taxable. Under the FCA, a person may bring a civil action, in which the U.S. government may intervene, against a party that
Mortgage interest deduction allowed for home never built
The Tax Court held that a couple could deduct interest paid on a loan incurred to purchase property on which they intended to construct a new home but never did. According to the court, a qualified residence was deemed to be under construction when an existing home was demolished and
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