In a fact sheet (FS-2011-13) released Friday, the IRS reminded U.S. citizens and dual citizens of the United States and foreign countries who live abroad about U.S. filing requirements, including Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR). Some dual-citizen taxpayers may have only recently learned
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Tax
Standard Mileage Rates for 2012 Released
The IRS on Friday released standard mileage rates for use in 2012 (Notice 2012-1). Taxpayers can use the optional standard mileage rates to calculate the deductible costs of operating an automobile. For business use of an automobile remains at 55½ cents per mile. For medical or moving expenses, it is
IRS Holds First Hearing on Real-Time Tax System
The IRS held a public hearing on Thursday to gather feedback on how to implement a system in which the IRS would match information on tax returns with data from third-party information returns during the processing of the return. Under the proposed “real-time tax system,” if the IRS found discrepancies
Final Regs Issued on Low-Income Community Businesses and New Markets Tax Credit
On Friday, the IRS issued final regulations on how entities serving certain targeted populations can qualify as active low-income community businesses for purposes of the Sec. 45D new markets tax credit (T.D. 9560). The new markets tax credit encourages capital investment in economically depressed areas by private investors in exchange
Schedule M-3 Requires New Disclosures
Schedule M-3, Net Income (Loss) Reconciliation, is required for returns of corporate and partnership entities that report assets of $10 million or more on their Schedule L balance sheet, to reconcile taxable income or loss with financial statement income or loss. The IRS introduced Schedule M-3 effective for tax years
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HIGH COURT TO HEAR BASIS ISSUE SPLITTING CIRCUITS The U.S. Supreme Court granted certiorari Sept. 27 in U.S. v. Home Concrete & Supply LLC, one of several cases in which the IRS has claimed that a six-year extended statute of limitation applies when an understatement of gross income arises from
IRS Issues Guidance on Fingerprinting, Other Registered Tax Return Preparer Details
The IRS provided more details on Sept. 21 of its still-developing requirements for all paid tax return preparers to be registered and undergo a background check, to include fingerprinting. The IRS said CPAs are exempt from fingerprinting at this time. It also said it will not require individuals to be
Tenth Circuit Remands Employee-Spouse Case to Tax Court
The Tenth Circuit Court of Appeals vacated the Tax Court’s decision that denied a farmer’s business deduction for reimbursements made to his wife under an employee medical expense and health insurance reimbursement plan. The appellate court held that the Tax Court should have applied the common-law agency doctrine to determine
Ninth Circuit Affirms Tax Court’s Jurisdiction to Redetermine Partnership Deficiency
In a Son-of-BOSS appeal, the Ninth Circuit Court of Appeals rejected a taxpayer’s two procedural arguments and upheld the Tax Court’s jurisdiction to redetermine the tax shelter participant’s deficiency. The petitioner, Michael Napoliello, entered into two pairs of offsetting long and short foreign currency option contracts held by an LLC
Offers in Compromise and Dissipated Assets
Under IRC Sec. 7122(a), taxpayers may request an offer in compromise (OIC) with the IRS to settle outstanding tax liabilities for less than the full amount owed. To qualify, taxpayers must prove that their outstanding tax liabilities exceed the amount of income and assets available to satisfy those liabilities during
IRS Clarifies Corporate Governance Questions for Tax-Exempt Organizations
The IRS believes that strong corporate governance leads to increased compliance for tax-exempt organizations. In 2008, the IRS released a redesigned Form 990, Return of Organization Exempt From Income Tax, which requires more comprehensive and in-depth information regarding the organization’s governance, structure, policies and disclosure practices. These changes were formalized
Adjunct Professor Ruled an Employee
The Tax Court held that an adjunct university professor was a common-law employee and not a statutory employee or independent contractor, since he exercised only limited control over his course curriculum and materials and the university considered him its employee. William Schramm was an adjunct professor at Nova Southeastern University
ProSystem fx Tips
With tax season just around the corner, here are a few tips for using CCH’s ProSystem fx Tax (Foundation). ProSystem fx was the most-used software among the 10,026 respondents in the 2011 tax software survey conducted by the JofA and The Tax Adviser (see tinyurl.com/42o9h5s). 1. Tax cross-referencing. Pressing F1
Advising Clients in Same-Sex Relationships
Even as the debate over legally recognizing same-sex relationships continues, many such unions are being created in which income, expenses, assets and liabilities are shared, but generally without legal recognition of property and other rights accorded heterosexual marriages, federally and in most states. These unions create unique challenges and opportunities
IRS Offers Employee Reclassification Agreement
Employers may reclassify independent contractors as employees and limit the resulting federal payroll taxes for their most recent tax year, plus avoid related penalties and interest for prior years, under an IRS program announced Sept. 21. In Announcement 2011-64, the IRS outlined its new Voluntary Classification Settlement Program (VCSP). Unlike
IRS Proposes New Treatment of LLC Members, Limited Partners Under Passive Loss Rules
The IRS on Friday issued proposed regulations (REG-109369-10) that would redefine “interest in a limited partnership as a limited partner” for purposes of determining material participation under the Sec. 469 passive loss rules. Under Sec. 469(h)(2), losses from an interest in a limited partnership are presumptively treated as passive losses
IRS Launches New Round of Preparer Office Visits
The IRS has sent letters to tax return preparers whom the IRS has identified as at high risk of not complying with their responsibilities as return preparers. The IRS will follow up with office visits to some of these preparers who appear to have serious compliance issues. The IRS has
IRS Announces Competency Testing for Registered Tax Return Preparers
As part of its ongoing initiative to regulate previously unenrolled tax return preparers, the IRS announced on Tuesday that competency testing for registered tax return preparers will start next week (IR-2011-111). The IRS announced that the fee for taking the competency test will be $116 ($27 of which is the
President Signs Government Contractor Withholding Repeal, Veterans Job Credits
On Monday, President Barack Obama signed into law the Three Percent Withholding Repeal and Job Creation Act (H.R. 674), which Congress sent to him last week. The act repeals a requirement that 3% of payments be withheld by the federal or state governments or their instrumentalities or subdivisions (including multistate
Temporary Regs on All-Cash D Reorgs Issued
The IRS on Friday issued identical temporary and proposed regulations on basis allocation in all-cash D reorganizations (T.D. 9558; REG-101273-10). The regulations govern the determination of the basis of stock or securities in a corporate reorganization when the issuing corporation does not distribute any stock or securities in the reorganization.
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