Taxpayers in certain areas affected by Hurricane Irene have until Oct. 31 to file certain returns and make payments normally due before then, the IRS announced Thursday (IR-2011-87). The areas eligible for relief include parts of North Carolina, New Jersey, New York and Puerto Rico; the IRS expects to provide
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Upward Stock Option Repricing
Companies often reduce the exercise price of employees’ outstanding stock options to the current stock price to restore the options’ incentive effect and retain talented employees. However, in some cases companies raise the exercise price to provide tax benefits for option holders under certain circumstances. If a stock option qualifies
Real Estate Transfer Taxes: Practical Considerations
Approximately two-thirds of U.S. states, as well as a number of municipalities, counties and other units of local government, impose a tax on taxpayers when they transfer real property to another party. As a practical matter, a real property transfer tax is typically triggered if a deed is recorded; however,
2011 Tax Software Survey
This year’s tax preparation software survey by The Tax Adviser and the JofA yielded more than 10,000 responses from readers, showing what tax professionals like and dislike about the tax preparation software they used this tax season. As in years past (see the 2010 survey here), price and ease of
IRS Finalizes Automatic Five-Month Extension for Partnership, Trust and Estate Returns
Final regulations set the time for automatic extensions of partnership, trust and estate income tax returns at five months (TD 9531). Under this rule, the extended returns and Schedule K-1s for partners and beneficiaries will generally be due Sept. 15. The regulations also provide for an automatic six-month extension for
Golfer Bogies Endorsement Income
Professional golfer Retief Goosen split a decision with the IRS in the Tax Court that partly redetermined the character and source of his income from product endorsements. Goosen is a native of South Africa and a nondomiciliary United Kingdom resident. He was well-known abroad before he won the 2001 U.S.
Deduction for Cat Expenses Get Second Life
The Tax Court permitted a deduction for a taxpayer’s unreimbursed volunteer expenses incurred while caring for foster cats in her home, since they were incurred “incident to the rendition of services” to a qualified organization. The court also held the recordkeeping requirements for cash contributions under $250 should apply to
No Reasonable Cause Defense for Preparer’s Omission
The Tax Court upheld an accuracy-related penalty, rejecting the husband-and-wife taxpayers’ argument that they had reasonable cause for a tax understatement caused by their return preparer’s apparently accidental omission of an item of income. The error involved omission of nearly $3.4 million in gain, which was slightly more than 10%
Advising Financially Stressed Clients
Tax and financial advisers should be prepared to discuss a range of possibilities for their clients who are facing financial difficulties and help make the best choices given their circumstances and goals. Should they consider bankruptcy? If they want to avoid bankruptcy, how can they best reduce their debt? Which
Third Circuit Upholds $473 Million Subpart F Deficiency
The Third Circuit Court of Appeals affirmed a deficiency of nearly $473 million against pharmaceutical company Merck & Co. Inc. as successor to Schering-Plough, saying an interest rate swap Schering-Plough engaged in with two foreign subsidiaries was a disguised loan from the subsidiaries. Subpart F of the IRC (sections 951
FATCA Reporting Suspended for Some; Pre-2010 FBAR Filing Extended
The IRS suspended FATCA (Foreign Account Tax Compliance Act) information reporting requirements for certain individuals with foreign assets and shareholders of passive foreign investment companies (PFICs) under IRC §§ 6038D and 1298(f) (Notice 2011-55). The requirement will be suspended until the IRS releases Form 8938, Statement of Specified Foreign Financial
IRS Clarifies Sept. 9 Extension for Offshore Reporting
The IRS on Monday clarified its postponement of deadlines under the 2011 Offshore Voluntary Disclosure Initiative (OVDI). On Friday, in response to Hurricane Irene, the IRS moved the OVDI deadline to Sept. 9 (from Aug. 31), but did not address the Aug. 31 due date for information filings that are
Hurricane Postpones IRS’s Offshore Voluntary Disclosure Deadline
As Hurricane Irene was about to make landfall in North Carolina on Friday evening and head up the East Coast, the IRS announced it had postponed the deadline for its 2011 Offshore Voluntary Disclosure Initiative (OVDI). The new due date for requests is Sept. 9, 2011. Before the extension, taxpayers
TIGTA: IRS Does Not Timely Resolve Math Error Disputes
The Treasury Inspector General for Tax Administration (TIGTA) released a report in which it recommended that the IRS develop processes to ensure that math error disputes with taxpayers are resolved more quickly and accurately. Between Jan. 1 and July 23, 2010, TIGTA reviewed 260 taxpayer responses to IRS math error
Final Regulations Govern Establishing Evidence of Delivery to the IRS
The IRS issued final regulations providing guidance on how taxpayers can prove the timely delivery of physical documents to the IRS or the Tax Court, absent direct proof of delivery (TD 9543). The regulations provide that proper use of registered or certified U.S. mail or a private delivery service, under
Election to Deduct Business Startup Expenses Gets Final Rules
The IRS on Tuesday issued final regulations (TD 9542) governing elections by individual taxpayers, corporations and partnerships to deduct startup expenses or organizational expenditures. The regulations adopt with a slight change temporary regulations the Service issued in 2008 (TD 9411). The rules provide guidance on the application of section 902
Health Care Premium Credit Rules Proposed
The IRS released proposed regulations Friday (REG-131491-10) implementing the health insurance premium tax credit, which was enacted last year by the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act and is effective starting in 2014. The proposed regulations are part of a “next step”
IRS Revises Actuarial Tables
The IRS issued final regulations Thursday relating to the use of actuarial tables for valuing annuities, interests for life or a term of years, or remainder or reversionary interests. The regulations (TD 9540) were necessary because IRC § 7520(c)(3) directs the IRS to update the actuarial tables to take into
IRS Issues Guidance on Carryover Basis Rules for 2010 Decedents’ Estates
On Friday evening, the IRS issued guidance on the time and manner for making the election not to have estate tax apply to estates of decedents who died in 2010 (Notice 2011-66). The election must be made by Nov. 15, 2011. The notice also discusses how donors can elect out
2011 Tax Software Survey: Individual Product Survey Responses
The JofA and The Tax Adviser surveyed our readers to determine what they liked and did not like about their tax preparation software. The survey was conducted in May 2011 and received 10,026 responses. As in past years, three products led the pack in the number of respondents using them.
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