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
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Tax
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.
“Killer B” Crackdown Finalized
The IRS issued new final regulations on cross-border reverse triangular reorganizations, popularly known as “Killer B” transactions (TD 9526). The regulations finalize with some modifications proposed regulations that were issued in 2008 (REG-136020-07). Previously, in Notices 2006-85 and 2007-48, the Service had said new rules were needed to thwart the
Client Tax Fraud and the CPA
Your client just called and left the following message: “I answered the door at my home today, and an agent who said he was from the IRS Criminal Investigation Division wanted to ask me some questions. What should I do?” While you may never get a call from a client
Line Items
RELIEF GIVEN FOR LATE ELECTIONS TO COMBINE REAL ESTATE ACTIVITIES The IRS established a special procedure by which taxpayers can make a late election to treat all their real estate activities as a single activity for purposes of meeting material participation rules. The guidance, in Revenue Procedure 2011-34, allows eligible
Prohibited Transactions Wipe Out Bankruptcy Exemption for Self-Directed IRA
The Court of Appeals for the Eleventh Circuit affirmed a district court decision (which had previously affirmed a bankruptcy court) that all funds in two of an individual’s IRAs and part of a third were not exempt from his bankruptcy estate under Bankruptcy Code (USC Title 11) section 522(b)(3)(C). These
Carrying Back Net Operating Losses
One of the biggest questions surrounding net operating losses (NOLs) is when to use this potentially significant tax attribute. Once a decision is made about when an NOL will be used, it is important that it be carried back and/or forward properly. Under IRC § 172(b)(1), an NOL (in general)
Managing an IRS Correspondence Audit
The IRS has expanded its use of correspondence examinations in lieu of field examinations of individual income tax returns. While this trend has allowed the Service to collect additional revenue more efficiently, it has also caused difficulties for some taxpayers and CPAs representing them. The IRS has had problems in
Type B Reorganization Basis Method Updated
With Revenue Procedure 2011-35 issued May 31, the Service updated and revised methods by which an acquiring corporation may establish its basis in the stock of a target corporation in a type B reorganization under IRC § 368(a)(1)(B) or other transferred basis transaction. The general procedures were provided 30 years
IRS Finalizes Circular 230 Regulations
The IRS issued final regulations (TD 9527) implementing components of its initiative to register and regulate all paid tax return preparers. The regulations, which finalized proposed regulations issued in August 2010 (REG-138637-07) revise Circular 230. Paid preparers of all or substantially all of certain tax returns and claims for refunds
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