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Final Regulations Simplify Accounting Rules in Corporate Reorganizations

The IRS issued final regulations (TD 9534) intended to clarify and simplify rules concerning continuity of accounting methods and inventory methods in certain tax-free corporate reorganizations and liquidations. The regulations revise regulations under IRC §§ 381(c)(4) and 381(c)(5) and adopt with nonsubstantive modifications proposed regulations issued in 2007 (REG-151884-03). They

Congressional Committee Checks In on Registered Tax Preparer Program

While tax professional communities offered diverging opinions of the registered tax return preparer (RTRP) program to a congressional subcommittee, all agreed on one thing—the IRS made a significant effort to listen. Although the program when initially proposed got off to a “rocky start,” a representative of the National Association of

Final Regulations Simplify Reduced Research Credit Election

The IRS released final regulations late Tuesday (TD 9539) further simplifying an election method by which taxpayers may use a standard rate to reduce a research credit under IRC § 41 in lieu of reducing their research expense deductions. The final regulations also clarify how members of a controlled group

Practitioners, Policymakers Welcome IRS Change on Innocent Spouse Relief

Tax practitioners, legislators and taxpayer advocates said the IRS’ announcement that it would no longer require taxpayer requests for innocent spouse equitable relief under IRC § 6015(f) to be made within two years of the beginning of collection activity was a long overdue change. “It’s not surprising at all; the

IRS Relents on Two-Year Limit on Innocent Spouse Equitable Relief

After winning appeals in three federal circuit courts of its two-year limit for requesting equitable innocent spouse relief, the IRS said on Monday it will no longer observe that deadline. In Notice 2011-70, the IRS said it will now consider taxpayer requests for equitable relief from joint and several liability

IRS Discontinues High-Low Method for Substantiating Travel Expenses

On Tuesday, the IRS announced that it is discontinuing the high-low method for substantiating lodging, meal and incidental expenses incurred in traveling away from home (Announcement 2011-42). Last year, the IRS asked for comments on whether the high-low method was still needed, and it received no comments. Under the high-low

FinCEN Creates FBAR E-Filing System

The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) on Monday said it has developed an electronic filing system for Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR). The reports can now be filed via FinCEN’s BSA E-Filing System. A United States person who has a financial

Comments Sought on IRS Continuing Education Provider Standards and Process

The IRS on Monday invited public comments on its process for approving continuing education providers and on the standards that should apply to such providers (Notice 2011-61). Under final Circular 230 regulations issued in May, registered tax return preparers will be required to meet continuing education requirements by completing courses

Economic Substance Guidance Issued to IRS Examiners

The IRS Large Business and International (LB&I) Division issued guidance to examiners on the newly codified economic substance doctrine limiting the application of penalties relating to the doctrine (LB&I-4-0711-015). The Health Care and Education Reconciliation Act of 2010, PL 111-152, codified the economic substance doctrine and a related strict liability

Phased Implementation of FATCA Requirements Announced

On Thursday, the IRS announced plans to phase in the requirements of the Foreign Account Tax Compliance Act (FATCA) (Notice 2011-53). The IRS has received numerous comments about the difficulty of implementing aspects of the FATCA requirements. The notice’s phased implementation is designed to give both foreign financial institutions and

Final Regulations Issued on Determining Amount of Tax Paid for Foreign Tax Credit Purposes

Final regulations issued on Wednesday provide guidance on determining the amount of taxes paid for purposes of determining the foreign tax credit (TD 9535). The regulations are designed to curb certain transactions that, the IRS says, “produce inappropriate foreign tax credit results.” The final regulations adopt proposed regulations issued in

100,000 Preparers Did Not Comply With PTIN Rules

The IRS announced on Tuesday that it has identified approximately 100,000 tax return preparers who did not comply with the new rules for preparer tax identification numbers (PTINs), and it is sending them letters informing them of the problem (IR-2011-74). All tax return preparers (including CPAs, attorneys and enrolled agents)

AICPA Offers Guidance on Registered Preparer Competency Exam

In a July 7 letter to IRS Commissioner Doug Shulman, the AICPA offered its perspective on the agency’s development of the registered tax return preparer examination. The IRS anticipates that it will begin offering the exam this fall to prospective candidates. In general, CPAs and employees under their supervision will

Tax Court Allows Deduction for Payment to Long-Term Caregivers

The Tax Court held that payments made to an elderly woman’s caregivers for personal care that she required due to her diminished capacity qualified as long-term-care services and were therefore deductible under IRC § 213(d)(1)(C) (Estate of Baral, 137 TC no. 1 (2011)). Lillian Baral was diagnosed by her physician

IRS Makes Dodd-Frank Mandated Language Changes to Regulations

To comply with requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (PL 111-203), the IRS has issued temporary and proposed regulations that remove all references to “credit ratings” from the Treasury regulations (TD 9533 and REG-118809-11). The regulations provide substitute standards of credit-worthiness. The Dodd-Frank Act requires

A Sea Change for Gift and Estate Planning

Martin Shenkman, Esq., CPA/PFS, is the author of numerous books and articles on tax and financial planning, including the AICPA-published Estate and Related Planning During Economic Turmoil, and with Steve R. Akers, Estate Planning After the Tax Relief and Job Creation Act of 2010: Tools, Tips, and Tactics. His firm,

Line Items

AICPA URGES STREAMLINING M-3 The AICPA recommended that the IRS reduce unnecessary or redundant information required on Schedule M-3, Net Income (Loss) Reconciliation. The suggestions were made in late April in a letter from Patricia Thompson, chair of the AICPA’s Tax Executive Committee. The IRS introduced Schedule M-3 in 2004

Section 179 Expensing for Noncorporate Lessors

While 100% bonus depreciation may be the “flavor of the month” when it comes to accelerated depreciation, it is limited to original-use property and is currently scheduled to sunset for most property at the end of 2011. IRC § 179 expensing therefore remains a prime option for small businesses, especially

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