For decedents dying in 2010, Congress provided two systems of taxing estates and determining basis of their assets. Executors of those estates must determine the better course. To do so, especially for valuations of gross estates above the new $5 million exclusion, they must take many factors and considerations into
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Tax
Common Reporting Errors on Form 990
The redesigned Form 990, Return of Organization Exempt From Income Tax, has been the subject of much discussion since the IRS released it in 2007. As the exempt sector and practitioners have been adjusting to the new filing requirements, areas of confusion have been identified. Earlier this year, an IRS
State Income Tax Credit Is a Capital Asset
The Tax Court held that a taxpayer’s sale of a state income tax credit resulted in a capital gain, not ordinary income, since the payments received from the sale were not a substitute for ordinary income. Capital assets consist of all assets except those listed in eight categories in IRC
PFP Services Guidelines
CPAs providing personal financial planning services to individual clients in estate, retirement, tax, investment and/or insurance planning need to ensure they are meeting their professional responsibilities. The AICPA Statement on Responsibilities in Personal Financial Planning Practice (SOR) provides guidance that can help protect against unforeseen risks of litigation. Here are
Loan Loss Held Not Personal
The Tax Court ruled that a taxpayer’s loan to a business associate was made in connection with the taxpayer’s trade or business, and therefore, the forgiveness of that loan was a bad-debt loss under IRC § 166(a). The IRS had argued that the loan was personal and therefore subject to
“Associated-Property” Regs Survive “Strong” Challenge
The U.S. Court of Federal Claims upheld regulations requiring imputed interest on the basis of business property temporarily removed from service to be included in capitalized costs of property improvements. Virginia electric and natural gas utility Dominion Resources Inc. replaced coal burners in two of its electric generating plants, which
Government Contractor Withholding Delayed to 2013
The IRS issued final regulations (TD 9524) further postponing implementation of mandatory 3% withholding on payments from government entities to contractors and providing interim guidance. The final regulations also adopt a $10,000 withholding threshold for any single payment and provide a transition rule under which interest and penalties will not
IRS Addresses Accounting Software Audit Concerns
In a March 29 letter from Patricia Thompson, chair of the AICPA’s Tax Executive Committee, to Chris Wagner, commissioner of the IRS’ Small Business/Self-Employed Division, the AICPA communicated its concerns regarding the Service’s program to request the accounting software files of certain small business taxpayers under examination; the letter cites
W-2 Health Insurance Reporting Detailed
The IRS released guidance (Notice 2011-28) in question-and-answer format on the new requirement that employers include the “aggregate reportable cost” of employer-sponsored group health insurance on Form W-2, Wage and Tax Statement. The requirement was added for tax years beginning after 2010 by the Patient Protection and Affordable Care Act
The Most Popular Stories of 2011 (So Far)
Use this list of the most popular articles to catch up on important news you may have missed in the past six months. Here are the Top 10 most popular articles from the JofA’s January through June print editions, based on the clicks they received on journalofaccountancy.com: “Maximizing Tax Season
National Taxpayer Advocate Warns Against IRS Budget Cuts
National Taxpayer Advocate Nina E. Olson warned Congress on Wednesday that cuts in the IRS budget could hurt the federal government’s ability to collect revenue and may result in harm to taxpayers. In her Fiscal Year 2012 Objectives Report to Congress, Olson asserts that recession-related legislation such as the
IRS Addresses Tax Treatment of Tax-Free Exchanges of Annuities
The IRS, in Revenue Procedure 2011-38, has given taxpayers guidance on the tax treatment of exchanges of annuity contracts under IRC §§ 72 and 1035. Under IRC § 1035(a)(3), taxpayers generally recognize no gain or loss when they exchange one annuity contract for another annuity contract. Congress provided this tax-free
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 Schedules K-1 for partners and beneficiaries will generally be due Sept. 15. The regulations also provide for an automatic six-month extension for
House Passes Bill With Tax Patent Provision, Sends Back to Senate
On Thursday, by a vote of 304–117, the House of Representatives passed the America Invents Act (H.R. 1249), which includes a provision intended to stop the granting of patents for tax strategies. The bill would deem any “strategy for reducing, avoiding, or deferring tax liability” to be prior art, and
IRS Raises Standard Mileage Rate for Second Half of 2011
In response to rising gasoline prices, the IRS has raised the standard mileage rate for business use of an automobile from 51 cents per mile to 55½ per mile, effective July 1 (Announcement 2011-40). The medical and moving standard mileage rate is increasing to 23½ per mile, also on July
IRS Publishes Interim Guidance on Stock Basis Reporting
On Wednesday, the IRS issued interim guidance on issues relating to the basis of stock subject to broker reporting (Notice 2011-56). The guidance responds to stakeholder comments received in response to final regulations on the topic issued last year (TD 9504). The IRS says it plans to issue proposed regulations
IRS Suspends Foreign Asset, Passive Foreign Investment Company Information Reporting Rules
The IRS announced on Tuesday that it is suspending the 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
FinCEN Grants Another FBAR Extension for Some Individuals
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) on Friday released Notice 2011-2, which gives another small subset of individuals with only signature authority over certain foreign financial accounts who are required to file Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), with respect to those
IRS Further Extends Deadline for Certain 2009 and Earlier FBARs
The IRS has further extended the deadline for certain persons to file Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), for 2009 and earlier years (IRS Notice 2011-54). The new filing deadline is Nov. 1, 2011. The extension applies to persons with signature authority over a
Fourth Circuit Upholds Two-Year Innocent Spouse Limitation Period
The United States Fourth Circuit Court of Appeals overturned a Tax Court decision and upheld a Treasury regulation that sets a two-year statute of limitation on claims for innocent spouse relief (Jones v. Commissioner, docket no. 10-1985 (4th Cir. 6/13/11)). This marks the third time the Tax Court has been
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