On Friday, the IRS issued final regulations governing the election and calculation of the alternative simplified research and development credit under IRC § 41(c)(5) (TD 9528). The new rules are effective for tax years ending after June 9, 2011. The final regulations extend the election procedures for the alternative incremental
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Tax
IRS Eliminates Form 5472 Duplicate Filing Requirement
On Thursday, the IRS issued temporary and proposed regulations to remove the duplicate filing requirement for Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business (TD 9529 and REG-101352-11). Under the current final regulations, corporations that are required
FinCEN Clarifies Parties Entitled to FBAR Filing Extension
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued a revised notice Monday that clarified that a small subset of individuals are entitled to a one-year extension of the June 30, 2011, filing deadline to file Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR). The notice
Regulators Extend FBAR Filing Deadline for Certain Financial Professionals
The IRS and the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced Tuesday that a small group of individuals required to file the Report of Foreign Bank and Financial Accounts (FBARs) will receive a one-year extension beyond the upcoming filing date of June 30, 2011. FinCEN issued Notice 2011-1 that
IRS Announces “Good Faith” Extension of Voluntary Disclosure Deadline
The IRS said on Thursday that it is making available to taxpayers a 90-day deadline extension to participate in the 2011 offshore voluntary disclosure initiative (OVDI). The extension would be available to taxpayers who have made a good faith attempt to fully comply by Aug. 31, but are unable to
IRS Finalizes Circular 230 Regulations
The IRS issued final regulations Tuesday (TD 9527) implementing components of the IRS’ initiative to register and regulate all paid tax return preparers. The regulations, which finalize proposed regulations issued in August 2010 (REG-138637-07), revise regulations under Title 31, part 10, commonly known as Circular 230, which govern the practice
Schedule UTP Answers Posted
The IRS posted a series of questions and answers about the new requirement for large corporations to report their uncertain tax positions. The seven FAQs address both reporting requirements for Schedule UTP, Uncertain Tax Position Statement, and the IRS’ policy of restraint. For the 2010 tax year, corporations filing Form
Plug-In Electric Cars Get a Jolt From Tax Incentives
With manufacturers now promoting their new plug-in electric models, the cars have caught up with the buyer tax credit Congress dangled for them three years ago. CPAs’ clients are likely to ask about this and other tax breaks for plug-in electrics. Although the Chevy Volt was available only in a
Co-ops and Casualties
The Tax Court held that a resident of a coop apartment complex could not claim a casualty loss deduction for an assessment to repair a common area in which she held no property interest beyond a right to use it. Christina Alphonso owned stock in Castle Village Owners Corp., a
Highway Repairs Are Domestic Production Property
The Tax Court held that a taxpayer’s receipts from highway construction projects were domestic production gross receipts (DPGR) permitting the taxpayer to claim a domestic production activities deduction. The court held that the taxpayer’s work substantially renovated real property, since it materially increased the property’s value, substantially prolonged its useful
Seven Good Reasons Credit Shelter Trusts Remain Relevant
At first glance, a new provision of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 might seem to have provided by law what estate planners have traditionally provided for their clients by setting up one or more trusts: a way to ensure that the estate or
Preparer E-File Regs Finalized
The IRS issued final regulations (TD 9518) and several pieces of guidance relating to the requirement that return preparers e-file tax returns, starting this year. The final regulations adopt, with minor changes, proposed regulations (REG-100194-10) that were published last December, and they require specified tax return preparers to e-file if
Flow-Through Entities and Uncertain Tax Position Reporting
Privately held business entities organized as flow-through entities face unique state tax issues under FASB Accounting Standards Codification (ASC) Topic 740 relating to the accounting for uncertainty in income taxes. For federal purposes, only a small percentage of flow-through entities pay income taxes, and if the scope of ASC 740
Strategies for Compromising Tax Debts
Representing financially distressed individuals is becoming increasingly common with the economic difficulties many individuals and businesses have experienced in recent years. While tax practitioners know that a taxpayer can make an offer in compromise, some of the options available in making an offer are not well-known. This article addresses three
1099 Provisions Repealed
Congress repealed a widely criticized expansion of Form 1099 information reporting that would have applied to most payments by businesses and a similar requirement for recipients of real estate rental income. The Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (HR 4) passed the Senate
IRS Wins Historic Credit Fund Appeal
The Fourth Circuit Court of Appeals ruled against the taxpayers in Virginia Historic Tax Credit Fund 2001 LLP v. Commissioner (docket no. 10-1333), reversing the Tax Court. As noted in Tax Matters coverage (April 2011, page 52) of the Tax Court’s holding in Historic Boardwalk Hall LLC v. Commissioner, 136
Palimony Claim Is a Valid Estate Tax Deduction
The U.S. Court of Appeals for the Ninth Circuit reversed the U.S. District Court for the District of Nevada, saying a palimony claim could be a valid deduction from a taxable estate and that the district court had misconstrued Nevada law regarding contracts between cohabitating individuals. Bernard Shapiro and Cora
IRS Gives Relief 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 taxpayers to avoid applying for a private letter ruling to
Treasury Releases Plan to Review All Regulations
The Treasury Department on Thursday released a plan to review all existing Treasury regulations and identify those that are “obsolete, unnecessary, excessively burdensome, or ineffective.” The plan is part of a larger federal government regulatory review mandated by an executive order issued by President Barack Obama in January. Under the
AICPA Speaks Out Against Proposed Model Sales and Use Tax Statute
The AICPA testified at a hearing May 18 to voice its opposition to a model statute drafted by the Multistate Tax Commission (MTC) that would authorize states to require nonresident companies to report sales transactions with in-state consumers in an effort to increase use tax compliance. The MTC is an
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