Time that a taxpayer considered himself “on call” for his real estate business could not be counted toward hours in which he performed services for it, limiting the losses he could claim, the Tax Court held. James Moss and his wife owned seven rental real estate properties in 2007 that
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Innocent Spouse Relief: Alternatives After the Lantz Case
This past June, the Seventh Circuit Court of Appeals in Cathy M. Lantz v. Commissioner (docket no. 09-3345, 6/8/2010) reversed the Tax Court and upheld the IRS’ position that innocent spouses seeking equitable relief under subsection (f) of IRC § 6015 are subject to the same two-year filing deadline that
Displaced Workers and Deduction for Travel Expenses
In today’s economy, employees may be displaced from long-held jobs. They travel to new assignments and locations as businesses cut costs. Sometimes, employees may have to choose between being laid off or reassigned. In these situations, workers have often tried to deduct business or employment travel under IRC § 162(a)(2).
Highlights of the Small Business Stimulus Act
The Small Business Jobs Act of 2010 (PL 111-240), which Congress passed and President Barack Obama signed in September, expands loan programs through the U.S. Small Business Administration (SBA), strengthens small business preference programs for federal government projects, provides incentives for exporters, offers a variety of small business tax breaks
AICPA VP Testifies on Changes Needed to IRS Return Preparer Plan
Edward Karl, AICPA vice president–Taxation, testified at an IRS hearing Oct. 8 about proposed amendments to Circular 230 that would put into place many parts of the IRS’ plan to register and regulate tax return preparers (REG-138637-07). The proposed regulations would clarify the definition of tax practice, establish a new
Estate Must Reduce Its Credit for Tax on Prior Transfers
The Tax Court upheld the government’s reduction of a widow’s estate tax credit for tax on prior transfers due to property included in her estate previously transferred from her late husband’s estate. The court held that the limitations of IRC §§ 2013(b) and 2013(c) applied to the credit; that the
Tax Attribute Survival
Tax attribute survival is often a critical consideration in assessing a proposed corporate reorganization. Beneficial tax attributes, such as net operating losses, earnings and profits, and capital losses, are often involved, and the speed at which reorganizations tend to move makes a good foundational understanding of the relevant rules crucial
Tax Court Again Strikes Down Innocent Spouse Filing Limit
Despite its recent reversal on the issue by the Seventh Circuit, the Tax Court again ruled invalid IRS regulations requiring innocent spouses to request equitable relief under IRC § 6015(f) within two years of the beginning of collection activity. For more, see “Innocent Spouse Relief: Alternatives After the Lantz Case,”
Deductibility of Work-Related Educational Expenses
The effects of the Great Recession are still being felt in high unemployment rates and other symptoms in the U.S. job market. The Business Roundtable reported in late 2009 that even as employment shrank, 60% of employers said they had trouble finding qualified applicants for the vacancies they had. Eighty-one
2010 Small Business Jobs Act: Good for Big Business
Larger companies should be aware there’s something for them, too, in the Small Business Jobs Act of 2010 (PL 111-240). Perhaps because of the name of the law enacted Sept. 27, larger businesses might not be aware of a potentially valuable provision that could apply to them: for tax years
Leveraged Partnership a Disguised Sale
In a recent ruling, the Tax Court found that a transfer of assets to an LLC constituted a disguised sale. The court also determined that the taxpayer was liable for an accuracy-related penalty in excess of $36 million for substantial understatement of income tax. The petitioner, Canal Corp. & Subsidiaries,
IRS Provides Additional Relief Under Section 409A Document Failure Correction Program
The IRS on Tuesday issued further relief for nonqualified deferred compensation (NQDC) plans covered by IRC § 409A (Notice 2010-80). The notice expands the types of plans eligible for relief under Notice 2010-6, which was issued in January. It also provides an additional method of correction and transition relief under
Notice Gives Guidance on In-Plan Roth Rollovers
On Friday, the IRS issued guidance on how plan participants can make rollovers from a 401(k) or 403(b) plan to a designated Roth account in the same plan (Notice 2010-84). Such in-plan Roth rollovers are now permitted under IRC § 402A(c)(4), as amended by the Small Business Jobs Act of
SBA Supports Bill to Repeal “Burdensome” 1099 Filing Requirements
The head of the U.S. Small Business Administration called for the repeal of a vast expansion of 1099 filing requirements scheduled to begin in 2012. In an open letter to small business owners, SBA Administrator Karen Mills repeated President Barack Obama’s Nov, 3 statements that the expanded requirement for small
AICPA Comments on SEC Proposed Rule for Family Offices
The definition of a family office’s “family clients” must be inclusive enough to encompass all of the clients and arrangements that are typically present in a single-family office, the AICPA said. The suggestion was among comments submitted by the Institute on Tuesday on a proposed SEC rule defining family offices, part of
AICPA Urges Repeal of Expanded 1099 Reporting Requirements
In letters to members of the House of Representatives and the Senate, the AICPA on Nov. 16 expressed its concerns about the compliance burdens being placed on businesses (including rental property owners) by recently expanded Form 1099 information-reporting requirements. The letters, signed by Patricia Thompson, CPA, chair of the AICPA’s
New Rules Require Rental Property Owners to Issue 1099s
The recently enacted Small Business Jobs Act contained one provision that may have escaped the notice of taxpayers who own rental property, but will affect them starting in January. Under the provision, owners of property who receive rental income will be required to issue Forms 1099 to service providers for
Featured Online Content for November 2010
FEATURED VIDEO Performance-Based Compensation Accounting firms are increasingly using pay-for-performance to compensate their high performers. Compensation experts August Aquila and Coral Rice discuss key aspects of a pay-for-performance system, how it can benefit your firm and mistakes to avoid when implementing it. Also on journalofaccountancy.com, read ideas from the
Expanded Form 1099 Reporting “A Nightmare”
The article “The Coming 1099 Revolution: Are You and Your Clients Ready?” (Aug. 2010, page 40) provided much useful information on the tremendous increase in burdensome paperwork that will be imposed on American businesses by section 9006 of the Patient Protection and Affordable Care Act. As the largest coin and
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FOREIGN TAX CREDIT RESTRICTIONS ENACTED New restrictions on the use of foreign tax credits (FTCs), along with other revenue-raising international tax provisions, were enacted Aug. 10, 2010, as part of the so-called Education Jobs Act (PL 111-226). The legislation adds IRC § 909, which provides generally that in the case
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