The IRS should phase in over the next three years a requirement that tax return preparers filing more than 10 returns do so electronically—a mandate that otherwise will take effect next year, an advisory panel said Friday. The recommendation was among nine by the Electronic Tax Administration Advisory Committee in
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Tax
Regulations Issued on Grandfathered Health Plans
The IRS, the Department of Labor, and the Department of Health and Human Services issued interim final regulations on June 14 regarding grandfathered health plans under the health reform legislation enacted in March (TD 9489). The Patient Protection and Affordable Care Act (PL 111-148) incorporated the provisions of part A
IRS Issues Regulations on New Indoor Tanning Tax
On Friday, the IRS issued final, temporary and proposed regulations to provide guidance on the new 10% indoor tanning services excise tax (TD 9486; REG-112841-10). The Patient Protection and Affordable Care Act (PL 111-148) created a new 10% excise tax on amounts paid for indoor tanning services after June 30,
IRS Issues Partnership Anti-Abuse Rule Regulations
The IRS and the Treasury Department issued final regulations on June 8 to provide that the IRC § 704(c) anti-abuse rule takes into account the tax liabilities of both partners and certain owners of partners (TD 9485). The regulations also provide that partnerships cannot use an allocation method to achieve
AICPA Submits Comments on IRS Uncertain Tax Position Proposal
On June 1, the AICPA submitted comments to the IRS on the Service’s proposal to require certain business taxpayers to disclose their uncertain tax positions on their tax returns. The comments raise concerns the AICPA has with the proposal and make several recommendations to the IRS. In its comments, the
IRS Revises Section 179 Expensing Amounts to Reflect HIRE Act Changes
On June 1, the IRS issued revised inflation-adjusted numbers to reflect the extension of the increased section 179 expensing amount for 2010 (Revenue Procedure 2010-24). On March 18, 2010, the Hiring Incentives to Restore Employment Act of 2010, PL 111-147 (the HIRE Act), extended for 2010 the increased amounts that
Line Items
ADOPTION CREDIT AND EXCLUSION EXPANDED The Patient Protection and Affordable Care Act (PL 111-148) temporarily increased the adoption expense credit and fringe benefit exclusion limit for adoption-assistance programs and made the credit refundable. The changes are effective for tax years beginning after Dec. 31, 2009. The act increased the statutory
QSub Bank’s Tax-Exempt Bond Expense Deductible
The Seventh Circuit Court of Appeals held that a bank organized as a qualified S corporation subsidiary (QSub) could deduct in full its interest paid to acquire tax-exempt bonds, reversing the Tax Court. As a general rule, expenses related to producing tax-exempt income, including interest, are nondeductible. Therefore, IRC §
Spouse Had “Reason to Know” of Disallowed Deductions
The Sixth Circuit joined the Second, Fifth, Seventh, Eighth, Ninth and Eleventh circuits in adopting the “knowledge of the transaction” test of Price v. Commissioner (887 F.2d 959 (9th Cir., 1989)) in innocent spouse cases, upholding a Tax Court finding of ineligibility for relief. IRC § 6015(b)(1)(C) requires taxpayers seeking
SUB Payments Are Not FICA Wages
The District Court for the Western District of Michigan affirmed a bankruptcy court’s holding that severance payments by a bankrupt company to its laid-off employees were not subject to FICA tax. The court held that because IRC § 3402(o) subjects a supplemental unemployment benefit (SUB) payment to income tax withholding
Widow Not Barred From Innocent Spouse Claim
The Tax Court determined that a widow was not prohibited from raising the issue of relief from joint and several liability for three tax years that had been previously litigated. The court concluded that the exception to res judicata applied, but it did not address whether the taxpayer qualified to
IRS Provides Guidance, Steps Up Exams of Sec. 199 Issues
Code § 199 provides a deduction equal to a specified percentage (9% for 2010 and subsequent years) of the lesser of qualifying production activity income (QPAI) or taxable income. In brief, QPAI equals eligible receipts, or domestic production gross receipts (DPGR), less allocable cost of goods sold and other deductions.
Sixth Circuit Finds False Imprisonment Settlement Payments Taxable
The Sixth Circuit affirmed a Tax Court decision that settlement proceeds received for false imprisonment were not excludable under IRC § 104(a)(2) as amounts received due to physical injury. Brenda Stadnyk was falsely imprisoned as the result of an auto dealership’s criminal complaint against her. She had stopped payment on
FASB’s Position on Uncertainty Makes No Sense
With regard to your article “An Update on Accounting for Uncertainty in Income Taxes” (Dec. 09, page 45), I wish to question what was wrong with the accounting rule makers. The position FASB is taking with regard to private companies makes no sense at all. The article states that the
Don’t Neglect to Elect
A wide range of federal tax elections gives individual taxpayers options for how they report certain income or expense items. Some of the more common elections for individuals concern retirement plans, medical expenses and interest expense. Each election has specific rules as to who can make the election, when and
Request for Replacement Estate Tax Check Denied
The U.S. Court of Federal Claims held it did not have jurisdiction to issue a replacement check to a U.S. executor after a foreign executor named to the same estate cashed a refund check from the IRS. The issue arose after a U.S. citizen died in 2006 while living in
CPAs Work for Clients, Not IRS
I suspect my note will be only one of many you will receive about the article “Tax From the Top” (April 10, page 16). Someone needs to advise the IRS that we, CPAs, are not partners with the IRS. We are advocates for our clients; we are professional, ethical and
Tax Return Preparation Mistakes
Errors and omissions in preparing tax returns can occur easily. You might accidentally enter a number incorrectly, misinterpret a law, or misconstrue the client’s facts. Later, before an IRS audit, you might discover the mistake, raising gut-wrenching questions: Do you call the mistake to your client’s attention? Do you advise
House Passes Tax Extenders Bill
On Friday, the House of Representatives passed the American Jobs and Closing Tax Loopholes Act (HR 4213) by a vote of 215–204. The bill now goes to the Senate, which will not take it up for consideration until after it returns from its Memorial Day recess on June 7. The
Supreme Court Declines to Hear Textron Work Product Privilege Case
The U.S. Supreme Court on Monday declined to review the case of Textron Inc. v. United States, Sup. Ct. docket no. 09-750 (5/24/10). The decision not hear the case lets stand the First Circuit Court of Appeals’ decision that a corporation’s tax accrual workpapers were not protected from an IRS
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