On April 15, the IRS issued Notice 2010-30, which gives certain civilian spouses of service members on active duty an extension of time through Oct. 15, 2010, to pay their 2009 federal income taxes. However, civilian spouses were not granted an automatic extension of time to file a return. The
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Circular 230 Best Practices
Circular 230, section 10.33, on best practices deals with providing advice and preparing a submission to the IRS. This section affects several aspects of tax practice, including clear client communications, the importance of the conclusions reached, acting fairly and with integrity, and having procedures to ensure best practices. Section 10.33
Choice of Entity: Benefits of a Partnership
When starting a new business, one of the first questions an entrepreneur asks is, “What type of entity should I use?” This question is not one that should be taken lightly, nor is there a one-size-fits-all answer. There should be a great deal of discussion with the client and his
Using a Qualified Plan Account to Fund a Roth IRA Conversion
Roth IRAs have become popular retirement savings options since their introduction in 1998. However, high-income individuals have not been able to take advantage of the Roth IRA opportunity. Recent tax law changes expand the Roth IRA to all taxpayers who have or could have traditional IRA accounts. Background Before 2010,
Final Regs Govern Deductibility of State Legislators’ Deemed Living Expenses
The IRS and Treasury released final regulations Thursday on the availability of a special deduction for deemed living expenses of state legislators (TD 9481). The final regulations adopt, with amendments, proposed regulations that were issued in 2008 (REG-119518-07). Under IRC § 162(h), a state legislator who lives more than 50
IRS Releases HIRE Act Employee Affidavit Form; Posts FAQs
The IRS released new Form W-11 on Wednesday for certifying that employees are qualified employees for purposes of tax benefits under the Hiring Incentives to Restore Employment (HIRE) Act (PL 111-147). The HIRE Act, enacted on March 18, created a payroll tax credit for employers who hire workers who have
Tax Filing Season Resources—Tax Year 2009
This is the one-stop shop for all the updates you need to know for this year’s tax filing season. Find resources from the JofA and The Tax Adviser, plus tax return checklists and tax savings tips from the AICPA, categorized by tax topic. INDIVIDUAL TAX IRS Reports Average Refund Size Is
“Bundled” Fiduciary Fees Fully Deductible for 2009
The IRS in Notice 2010-32 extended to tax years beginning in 2009 its interim guidance on deductibility of a “bundled” investment advisory commission or fee paid to a trustee or executor on behalf of a nongrantor trust or estate. The interim guidance was issued in February 2008 in Notice 2008-32
IRS Publishes FAQs on Health Care Small Business Credit
On Thursday, the IRS published to its Web site 22 questions and answers about the new health care small business credit. The FAQs cover: Eligibility for the credit; Calculation of the credit; Determining full-time employees and wages for purposes of the credit; How to claim the credit; and Transition
Health Care Reform Reshapes Tax Code
In March, Congress passed two pieces of legislation designed to reform the U.S. health care system. The Patient Protection and Affordable Care Act (PL 111-148) was enacted on March 23, and was quickly followed by the Health Care and Education Reconciliation Act of 2010 (PL 111-152), which amended several portions
Life Insurance Checkup
Life insurance policies often form a large percentage of a client’s net worth. As goals, needs and products evolve, advisers should review their clients’ insurance portfolio to make sure it is optimized. Follow these steps to get started: —By Cory Chmelka, CFP, (cchmelka@capwm.com) managing partner of Capstone Wealth Management LLC
Gift Tax on QTIP Transfer Included in Gross Estate
The Tax Court agreed with the IRS that gift tax of approximately $10 million resulting from the gift of qualified terminable interest property (QTIP) by a decedent within three years before her death was includible in her gross estate under IRC § 2035(b). Even though the gift tax on the
FLP Affirmed by Tax Court
The Tax Court held that although a family limited partnership (FLP) conducted no active trade or business, it nonetheless fulfilled a legitimate and significant nontax purpose. Thus, a discounted value of an interest in the FLP, rather than that of stock with which it was funded, was includible in a
Acquiring Basis in S Corp Shareholder Loans
Practitioners routinely face the challenge of helping S corporation shareholders increase their basis for purposes of deducting pass-through losses under IRC § 1366(d)(1). Often, planning to increase basis will result in shareholders making loans to the S corporation at year-end. In situations involving shareholder loans to S corporations facilitated by
IRS Proposes Disclosure of Uncertain Tax Positions
The IRS said on Jan. 26 (Announcement 2010-9) that it may require businesses to disclose with their tax returns any uncertain tax positions for which they must establish a reserve, as well as those for which they have not established a reserve because they expect to litigate the position or
Claiming and Documenting the First-Time Homebuyer Credit
Practitioners should be aware of increased documentation procedures for the first-time homebuyer credit and the new administrative powers available to the IRS if a client’s return is selected for review. In addition, required attachments necessitate filing a paper return for 2009 (see news release IR 2009-108). This credit under IRC
Tax From the Top: Q&A With IRS Commissioner Doug Shulman
In March 2008, Doug Shulman became the 47th commissioner of the IRS, after serving as vice chairman of the Financial Industry Regulatory Authority (FINRA). Within months, the financial crisis hit and the IRS was given the task of administering a number of new economic stimulus and tax relief provisions, in
Tax Court Must Heed Special Trial Judge’s Report
In the long-running case of three taxpayers at the center of an alleged kickback and tax avoidance scheme, the Seventh Circuit held that the Tax Court did not give proper deference to the findings of its special trial judge (STJ) 12 years ago. In so finding, the court remanded to
Tax Treatment of Adoption Expenses
Of the family-related “life events” with significant implications for taxes, adoption of a child ranks among the potentially most expensive. Most readers of Adoptive Families who answered the magazine’s request to report the costs of a completed adoption gave figures between $25,000 and $30,000 (tinyurl.com/yjxlvre). International adoptions tend to be
U.S.-Switzerland Protocol Will Allow Handover of UBS Account Holder Information
The United States and Switzerland announced a new protocol, amending the income tax treaty between the two countries to allow the Swiss government to provide information to the IRS on U.S. account holders of Swiss bank UBS. The protocol has been approved by the Swiss Federal Council and was signed
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