State net operating loss (NOL) rules generally differ from federal NOL rules, and state NOL rules often differ from one another. This is especially true with respect to carrybacks of NOLs—which, unlike for federal returns, the majority of states do not allow—and carryforwards. This lack of consistency can lead to
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Tax
The Foreign Account Tax Compliance Act
A key component of the federal government’s push for heightened tax compliance among U.S. taxpayers with foreign accounts and assets is the Foreign Account Tax Compliance Act (FATCA). In an interview in February this year with the JofA, IRS Commissioner Doug Shulman called the then-pending legislation “the next big thing”
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SUPREME COURT WON’T REVIEW TEXTRON The U.S. Supreme Court declined to review Textron Inc. v. U.S. (Sup. Ct. docket no. 09-750), letting stand a First Circuit Court of Appeals decision that the work product privilege did not protect the corporation’s tax accrual workpapers from an IRS summons. For the First
Step Transaction Doctrine Collapses LLC Interest Gifts
In a second decision (Pierre II) involving Suzanne Pierre’s transfer of a single-member limited liability company (LLC) interest to two trusts, the Tax Court applied the step transaction doctrine to the gift and sale transactions at issue in the case and slightly reduced the lack-of-control discount. Previously, the court had
Roth IRA Conversion Quiz
By now, CPAs have heard much about Roth IRA conversions made widely available in 2010. Take the following test to see how much you’ve learned. TRUE OR FALSE? 1. Starting in 2010, there are no income limitations to make regular contributions to a Roth IRA. 2. Roth IRA investment income
Is Your College Student Still a Dependent?
College students combine many sources of funds to pay for their education, including personal savings, family savings, income from jobs, scholarships and/or student loans. As the percentage of funds from the student’s sources increases, parents risk losing the student as a dependent on their tax return. Not only do the
Discharging Taxes in Bankruptcy
With the downturn in the economy and massive job losses, personal bankruptcy filings have exploded. According to the National Bankruptcy Research Center, approximately 1.4 million bankruptcies were filed in 2009, a 32% increase over 2008. They included Chapter 7 bankruptcy filings, which increased 42%, and Chapter 13 filings, which increased
AICPA, Others Ask IRS to Withdraw UTP Reporting Plan
The AICPA and other accounting, legal and business groups called upon the IRS to withdraw its proposed requirement that businesses above a $10 million asset threshold report their uncertain tax positions. The groups responded to the IRS’ request for comments on its three announcements earlier in the year (2010-9, 2010-17
Highlights
The U.S. Supreme Court issued a long-awaited ruling in the constitutional challenge to the PCAOB that left the agency virtually unchanged. The court’s 5–4 decision, announced in June, will not affect day-to-day operations of the PCAOB, the agency said. Chief Justice John Roberts wrote the majority opinion. In it,
Special-Needs and International Adoptions Not Easier
I am a CPA and a mom via adoption times two. I was baffled to read in the April 2010 article “Tax Treatment of Adoption Expenses” (page 44) that adoptive parents “may want to give more consideration to a special-needs child or international adoption, both of which can often be
Tax Court Refuses to Reconsider Overstatement of Basis Case
The Tax Court recently denied motions of the IRS to vacate and reconsider its prior decision in Intermountain Insurance Service of Vail LLC v. Commissioner, TC Memo 2009-195, in light of new Treasury regulations issued approximately one month after that case was decided. (For prior Tax Matters coverage, see “Application
TIGTA Finds IRS Doesn’t Always Protect Taxpayers, Follow Rules When Filing Liens
A report issued by the Treasury Inspector General for Tax Administration (TIGTA) says the IRS does not always follow legal requirements when issuing liens and lien notices. The report also concludes that, as a result, action is needed to protect taxpayer rights during the lien process. A federal tax lien
IRS Provides Relief for Small Tax-Exempt Nonfilers
The IRS announced that is providing relief for small tax-exempt organizations that are supposed to automatically lose their tax-exempt status because they failed to file Forms 990-EZ or 990-N for the years 2007, 2008 and 2009. Under a special one-time program, the IRS is giving those organizations until Oct. 15
Appeals Court Overturns Taxpayer Win in Tax Shelter Case
The U.S. Court of Appeals for the Tenth Circuit has held that a taxpayer’s investment in a “Son of BOSS” tax shelter lacked economic substance and therefore did not generate deductible losses (Sala, No. 08-1333 (10th Cir. 7/23/10)). This holding reverses a rare taxpayer win on the issue of Son
IRS Proposes PTIN Fees
The IRS proposed (REG-139343-08) Thursday to begin charging all authorized tax preparers a $50 user fee to obtain or renew annually a preparer tax identification number (PTIN). The fee would be on top of a “reasonable fee” charged by a third-party vendor that will administer the application and renewal process.
Regulations Issued on Preventive Services
As part of ongoing guidance on this spring’s health reform legislation, the IRS, Department of Labor, and Department of Health and Human Services have issued interim final and proposed regulations implementing the preventive health services rules in the acts (TD 9493; REG-120391-10). The Patient Protection and Affordable Care Act (PL
IRS Launches Gulf Oil Spill Hotline, Plans Special Assistance Day
The IRS announced that it has set up a special toll-free telephone line for taxpayers affected by the oil spill in the Gulf of Mexico. The phone number is 866-562-5227, and it will operate on weekdays from 7 a.m. to 10 p.m.local time, the IRS said. The phone line is
Closing Date Deadline for Homebuyer Credit Extended to Sept. 30
President Barack Obama signed the Homebuyer Assistance and Improvement Act of 2010 (HR 5623) on July 2. The bill extends the closing date deadline to qualify for the first-time homebuyer credit under IRC § 36 from June 30, 2010, to Sept. 30, 2010. To offset the cost of the extension,
Regular IRA to Roth IRA Conversion: Evaluating the Income Recognition Options
Editor’s note: Also read “Deferral and Spreading of Roth Conversion Income Not Always Best,” in the July 2010 issue of the Journal of Accountancy. Click here to download “Regular IRA to Roth IRA Conversion: Evaluating the Income Recognition Options,” an illustrative spreadsheet that allows planners to choose between two possible
EIN Retention When Converting a Corporation to an LLC
Most companies that convert a corporation to an LLC want the LLC to retain the historic employer identification number (EIN) of the corporation and may assume that the EIN carries over automatically to the LLC. In fact, the IRS will reassign the historic EIN of a corporation to a successor
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