The IRS and Treasury Department issued final regulations (TD 9469) this week governing how an S corporation reduces its tax attributes under IRC § 108(b) when the S corporation has discharge of indebtedness (COD) income that is excluded from gross income under section 108(a). The regulations address situations in which
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Tax
Shulman: ‘Big Shift’ Possible in Preparer Standards, But No Details Yet
IRS Commissioner Douglas Shulman discussed return preparer standards, enforcement in a globalized economy and a new IRS initiative focused on high-wealth individuals’ tax compliance during a speech to the AICPA’s National Tax Conference in Washington on Monday. Return Preparer Oversight In June, Shulman announced during a hearing of the House
Government Loses LILO Case
In a rare setback for the IRS in its litigation against lease-in, lease-out (LILO) tax shelters, the Court of Federal Claims held that an arrangement Consolidated Edison Co. of New York (Con Ed) had with an electric utility in the Netherlands should be respected for federal tax purposes because it
Coalition Urges Congress to Ban Tax Strategy Patents
A coalition of various organizations, including the AICPA, has written to members of Congress to ask for a ban on the patenting of tax strategies. The letter says tax strategy patents “pose a significant threat to taxpayers and their advisers,” and urges Congress to prohibit them. In the past few
IRS Releases Annual Inflation Adjustments, Many Unchanged for 2010
The IRS has released its annual revenue procedure updating the tax bracket amounts and making inflation adjustments for various credits and other tax items (Revenue Procedure 2009-50). Because inflation has been minimal, many of the numbers are unchanged from 2009 or have only been adjusted slightly. The Social Security Administration
IRS Memo Allows Taxpayer to Deduct Interest on $1.1 Million Mortgage
The IRS Office of Chief Counsel has issued a memorandum in which it reinterprets the definition of “acquisition indebtedness” under IRC § 163(h)(3) to allow a taxpayer to deduct interest on the first $1.1 million of his or her mortgage instead of the usual $1 million limit (CCA 200940030). This
Phone Tax Challenge Reinstated
A panel of the U.S. Court of Appeals for the District of Columbia ruled that taxpayers could challenge under the Administrative Procedure Act (APA) the IRS’ method of refunding long-distance telephone excise taxes. The 2-1 decision in Neiland Cohen v. U.S. reversed and remanded a dismissal of the case by
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FBAR FILING EXTENDED FOR SOME The IRS extended for certain taxpayers the due date for filing Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), for tax year 2008. The reporting form originally was due June 30 this year. In Notice 2009-62, the Service said two types
ARRA Changes 2009 Estimated Tax Rules
For tax years beginning in 2009 only, the American Recovery and Reinvestment Act of 2009 (ARRA) reduced the amount of estimated tax that individual taxpayers with income from small businesses must pay. As 2009 draws to a close, practitioners should make sure their clients are aware of and taking advantage
The Generation-Skipping Transfer Tax: A Quick Guide
Sooner or later, every estate planner comes face to face with the generation-skipping transfer tax (GSTT). Many practitioners do not feel up to the challenge because this particular tax has a reputation for being as treacherous as the sea. But after you boil down all the complications, you’re left with
ESOP Redemptions Not Deductible as Dividends
The Third Circuit Court of Appeals joined the Eighth Circuit in ruling that even if cash payments to redeem employee stock ownership plan (ESOP) accounts are otherwise deductible dividends within the meaning of IRC § 404(k), an employer is barred by section 162(k)(1) from deducting the payments if they are
Recovery Act Reminders for 2009
Given the breadth and variety of tax relief provisions in the American Recovery and Reinvestment Act (ARRA) of 2009, PL 111-5, one or more could affect your clients’ individual returns for the 2009 tax year. Many are intended to provide relief for taxpayers in financial distress, stimulate consumer spending or
Related Parties Must Share Employee Stock Option Costs
A panel of the U.S. Court of Appeals for the Ninth Circuit held that employee stock option (ESO) costs incurred by one company participating with related companies in a cost-sharing agreement (CSA) in the late 1990s must be allocated among the research and development (R&D) costs of all the participants
Losses From Interests in LLCs and LLPs Not Presumptively Passive
The Court of Federal Claims recently ruled that an interest in a Texas limited liability company (LLC) was not a limited partnership interest held as a limited partner for purposes of the passive loss rules and therefore losses from the interest should not be treated as presumptively passive. The Tax
Fifth Circuit Remands Research Credit Case
The U.S. Court of Appeals for the Fifth Circuit vacated a district court decision that had disallowed a taxpayer’s research tax credit. The Fifth Circuit held the lower court had not used the proper definitions of “discovering information” and “process of experimentation” when deciding whether the taxpayer had qualified research
Disclosure Consent Under § 7216
IRS rules effective Jan. 1, 2009, delineate more strictly tax return preparers’ duties to safeguard taxpayer information from unauthorized disclosure or use. IRC § 7216 imposes criminal penalties on the unauthorized use of taxpayer information. The requirements are closely tailored to the type of information, the party using it, and
Tax Software Survey
Here are highlights of the JofA’s 2009 tax software survey, conducted jointly with The Tax Adviser. Nearly 10,000 AICPA members responded. FULL RESULTS More detailed results are available here and includes complete responses for each product, including many questions not shown here, such as ease of learning the software and how hard
Charitable Remainder Trust Update
Although many investment assets have lost value in the past year, individuals coming to CPAs for estate planning advice often hold highly appreciated assets, and many want to make significant charitable gifts. For that reason, charitable remainder trusts remain a popular method of reducing assets subject to estate tax. They
IRS Updates Travel Expense Per Diem Rates
On Wednesday, the IRS released Revenue Procedure 2009-47, which is its annual update to the substantiation rules for business travel expenses when an employer provides a per diem reimbursement allowance. It sets the per diem rate for travel to high-cost localities and for travel to other localities in the continental
IRS Issues Regs on Six-Year Limitations on Basis Overstatement
The IRS issued proposed and temporary regulations (TD 9466, REG-108045-08) Thursday to clarify that an overstatement of basis can create a substantial omission of gross income under IRC §§ 6229(c)(2) and 6501(e) for purposes of the six-year extended period for assessments and collections of tax attributable to partnership items. In
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