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Tax

Growing Opportunities: The Agricultural Chemical Security Credit

During these depressed economic times, taxpayers are increasingly confronted with issues related to cash flow management and the need to reduce taxes. In many cases, taxpayers are looking at all possible tax-saving opportunities. There is a little-known tax credit opportunity that may bring additional benefit to taxpayers that deal with

Web Lookup for Recovery Payments Coming Soon; Automated Phone Service Now Available

The IRS has established an automated telephone service to confirm whether taxpayers received an economic recovery payment in 2009. The Service also said on its Web site that it will provide a Web-based service, “Did I Receive a 2009 Economic Recovery Payment?” for looking up the information, starting March 23.

IRS Designates Chile Earthquake a “Qualified Disaster”

On Tuesday, the IRS designated the Feb. 27 earthquake in Chile as a “qualified disaster” for purposes of IRC § 139 (Notice 2010-26). As a result, victims of the earthquake who receive qualified disaster relief payments will be able to exclude those payments from income. The notice also allows employer-sponsored

IRS Provides Guidance on Deemed Dispositions by Canadian Emigrants

The IRS has issued guidance for individuals who emigrate from Canada and wish to make an election under the U.S.-Canada income tax treaty regarding Canadian departure tax (Revenue Procedure 2010-19). Under Article XIII(7) of the U.S.-Canada treaty, if an individual is treated for purposes of taxation by one of the

Safe Harbor for Failed Like-Kind Exchanges Where Qualified Intermediary Goes Bankrupt

The IRS has provided a safe harbor for taxpayers who start a like-kind exchange but fail to complete the exchange because the qualified intermediary (QI) goes bankrupt and defaults on its obligation to acquire replacement property (Revenue Procedure 2010-14). Taxpayers often use QIs to help them complete a tax-free like-kind

President Signs Extension of COBRA 65% Subsidy

President Barack Obama signed into law on Wednesday the Temporary Extension Act of 2010 (HR 4691), hours after the Senate passed it by a 78–19 vote. The main purpose of the bill is to extend unemployment benefits and health care subsidies for the unemployed, but it also extends through March

The Proper Timing of Workers’ Compensation Deductions

For companies with more than a de minimis amount in their workers’ compensation reserve, it may be worthwhile to review the details underlying the reserve amount. The reason? These days a significant portion of a workers’ compensation reserve likely results from amounts due to medical service providers for treatment already

How the R&D Tax Credit Is Calculated

Editor’s note: This is a Web-exclusive sidebar to “Navigating the R&D Tax Credit,” in the March 2010 issue of the JofA.   Regular research credit. The RRC is an incremental credit that equals 20% of a taxpayer’s current-year QREs that exceed a base amount, which is determined by applying the

Navigating the R&D Tax Credit

Although it has a well-deserved reputation for complexity and uncertainty for taxpayers, the research tax credit of IRC § 41 nonetheless remains a valuable source of support to businesses that conduct qualified research and development. In fiscal year 2009 alone, the credit represented an estimated $5.6 billion federal subsidy for

Toward a (More) Paperless Tax Practice

Nearly all CPA firms prepare tax returns electronically. However, many still also use some old-fashioned methods, such as sending out tax organizers manually. Here are tips to more fully realize what it means to go paperless. First, understand and share the goal: A more efficient, digital tax process can help

Line Items

SECURITIES BASIS REPORTING PROP. REGS ISSUED The IRS issued proposed regulations (REG-101896-09) in December relating to how securities brokers report sales to the IRS and how stock basis is determined. The regulations also proposed a Feb. 15 annual deadline for brokers to supply certain information statements. The proposed rules reflect

Charitable Deduction Due to a Partial Disclaimer

The Eighth Circuit upheld the Tax Court’s decision to allow a charitable deduction involving a disclaimer by an heir of a portion of her interest in an estate. The Tax Court had held the disclaimer was not qualified under IRC § 2518 with respect to property that passed to a

Acquisition Intermediary’s Role Ignored

The Fifth Circuit Court of Appeals upheld a decision of the U.S. District Court for the Southern District of Texas that recharacterized a corporation’s acquisition of assets as an acquisition of stock with a subsequent liquidation of the acquired corporation. The appellate court agreed with the IRS and the district

IRS to Register and Test Signing Preparers

The IRS on Jan. 4 said it will require registration of paid, signing tax return preparers as well as competency testing and continuing education for preparers other than practitioners (CPAs, attorneys and enrolled agents and others authorized to practice before the IRS). The plan also calls for extending the requirements

NOL Carrybacks and the Statute of Limitation

With the introduction of the five-year net operating loss (NOL) carryback in IRC § 172(h) many taxpayers are now examining their tax situations to determine how to best take advantage of the new rules. However, as taxpayers evaluate their situations, they should also consider the impact that carryingback an NOL

Voluntary Tax Payment Not Exempt From Early Withdrawal Penalty

Although paying a tax levy can exclude early IRA withdrawals from an otherwise applicable 10% penalty, a notice of intent to levy does not have the same effect, the Tax Court held. If a taxpayer is under 59½ years old, IRC § 72(t) generally imposes an additional penalty tax of

Method of Calculating Buy-In Payment Approved

The Tax Court approved a software company’s method of valuing a buy-in payment for the transfer of intangible assets to a subsidiary, calling the IRS’ redetermination of the buy-in payment amount “arbitrary, capricious and unreasonable.” The case concerned tax years 1999 through 2001 of VERITAS Software Corp. (VERITAS U.S.), which

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