The IRS in late December issued temporary and proposed regulations under IRC § 7216 clarifying and expanding the ways in which tax return preparers may disclose or use certain tax return information without taxpayer consent (TD 9478 and REG-131028-09). The IRS also issued two revenue rulings approving several scenarios involving
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The ESOP Exit Strategy
The scenario is all too common. A majority partner wants to retire, but the remaining partners can’t afford to buy him or her out, or they want out themselves. Key employees eye the door as rumors swirl that the company may be sold to a larger competitor that is sure
Missing Links?
In “Tax Matters: When a Tax Return Is Not a ‘Return’” (Dec. 09, page 73), I believe that you were addressing the specific issue of what is a validly filed return for purposes of Bankruptcy Code § 523(a). While I appreciate your pointing out the Links case, I think that
IRS Issues Regulations on 2009 Reduced Estimated Tax Options
The IRS on Friday released temporary and proposed regulations relating to reduced estimated income tax payments for qualified individuals with small business income in 2009 (TD 9480 and REG-117501-09). The regulations provide guidance on who is a qualified individual and what is a small business for these purposes. The American
Taxpayers Have Until Feb. 28 to Make Haiti Donations and Deduct Them on 2009 Returns
Taxpayers have until midnight on Sunday, Feb. 28, to make cash contributions to charities providing earthquake relief in Haiti and deduct them on their 2009 tax returns, under the provision of the Haiti Assistance Income Tax Incentive Act, PL 111-126. Contributions made after that date and before the end of
Tax Court Rules on Valuation of Life Insurance Policy in Bargain Sale
In a case of first impression, the Tax Court has held that where taxpayers purchased a life insurance policy on their lives from their profit-sharing plan, they could not reduce the taxable value of the policy by the amount of the policy’s surrender charge (Matthies, 134 T.C. no. 6). The
IRS Initiatives Could Change Compliance Landscape in 2010
During the latter part of 2009, the IRS announced a number of new compliance initiatives that, when fully implemented, have the potential to dramatically alter how the IRS deals with certain groups of taxpayers. The programs are important not only in how they will directly affect the targeted taxpayer groups
Tax Court Allows LLC Member’s Losses; Rules Against IRS on Limited Partner Issue
The Tax Court held on Tuesday that an LLC member who materially participated in the management of an LLC is not treated as a limited partner and is therefore not subject to the passive loss limitations under IRC § 469 (Newell, TC Memo 2010-23). The taxpayer owned one-third of a
IRS Issues 2010 Updates for Automobile Depreciation Deduction Limits
The IRS provided the 2010 inflation adjustments to the depreciation limitations and lease inclusion amounts for certain automobiles under IRC § 280F (Revenue Procedure 2010-18). For passenger automobiles (other than trucks or vans) placed in service during calendar 2010, the depreciation limit under IRC § 280F(d)(7) is $3,060 for the
Tax Consequences of Rollovers from Employer Plans to Roth IRAs
Starting in 2010, taxpayers can make rollovers from non-Roth retirement accounts to Roth individual retirement accounts (IRAs) without regard to the former $100,000 modified adjusted gross income (AGI) limit and (in 2010 only) can benefit from a special two-year averaging provision (the taxable portion of the rollover is taxed in
IRS Issues 2009 Form 990; Explains Significant Changes
The IRS has issued final 2009 versions of Forms 990 and 990-EZ, as well as their instructions. The IRS has also provided a detailed explanation of significant changes to the forms. Form 990, Return of Organization Exempt From Income Tax, was extensively revised for 2008. The new Form 990 is
Request for Audit Reconsideration
IRC § 6404(a) allows the IRS to abate any assessment of tax and applicable interest and/or penalties if the assessment is excessive, erroneously or illegally made, or made after the statute of limitation has expired. If an erroneous assessment has been made and a taxpayer has not paid it, under
Senate Passes Bill to Limit Reportable Transaction Penalties
The Senate passed a bill (S. 2917) Tuesday that would modify the amount of the penalty for failure to report tax shelter transactions under IRC § 6707A. The Small Business Penalty Fairness Act of 2009 passed by unanimous consent. The bill would set the amount of the penalty under section
Appeals Court Upholds Return Preparer’s Conviction in RAL Wire Fraud Case
The Fourth Circuit Court of Appeals upheld the conviction of a Maryland tax return preparer for preparing false tax returns and for wire fraud, where the preparer used interstate wire communications to secure refund anticipation loans (RALs) for his customers based on the false tax returns (U.S. v. Mehta, docket
New Accounting Methods Subject to Automatic Change Procedures
The IRS has issued new guidance on automatic accounting method changes. Revenue Procedure 2009-39 provides certain additions, modifications and clarifications to Revenue Procedures 2008-52 and 97-27 (as modified, amplified and clarified by various other revenue procedures). Revenue Procedure 2008-52 provides procedures for taxpayers to obtain automatic consent for certain changes
Obtaining a Power of Attorney Through IRS E-Services
E-services is a suite of Internet-based products that allows tax professionals to conduct client business with the IRS 24 hours a day, 7 days a week. Compared with mailing or faxing a Form 2848, Power of Attorney and Declaration of Representative, the e-services application is a much faster way for
Tax Court Allows Medical Deduction for Sex Change Operation
In a case of first impression, the Tax Court has held that a taxpayer can take a medical expense deduction for the costs of a sex change operation (O’Donnabhain, 134 TC no. 4). However, the taxpayer’s expenses for breast augmentation surgery were disallowed by the court as cosmetic surgery. The
IRS Issues Guidance on Gift Tax Consequences of Transfers in Trust
The IRS on Tuesday clarified for taxpayers that despite the provisions of IRC § 2511(c), the gift tax continues to apply to certain transfers to a wholly owned grantor trust (Notice 2010-19). Some taxpayers had interpreted section 2511(c) to exclude from gift tax all transfers in trust where the trust
Cross-Border Tax Issues
CFOs can exercise reasonable diligence to ensure that they have procedures in place to deal with some of the more common shortcomings in cross-border tax compliance. The following are some routine tax compliance situations that U. S. companies ($500 million or less in sales) with outbound activities are most likely
Solar Energy Systems: Incentives Are Better Than Ever
The 30% federal tax credit available to homeowners and businesses to install solar energy systems was recently expanded and extended. A dollar-amount cap was removed from the credit for residential solar water heating systems, and the availability of the credit for all systems was extended through the end of 2016.
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