The IRS on Tuesday released Rev. Proc. 2009-33, providing guidance on how taxpayers can elect not to claim 50% bonus depreciation under IRC § 168(k)(1) but instead increase their credit limitation under section 38(c) and their AMT credit limitation under section 53(c). The revenue procedure gives guidance on what property
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Tax
Charting a Course: Estate Planning 2009–2011
This special report is published as a supplement to the July 2009 issue of The Tax Adviser. It looks at the status of estate, gift, and generation-skipping transfer taxes over the next few years.1 Current State of the Law In 2001, Congress enacted the Economic Growth and Tax Relief Reconciliation
Report of Foreign Bank and Financial Accounts: Significant Revisions and Severe Penalties
In September 2008, the IRS website posted revisions to the Report of Foreign Bank and Financial Accounts (Form TD F 90-22.1) that surprised many practitioners. This article discusses new traps for the uninitiated created by these revisions and the new reporting requirements for certain taxpayers who previously may not have
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AUTO DEPRECIATION LIMITS UPDATED The IRS issued Revenue Procedure 2009-24 that provides 2009 inflation adjustments to the depreciation limitations and lease inclusion amounts for certain automobiles under IRC §§ 280F and 168. For passenger automobiles (other than trucks or vans) placed in service during calendar 2009, the 2009 depreciation limit
Time Limit for Equitable Relief Struck Down, De Novo Standard Applied
In a trio of cases this spring, the Tax Court widened the availability of equitable relief under IRC § 6015(f) for taxpayers with innocent spouse claims. In two cases, the court invalidated a Treasury regulation provision limiting to two years the period in which innocent spouses may request equitable relief
Due Diligence on a QI
As the financial press focuses on Bernard Madoff and other Ponzi schemes, recent investor losses approaching $1 billion by the failure of qualified intermediaries have gone relatively unnoticed. Qualified intermediaries, or QIs, facilitate tax-deferred exchanges of like-kind property under section 1031 of the Internal Revenue Code. Some QIs have made
Valuation Discounts for Estate and Gift Taxes
One purpose of fixing a value on an interest in a closely held business is to determine gift and estate tax liability. CPAs called upon to provide such valuations know that this can be a painstaking task. It is not an exact science but an educated estimate when, as often
Correcting FICA Errors
Correcting an employment tax error that is discovered in the year in which the error occurs is generally a simple process. However, employers often discover such errors after the close of the calendar year in which they paid the wages to an employee. The process for correcting those errors is
QI No Cure for Related-Party Deal
The Tax Court reaffirmed its 2005 holding that use of a qualified intermediary in a section 1031 exchange of like-kind property does not bypass restrictions on such exchanges between related parties. In evaluating whether tax avoidance was a principal purpose of such a transaction for purposes of the exception to
Self-Employment or Other Income?
Taxpayers frequently have income reported on Form 1099-MISC. It may represent earnings from a trade or business that should be reported on Form 1040, Schedule C. If not, it generally is reported as other income on Form 1040. Of course, net income from a trade or business is subject to
FBAR Disclosure Questions Answered
The IRS has answered 51 “frequently asked questions” (FAQs) about its voluntary disclosure and settlement option for previously unreported offshore financial accounts and entities and income from them. The six-month window for making disclosures under the program ends Sept. 23. Although IRS Commissioner Doug Shulman said the program can allow taxpayers
Foreign Bank Account and Other Foreign Information Return Developments
The IRS on June 24 released 20 new updated frequently asked questions (FAQs) on its offshore income voluntary disclosure program (VDP) and foreign bank and financial accounting reports (FBAR). The IRS also provided to the AICPA FBAR Task Force the street address for FBAR submissions by private delivery services: IRS
ETAAC Recommends Congress Mandate More E-Filing
Do-it-yourself e-filing by individual taxpayers increased 19% from 2008 to 2009, the Electronic Tax Administration Advisory Committee (ETAAC) said in its 2009 Annual Report submitted to Congress on Wednesday. However, e-filed returns by tax preparers were down 1%. Overall, the committee estimates that for major form types, 59% of returns
TIGTA: 1040 Tweaks Needed, Drabness to Stay
A few relatively minor changes to Form 1040 could yield improvements in preventing common taxpayer errors, the Treasury Inspector General for Tax Administration (TIGTA) said in an audit. Analyzing the approximately 7 million math error notices the IRS sends annually, TIGTA homed in on some of the most frequent taxpayer
Deducting Losses for Defrauded Investors
The financial collapse of high-profile investment institutions has generated billions of dollars of losses. A recent report notes that federal and state prosecutors “are preparing for a surge of prosecutions of financial fraud.”1 A question may arise as to whether these losses for tax purposes are to be treated as
New Car Buyers in States With No Sales Tax Can Still Take Sales Tax Deduction
On June 10, the IRS announced that new car buyers in states with no sales tax are entitled to take the new car sales tax deduction under IRC § 164(b)(6) (IR-2009-60). The American Recovery and Reinvestment Act of 2009 introduced a deduction for taxpayers who buy new cars, light trucks,
FBAR Voluntary Disclosure Questions Answered
The IRS has answered 51 “frequently asked questions” (FAQs) about its voluntary disclosure and settlement option for previously unreported offshore financial accounts and entities and income from them. The six-month window for making disclosures under the program ends Sept. 23. Although IRS Commissioner Doug Shulman said the program can allow taxpayers
IRS Offshore Voluntary Compliance Program Questions
The information below includes questions that IRS Criminal Investigation special agents have asked some taxpayers participating in the IRS Offshore Voluntary Compliance program. Practitioners might want to document the facts as fully as possible in a detailed summary when submitting under the program. Those considering the Offshore Voluntary Compliance program
IRS Proposes New Cell-Phone Fringe Benefit Substantiation Rules
Employer-provided cell phones have gone from an exclusive perk to common equipment in the 20 years since Congress made them subject to strict substantiation requirements for business use. Monday, the IRS proposed simplifying those rules. Generally, employees must include in income the fair market value of fringe benefits provided by
IRS Changes FBAR Reporting Requirements for June 30, 2009
June 30 is the deadline for filing the current year Report of Foreign Bank and Financial Accounts, Treasury Form TD F 90-22.1 (FBAR). “United States persons” having a financial interest in or signature authority or other authority over any financial account in a foreign country have an FBAR filing requirement
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