President Obama released his plan to raise $198.3 billion from 2011–2019 by overhauling international taxes, which will affect multinational corporations. When combined with further international tax reforms that will be described in the administration’s full budget proposal, the proposed international tax reform package would raise $210 billion over the next
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SIXTH CIRCUIT UPHOLDS LIFE TABLES FOR LOTTERY LUMP SUMThe Sixth Circuit Court of Appeals ruled in Negron v. U.S. (No. 07-4460 (6th Cir. 1/28/09)) that the IRS annuity tables of IRC § 7520 provide a realistic and reasonable estate valuation of a state lottery prize paid as a lump sum
Third Party’s Activities Create Nexus
The U.S. Supreme Court declined to review a finding of substantial nexus by New Mexico for gross receipts tax on mail-order and online sales in that state by a subsidiary of Texas-based computer maker Dell Inc. The New Mexico Court of Appeals last summer affirmed an assessment of gross receipts
Strengthening Tax Services’ Foundation
The AICPA’s Statements on Standards for Tax Services (SSTSs) have been updated, clarified and streamlined in proposed revisions now available for study and comment by AICPA members. They can be found on the Tax Division pages of the AICPA Web site at tinyurl.com/5be2rk. The SSTSs are enforceable rules of conduct
Deduction Denied for ESOP Stock Redemption
The Eighth Circuit Court of Appeals denied food giant General Mills’ deductions for “cash distribution redemptive dividends” it paid participants in the company’s employee stock ownership plans (ESOPs). In so doing, the Eighth Circuit reversed a district court decision and ignored the Ninth Circuit’s ruling six years ago in Boise
Retirement Planning Using a Client’s Tax Return
Many CPAs never follow up with clients after tax season, but CPAs can provide valuable assistance by taking some time after busy season to use the tax return as a guide to helping clients prepare for retirement. A tax return is an excellent starting point for the personal financial planning
Noncompete Agreement Payment Wasn’t Sale of Personal Goodwill
The First Circuit upheld a district court’s holding that money allocated to a noncompete agreement was not for “personal goodwill” when a business’ sale agreement didn’t specifically identify it as such. When a business is sold, it is not uncommon for a portion of its sale price to be attributable
Mechanic Gets Bumped Again
The Seventh Circuit Court of Appeals upheld a Tax Court opinion that had denied former airline mechanic David Wilbert’s deductions for travel expenses incurred when he accepted assignments in various cities to keep his job under the airline’s employee “bumping” arrangement. Although the court was sympathetic to the taxpayer’s situation,
Looking Through the QSub Election
The Tax Court denied a taxpayer’s claim that the interest expense deduction for IRC § 265 qualified tax-exempt obligations (QTEOs) held by a qualified subchapter S subsidiary (QSub) bank is exempt from IRC § 291(a)(3) financial institution preference item limitations. Petitioners Jerome and Doris Vainisi together owned 100% of an
Small Retirement Plans Face Funding Dilemma
Many traditional defined benefit pension plans are underfunded due to market declines. As a result, barring congressional action, they could face future excise taxes ranging from 10% to 100% of the underfunded amounts as mandated by the Pension Protection Act of 2006 (PPA). Funding liabilities are especially difficult for smaller
Help for Homebuyers: A Guide to the New First-Time Homebuyer Credit
The first-time homebuyer credit, introduced by the Housing and Economic Recovery Act of 2008, PL 110-289 (the 2008 act), has been substantially modified and clarified by two developments this year: the passage of the American Recovery and Reinvestment Act of 2009, PL 111-5 (the 2009 act), and the issuance of
IRS Issues Proposed Regs on Graduated Retained Interests Under Sec. 2036
The IRS issued proposed regulations Thursday providing guidance on the portion of trust property includible in the grantor’s gross estate if the grantor has retained certain interests in the property (REG-119532-08). The retained interests covered include the use of the property and the right to an annuity, unitrust, graduated retained
IRS Strategic Plan Focuses on Compliance and Service
The IRS released its strategic plan on Tuesday for 2009–2013. Not surprisingly, the plan says that the Service will focus on improved taxpayer service as well as increased compliance. The plan also discusses challenges that the IRS anticipates facing over the next few years and how it hopes to meet
CPAs Head to the Hill to Discuss Reform, Economy, Taxes
CPAs wrapped up the 2009 AICPA Spring Meeting of Council in Washington on Tuesday with visits to Capitol Hill to discuss regulatory reform, the economic crisis and tax issues. Before heading into discussions with legislators, the group heard briefings from members of Congress. “We have a lot of work before
AICPA Passes Budget With No Dues Increase
Members of the AICPA Council on Monday unanimously approved an operating budget for 2009-2010 with no increase in member dues. The budget calls for $174.4 million in total net revenue and $172.3 million in total expenses for the fiscal year beginning Aug. 1—an outlook that is basically flat compared to
IRS Provides Guidance on the Residential Energy Efficient Property Credit
On Wednesday, the IRS issued Notice 2009-41, providing guidance to manufacturers and consumers on satisfying the requirements of the residential energy efficient property credit. The notice outlines procedures manufacturers must follow to certify that property satisfies the credit’s conditions. Taxpayers received guidance on when they may rely on a manufacturer’s
FBAR Penalties Reduced for Six Months
The IRS has provided a framework for voluntary disclosure requests containing offshore issues, such as previously undisclosed foreign financial accounts and entities (March 23, 2009, memo from Deputy Commissioner Linda Stiff to the commissioners of the Large and Mid-Size Business Division and the Small Business/Self-Employed Division). The policy will remain
“Differential Wage Payments” During Active Military Service Subject to Income Tax But Not FICA, FUTA
Payments by employers to employees while they are on active military duty for more than 30 days are subject to withholding for federal income tax but are not taxed under the Federal Insurance Contributions Act (FICA) or Federal Unemployment Tax Act (FUTA), the IRS said in Revenue Ruling 2009-11, issued
IRS Issues Proposed Regs on Determining Partners’ Distributive Shares
The IRS has issued proposed regulations on determining partners’ distributive shares of partnership items of income, gain, loss, deduction and credit when a partner’s interests vary during a partnership tax year (REG-144689-04). The proposed regulations also modify the existing regulations regarding a partnership’s required tax year. The proposed regulations provide
IRS Issues Inflation Updates for Automobile Depreciation Deduction Limits
The IRS issued Revenue Procedure 2009-24 on Thursday 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 under IRC
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