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
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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
IRS Provides 2009 RMD Rollover Relief for IRA, 401(k) Distributions
The IRS on Thursday issued Notice 2009-82 to provide relief for taxpayers who have received required minimum distributions in 2009 from an IRA or similar account. Such taxpayers have until Nov. 30, 2009, (or within 60 days of the distribution, whichever is later) to roll over the distribution into another
Offshore Account Voluntary Disclosure Deadline Extended to Oct. 15
The IRS today extended the deadline for voluntary disclosures by taxpayers with unreported income from hidden offshore accounts from this Wednesday, Sept. 23, to Oct. 15. The IRS cautioned that there would be no further extensions. The IRS said that tax practitioners had requested an extension because some are having
IRS Finalizes Rules on COD Reporting
The IRS on Thursday issued final regulations regarding information returns for cancellation of indebtedness by certain entities (T.D. 9461). The regulations are designed to avoid premature reporting by certain entities that are currently required to file information returns and to reduce the number of returns required to be filed. They
IRS Expands, Updates Appeals Mediation Process
The IRS on Friday expanded the number of cases that are eligible to go through mediation in Appeals and updated the mediation procedures (Revenue Procedure 2009-44). The IRS’ Appeals mediation program was authorized in 1998. The IRS Appeals function is designed to resolve tax controversies without litigation. The mediation program
IRS Boosts Tax Incentives for Retirement Savings
The IRS released several pieces of guidance Tuesday designed to boost tax incentives for retirement savings. The initiatives include expanded opportunities for automatic enrollment in 401(k) plans, vehicles for taxpayers to save their tax refunds and convert accrued vacation time into savings, and better explanations of the available options for
IRS Provides Guidance on Late Entity Classification Elections
The IRS on Thursday released Revenue Procedure 2009-41, giving eligible entities guidance on how to obtain relief when they make a late entity classification election. The relief is available for three years and 75 days after the requested effective date of the eligible entity’s classification election. Under the check-the-box regulations,
Broken Home: Divorce and the Principal Residence
When Bill and Jen decided to divorce, they never expected their personal residence to become a major problem. Initially, Jen thought she wanted to stay in the house. She was emotionally attached to the home, and she thought remaining in it would help minimize the impact of the divorce on
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TIGTA: CLEARER 1040 COULD REDUCE TAXPAYER ERRORS 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 (available at tinyurl.com/m8625m). Analyzing the approximately 7 million math error notices the IRS sends annually,
Ninth, Federal Circuits: Basis Overstatement Not Income Omission
An overstatement of basis does not constitute a substantial omission of gross income that would extend the deficiency statute of limitations to six years, the Ninth Circuit Court of Appeals ruled, upholding the Tax Court. The decision in Bakersfield Energy Partners v. Commissioner puts the Ninth Circuit in line with
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