With the current economic downturn causing dislocations and struggles for businesses of all sizes, family-owned businesses may find their values diminished along with their immediate prospects. But with these challenges come opportunities for succession planning. Because closely held businesses may now be worth less than formerly, this might be a
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Trusts as S Corporation Shareholders
Sometimes a C corporation considering S corporation status has a trust as a shareholder. If the trust was not originally drafted with the intent of being an eligible S corporation shareholder but continues to hold the stock, the corporation could be prevented from making the S election. Nevertheless, it may
No Penalty Tax on Additional IRA Distributions
The Tax Court ruled that paying higher education expenses from an IRA was not a modification of a taxpayer’s annuity payments from the IRA that would have made the payments subject to the 10% additional tax on early distributions. Generally under IRC § 72(t), distributions received from an IRA before
Loan Refinancing Deemed a Taxable Distribution
The Tax Court found that the amount by which a taxpayer’s refinancing of a loan from his qualified retirement plan exceeded statutory limits was a deemed distribution subject to the 10% additional tax. Under section 72(p)(2), a loan from a qualified retirement plan to a participant is not treated as
Full-Time Medical Residents Not Exempt From FICA
Several circuits have ruled on whether medical residents are eligible for the student exception to FICA (see “Tax Matters: FICA for Medical Residents Splits Circuits,” JofA, Jan. 08, page 73). Until recently, the issue had been whether a medical resident could be considered a “student” and a hospital could be
The Readable Code and Regs: Partnerships, 2009 Edition
edited by Glenn L. Madere, J.D., LL.M. Readable Press, 2009, 1,078 pp. (vol. 1) and 1,382 pp. (vol. 2) Every neophyte in tax practice has no doubt wondered why someone couldn’t publish a plain-language gloss of the Internal Revenue Code and associated regulations. Let’s face it: Tax statutes and
Courts Split on Tax Shelter Exception to Practitioner Privilege
In the long-running Countryside Limited Partnership case, the Tax Court ruled against a government documents discovery request, saying the government had not met its burden of proof for showing the documents were in connection with the promotion of a tax shelter. Thus the government was unable to overcome the federally
AICPA Calls for Civil Tax Penalty Reform
The AICPA called on Congress and the IRS and Treasury Department to reform civil tax penalties, which it said have strayed from their intended purpose of promoting voluntary compliance with tax laws. A report and cover letter signed by Alan Einhorn, chair of the AICPA’s Tax Executive Committee, were submitted
IRS Modifies Automatic Accounting Method Change Procedures
The IRS on Thursday modified the procedures for obtaining automatic consent to change an accounting method. Revenue Procedure 2009-39 amplifies, modifies and clarifies various earlier pieces of guidance that had established the general procedures for taxpayers to secure advance IRS consent to an accounting method change. Last year, the IRS
Taxpayer Wins Lawsuit on Valuing Transfers of LLC Interests
In a case involving the proper valuation of LLC interests that were transferred by a taxpayer into trusts set up for the benefit of her children, the Tax Court has held that transfers should be valued as transfers of LLC interests and not, as the IRS had argued, as transfers
IRS Provides Guidance on Election to Defer COD Income
In Revenue Procedure 2009-37, the IRS has provided guidance to taxpayers on how to make the new election to defer recognizing cancellation of debt (COD) income under IRC § 108(i). The revenue procedure also requires taxpayers who make the election annually to provide additional information on their returns, starting with
First Circuit Denies Textron Work Product Privilege
In a 3-2 decision Thursday, the First Circuit Court of Appeals overturned its earlier three-judge ruling and a district court to hold that the work product doctrine did not protect tax accrual workpapers of aviation and industrial conglomerate Textron Inc. from IRS summons. Judge Michael Boudin, writing for the majority,
Comments Sought on Partnerships, Combined Pension Plans
The IRS requested public comment Wednesday on proposed regulations issued earlier on allocation of gain or loss in partnership mergers. In a separate notice, the Service invited comment on combined defined contribution and defined benefit plans under IRC § 414(x), on which the Service plans to issue guidance before it
Phone Tax Suit Revived
A panel of the U.S. Court of Appeals for the District of Columbia ruled that taxpayers could challenge under the Administrative Procedure Act (APA) the IRS’ method of refunding long-distance telephone excise taxes. The 2-1 decision in Neiland Cohen v. U.S. (docket no. 08-5088) reversed and remanded a dismissal of
IRS Extends FBAR Filing Date for 2008 Filings
The IRS announced Friday in Notice 2009-62 that it is extending for certain taxpayers the due date for filing calendar year 2008 Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR). Because the Treasury Department is still working out various FBAR filing issues, it has decided to
TIGTA Announces Program to Detect, Deter IRS Employee Misconduct
The Treasury Inspector General for Tax Administration (TIGTA) announced on Tuesday that it has reached an agreement with the IRS to conduct a program to detect and deter waste, fraud and abuse in IRS programs and operations. The purpose of the program is to protect against attempts to interfere with
Tax Software Survey: TaxWorks
Click here for a PDF of detailed survey responses for TaxWorks. Tax program name TaxWorks Vendor name RedGear Technologies Inc. Telephone 800-230-2322 E-mail address sales@taxworks.com Web site taxworks.com Price on Federal 1040 $1,095.00 Is this an increase from last year? By how much? No Renewal price $1,095.00 State price $260.00
Tax Software Survey: UltraTax CS
Click here for a PDF of detailed survey responses for UltraTax CS. Tax program name UltraTax CS Vendor name Thomson Reuters Telephone 800-968-8900 E-mail address CS.Sales@thomsonreuters.com Web site cs.thomsonreuters.com Price on Federal 1040 $2,250 Is this an increase from last year? By how much? Yes, $50 Renewal price $1,960 State
Tax Software Survey: ProSystem fx Tax
Click here for a PDF of detailed survey responses for ProSystem fx Tax. Tax program name ProSystem fx Tax Vendor name CCH, a Wolters Kluwer business Telephone 800-739-9998 E-mail address sales@prosystemfx.com Web site cchgroup.com Price on Federal 1040 $3,585 Is this an increase from last year? By how much? Yes
Tax Software Survey: TaxACT 2009 Preparer’s 1040 Edition
Click here for a PDF of detailed survey responses for TaxACT 2009 Preparer’s 1040 Edition. Tax program name TaxACT 2009 Preparer’s 1040 Edition Vendor name 2nd Story Software Inc. Telephone 800-573-4287 E-mail address support@TaxACT.com Web site taxact.com Price on Federal 1040 $119 Is this an increase from last year? By
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