On remand from the Sixth Circuit, the Tax Court has held that a deficit restoration obligation (DRO) added to the operating agreement of a limited liability company didn’t allow its member to create recourse debt. Despite the DRO, the at-risk rules under IRC § 465 barred a current deduction because
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Tax
Open Transaction Doctrine Applied to Demutualization
The Court of Federal Claims ruled that gain was not recognized in the sale of stock received in exchange for policy ownership interests in an insurance company’s demutualization. A mutual insurance company is owned by the policyholders rather than shareholders. When it reorganizes as a traditional stock company, the policyholders
Phone Company on the Hook for Incentives
The Eleventh Circuit Court of Appeals upheld a Georgia district court decision holding that federal and state incentive payments to a local telephone company were gross income. The appellate court accepted the lower court’s analysis that the payments were not excludable as nonshareholder capital contributions. IRC § 118(a) excludes from
Safe From the IRS but Not Necessarily From the State
My comments relate to Stephen Huggard’s article titled “Voluntary Disclosure to the IRS: A Viable Option” (March 08, page 40). This article was very well written and right on point. Huggard makes an excellent final comment in the article stating that, “As long as the taxpayer is careful, he or
Highlights
The rescue package, the Emergency Economic Stabilization Act of 2008, allows the Treasury Department to buy up problem assets in an effort to improve the balance sheets of financial institutions and keep credit flowing. The final version of the plan passed by Congress and signed by President Bush on Oct.
Depreciate Property in Like-Kind Exchanges Consistently
The Treasury has issued final regulations (Treasury Decision 9314) explaining how to depreciate modified accelerated cost recovery system (MACRS) property that has been acquired in a section 1031 like-kind exchange or through a section 1033 involuntary conversion when both the acquired and relinquished property are subject to MACRS in the
Intentionally Defective Grantor Trusts
Estate tax planners have long employed intentionally defective grantor trusts to freeze the value of an asset for estate tax purposes while transferring assets out of the estate free of gift tax. An intentionally defective grantor trust (IDGT) is a complete transfer to a trust for transfer tax purposes but
Be Wary of Taxes Sapping Life Insurance Proceeds
Life insurance can provide an “instant” source of liquidity to the estate of an owner of a closely held business, preferably when the policy insuring the business owner’s life is held by an irrevocable life insurance trust (ILIT). Especially when business owners face succession issues, CPAs advising
IRS Commissioner: Tax Collections Must Be Fair Amid Tough Economic Times
The IRS and tax preparers can reach out to taxpayers hurt by the current economic downturn to help them meet their tax obligations, IRS Commissioner Douglas Shulman told the AICPA National Tax Conference on Oct. 27. (Watch the speech here.) While the Service is mindful that many taxpayers are
Alan R. Einhorn to Lead AICPA Tax Executive Committee
Alan R. Einhorn, national director of the Quality Assurance Group for Deloitte Tax LLP, is the new chair of the American Institute of Certified Public Accountant’s Tax Executive Committee. Einhorn will lead the AICPA’s senior tax committee for the next two years. The Tax Executive Committee establishes tax policy for
Tax Provisions of the Emergency Economic Stabilization Act
Among its many tax provisions, the Emergency Economic Stabilization Act equalized with that of taxpayers the understatement penalty standard tax preparers must observe for undisclosed items. The provision was originally introduced in the House late last year at the urging of the AICPA to fix the problems created by the
IRS Appeals Jelke to Supreme Court
The government asked the U.S. Supreme Court to review the Eleventh Circuit’s decision in Estate of Frazier Jelke III v. Commissioner (100 AFTR2d 2007-6694, “Tax Matters: Dunn Does It Again,” JofA, March 08, page 70). The Eleventh Circuit previously declined to rehear en banc its decision overruling the Tax Court
Service Launches LILO, SILO Settlement Initiative
The IRS followed up its recent court victories against LILOs (lease in, lease out) and SILOs (sale in, lease out) with an offer to settle the estimated hundreds of the listed-transaction tax shelters still on companies’ books. The offer, sent initially on Aug. 6 to 45 large corporations known to
Shell Wins $19M Refund
A district court in Texas allowed Shell Petroleum to carry back capital losses and receive a nearly $19 million refund. The losses were generated by a restructuring transaction involving an exchange of highbasis property for new subsidiary stock followed by loss-generating dispositions of the stock. In 1992, Shell Oil was
Health Accounts Illustrated
The IRS has provided guidance on a variety of issues pertaining to health savings accounts (HSAs). The 42 questions and answers of Notice 2008- 59 address such issues as eligibility for individuals with “limited purpose” coverage by a health flexible spending account (FSA) or health reimbursement arrangement (HRA). The guidance
AICPA To Webcast Seminars On NQDC, AMT
A Web seminar, “Nonqualified Deferred Compensation Under Section 409A: Implementation Roundtable,” will be held Oct. 2 from 2 to 4:30 p.m. ET. Tax, PFP and PCPS section members may participate free or may pay a discounted price of $74 and receive 21/2 hours of CPE credit (non-section members pay $99).
All That Glitters Is Not Deductible
The Tenth Circuit Court of Appeals upheld a district court’s ruling that a company could not carry back a loss because the statute of limitations had passed. Taxpayers that incur net operating losses are permitted under IRC § 172 to carry them back two years and forward 20 years. A
Startup Expensing Election Now Deemed
Taxpayers may elect under IRC § 195 to deduct in the first year of operation up to $5,000 of startup expenses (reduced by the excess of total startup costs over $50,000) of an active trade or business and generally must amortize the remainder over 15 years. In July, the IRS
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SPONSORED REPORT
Preparing clients for new provisions next tax season
As the 2025 filing season approaches, H.R. 1 introduces significant tax reforms that CPAs must be prepared to navigate. These legislative changes represent some of the most comprehensive tax updates in recent years, affecting both individual and corporate taxpayers. This report provides in-depth analysis and guidance on H.R. 1.
From The Tax Adviser
November 30, 2025
Digital asset transactions: Broker reporting, amount realized, and basis
October 31, 2025
Recent developments in estate planning
October 31, 2025
