An owner of a California health care company was found liable by the Tax Court for an accuracy-related penalty for a deduction he claimed in spite of his CPA’s advice against it. Larry Wadsworth was a general partner of Gold Coast Medical Services (GCMS), which provided medical products and services
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Tax
IRS Boosts Online Payment Agreement Application
It’s now easier for tax practitioners and taxpayers to make changes to installment agreements, thanks to the addition of several new features to the Service’s Online Payment Agreement application. The interactive application now allows: Individuals to revise due dates and payment amounts on existing agreements. Individuals to revise existing regular
GRAT Expectations
The Service adopted final regulations governing inclusion in estates of trust property of grantor retained trusts, charitable retained trusts and similar trusts. The final regs (TD 9414) are effective for estates of decedents dying after July 13, 2008, and modify and clarify a number of features of their proposed version
Housing Act Tightens Home Sale Exclusion
A revenue-raising provision of the Housing and Economic Recovery Act of 2008 enacted in late July (PL 110- 289) disallows exclusion of gain from the sale of a principal residence under IRC § 121 attributable to periods the dwelling is used as a vacation or rental home or other nonqualified
Smart Stops on the Web
TAX A TAX TOOLBOXwww.irs.gov/taxpros/article/0,,id=118004,00.htmlThis Smart Stop from the IRS provides a host of basic tools for tax professionals, handily compiled onto one page for easy access. The information ranges from recent tax law changes to standards of practice and Circular 230 information to the contact info for the Taxpayer Advocacy
Substantially Equal Periodic Payments From an IRA
In the current economic climate, unexpected circumstances may cause many individuals to consider the early withdrawal of IRA funds. Minimizing the tax consequences of these withdrawals requires careful consideration of opportunities to avoid the 10% penalty on premature distributions. While all distributions from a traditional IRA are subject to income
GAO: Businesses Owe $58B in Payroll Taxes
Although payroll tax debts are one of the IRS’s top collection priorities, the Service hasn’t made optimal use of its enforcement tools against the 1.6 million businesses owing $58 billion for employees’ income, Social Security and Medicare taxes, the Government Accountability Office said. Earlier GAO audits found that payroll taxes
Criminal Enforcement Ramps Up
©2008 AICPA
Rules Clarified for Claiming the Exemption (and Related Tax Breaks) for Children of Divorced Parents
New final rules clarify who may claim qualifying children in the case of divorced or separated parents. Treasury Decision 9408, amending Treas. Reg. § 1.152-4, clarified the “counting nights” rule to identify a custodial parent. In promulgating the final regulations, the IRS took into consideration comments of the AICPA (Aug.
A Showcase of Tax Research
In this third installment of “In Practice,” we distill research published in tax and accounting journals that should be of interest to busy tax practitioners. The pervasiveness of tax considerations in the affairs of everyone from students to CEOs makes the field a particularly fertile one for studying financial behavior.
Derivatives and Hedging: Accounting vs. Taxation
EXECUTIVE SUMMARY Hedge documentation is important in both financial reporting and income taxation.For financial accounting purposes, on the date of the hedge, an entity must identify the hedged item, the instrument used, the type of risk hedged, the means of assessing hedge effectiveness, and the risk management objective and strategy.
Equitable Owner Equals Deduction
The Tax Court held that a married couple could deduct mortgage interest and property tax payments made from a corporate checking account on a home that was owned by their son. The court held that the taxpayers were equitable and beneficial owners of the property and that the checking account
Nexus for Sales and Use Taxes
States have become more aggressive in claiming a seller has substantial nexus for sales and use tax purposes. They look for in-state activities, relationships and assets of unregistered businesses with customers in the state. Here are some tips to help businesses determine their sales and use tax collection obligations: Review
Online Retailers Battle N.Y. Nexus
Online retailers Amazon.com and Overstock. com sued the New York State Department of Taxation and state officials over the state’s new definition of Web sellers required to collect sales and use tax. New York changed the definition of vendors subject to the tax to include those who pay a commission
Full Charge On Alternators
The Tax Court required an auto parts remanufacturer to include in income charges it normally waived in exchange for used parts from its customers. In so ruling, the court underscored that where a taxpayer’s accounting method does not clearly reflect income, the government can require it to use a different
Worldcom Shareholder’s Loss Not Theft
Criminal conviction of corporate officers for misconduct is not enough to allow shareholders to claim a theft loss, the Tax Court ruled. In cases where a shareholder’s stock becomes worthless due to corporate theft, it would generally be advantageous to treat relatively small losses as capital losses (due to the
Top Things to Know About Roth 401(k)s
Roth IRAs have become popular retirement vehicles, but the low contribution limits and participant income limitations have prevented many people from taking advantage of them. The Economic Growth and Tax Relief Reconciliation Act of 2001 provided for designating Roth contributions within a qualified plan. Now many individuals previously excluded can
Is 2008 a Good Year to Elect Out of Installment Sale Accounting?
The sale of investment real estate is often a large taxable transaction, frequently involving deferred payments. Installment sale accounting is automatic under IRC § 453, although taxpayers may elect out and recognize all of the income currently. Usually, taxpayers would rather defer income, but right now, it may make better
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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.
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