When it comes to tax rebate checks, American consumers may not be so eager to spend, spend, spend. A CCH and Harris Interactive survey asked 2,020 adults what they would do with a broad-based tax rebate. Their responses were: Pay down debt – 47% Save it – 32% Spend it
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Tax
FLPs That Flop
In several recent cases, the IRS successfully challenged attempts to exclude from taxable estates assets transferred to family limited partnerships (FLPs, or “flips”) in which a decedent had retained the right to enjoy the property or income from it. Besides reducing estate taxes, purposes of FLPs include liability protection and
Charity Begins With Ownership
The Tax Court ruled that a criminal defense attorney who donated case materials in a prominent case to the University of Texas did not have sufficient ownership rights to the materials to claim a charitable deduction under IRC § 170. Even if the taxpayer did exhibit proper ownership, section 170(e)(1)(A)
PPA Regs Delayed, Guidance Issued
The IRS delayed implementation and provided transitional guidance for proposed regulations under new provisions of the Pension Protection Act of 2006 that relate to funding requirements and benefits of single-employer defined-benefit pension plans. Prop. Treas. Reg. §§ 1.430(f)-1 and 1.430(h)(3)-2, which address maintaining certain funding balances and use of substitute
On Equal Terms
Rep. Rick Boucher, D-Va. (9th District), has been at the forefront of efforts to stop patents on tax planning methods. With a fellow Virginian from across the aisle, Rep. Bob Goodlatte, R-Va., and Rep. Steve Chabot, R-Ohio, Boucher introduced HR 2365, a free-standing bill, to limit damages for infringements on
IRS Can’t Shake Yardstick at Tax Treaty
The Court of Appeals for the Federal Circuit ruled a U.K. bank was entitled to a $65 million refund because the IRS applied a regulation that increased the institution’s income by $155 million in violation of the U.S.-U.K. tax treaty of 1975. In the tax years 1981–1987, National Westminster Bank
Taxpayer Advocate Presents Annual Wish List
National Taxpayer Advocate Nina Olson presented her annual report to Congress in January recommending dozens of issues for the IRS and Congress to resolve this year. The report analyzes issues in 26 categories, including collection and tax services, privacy protection and tax preparer standards. Late tax-law changes. Olson said paper
This Sold House
The Tax Court recently held that a couple could exclude gain from the sale of one of their two residences, since during the five-year period preceding the home’s sale, it was used as the couple’s principal residence for the requisite two-year period. The taxpayers were not allowed to exclude the
Advising Private Foundations
In the arsenal of estate planning, private foundations have traditionally ranked among the big guns. With their relative formality and extensive tax rules, they have been considered the province of the truly wealthy – people with $1 million or more to dispose of charitably. The belief that lesser largesse could
Split-Interest Prohibition Upheld
The Third Circuit Court of Appeals joined other jurisdictions in affirming IRC § 2055(e)’s prohibition of charitable deductions from an estate for transfers of interests in trust property that are not definitely divided between charitable and noncharitable beneficiaries, even where the arrangement shows little likelihood of being abusive in the
Top Return Errors for Taxpayers and Paid Preparers
Source: www.irs.gov .
Step Right Up
The Tax Court upheld as having economic substance a partnership’s nearly $12 million distribution of notes to redeem partners’ interests in real estate on which the partnership claimed a step-up in basis. The IRS had denied the partners’ resulting nonrecognition of gain on grounds that the distribution consisted of either
Data Point: 87
The proportion of multinational enterprises that believe transfer pricing is a risk when managing financial statements, as compliance requirements have increased due to developments in financial reporting. More than half of the enterprises surveyed have undergone a transfer pricing examination since 2003, with 27% resulting in adjustments by tax authorities.
Georgia Tax Court Eyed
Practitioners hope to see a state tax court started in Georgia, one of 27 states lacking a dedicated tax court or administrative appeals forum fully independent of a state revenue agency. Besides removing proceedings from any appearance of bias, an independent tax tribunal offers several other advantages including a less
AICPA Issues Guidance for 2007 Returns on Trustee Costs
The AICPA has produced guidance for members preparing 2007 fiduciary income tax returns, in keeping with the recent holding of the U.S. Supreme Court in Knight v. Commissioner. The case (101 AFTR2d 2008-380) affirmed that investment advisory fees of estates and nongrantor trusts generally are subject to the 2% of
Return Preparers Subject to New Regulations
Section 7216 of the Internal Revenue Code imposes criminal penalties on tax return preparers who knowingly or recklessly make unauthorized disclosures or uses of information furnished to them in connection with the preparation of an income tax return. Newly finalized regulations should prompt all return preparers to evaluate their processes
2007 in Review: Congressional Impact on CPA Profession
Last year, CPAs had plenty of reasons to pay attention to policymakers’ proposals. Legislation under consideration has the potential to improve tax practices, alter audit practices, and even pave the way for greater competition. AICPA VP Testifies Before Senate Panel on International Accounting Standards Last fall, the Senate Banking
Economic Substance Prevails Against Another Son of BOSS
The IRS scored a major success in its war against Son of BOSS-type tax shelters in Jade Trading LLC . The Court of Federal Claims used the application of the economic substance doctrine in Coltec Industries to disallow losses involving partnerships and euro call options. In 1999, after clearing approximately
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