FASB issued Statement no. 141(R), Business Combinations , and Statement no. 160, Noncontrolling Interests in Consolidated Financial Statements . Effective for fiscal years beginning after Dec. 15, 2008, the standards are intended to improve, simplify and internationally converge accounting for business combinations and the reporting of noncontrolling interests
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Tax
Son of BOSS Adjustment Timely for IRS
A federal court has concluded that a suspected “Son of BOSS” transaction that caused an overstatement of basis in the calculation of gain from a sale of real estate is a gross income omission that allows the IRS six years to assess a deficiency. The ruling, in Salman Ranch Ltd.
Identifying “Specified Employees”
The nonqualified deferred compensation (NQDC) rules may surprise employees who expect to receive distributions from their NQDC plans immediately after they terminate employment. Code § 409A contains strict rules NQDC plans must follow to avoid harsh consequences to the employee (that is, immediate taxation, 20% penalty, and
IRS Reminds EOs of Political Restrictions
Churches and other exempt organizations (EOs) must abide by laws prohibiting them from direct or indirect involvement in political candidates’ campaigns, the IRS reminded in a news release. Revenue Ruling 2007-41, issued last summer, provides scenarios of how the ban may be observed. Generally, tax-exempt organizations are forbidden to promote
Partnerships for Community Development
EXECUTIVE SUMMARY CPAs can use their expertise to structure partnerships between long-term community investors and developers who want to contribute to improving markets without displacing current residents and local businesses. For tax purposes, forming an LLC may be the best approach to a development partnership. The partners
Passive or Nonpassive Activity—IRS Wins Either Way
The Tax Court recently ruled on the same day in favor of the IRS in two unrelated cases involving the passive loss rules for rental activities (see also “ Real Tax Savings in Real Estate,” page 68). In one case, the court determined that a taxpayer’s rental activity was passive,
Independent Contractor or Employee?
A recent congressional inquiry into whether Blackwater USA properly classified its security guards in Iraq and Afghanistan as independent contractors rather than employees highlights the often complicated application of provisions for determining this status. In its defense, Blackwater invoked the safe-harbor provisions of section 530 of the
Do-It-Yourself Will Succeeds in Spite of Itself
The Ninth Circuit Court of Appeals recently upheld a district court’s decision that a self-prepared will’s bequest qualified for the marital deduction, even though its literal wording created a disqualifying terminable interest. The courts found the decedent’s handwritten notes of planned revisions to the will and an article he saved
Deciphering the Code
A recent case that ostensibly dealt with a bank’s deductions for interest and other expenses associated with tax-exempt income could affect how advisers approach interpretation of the Code and revenue rulings generally. PSB Holdings is the parent of an affiliated group that includes Peoples State Bank, which is based in
Real Tax Savings in Real Estate
EXECUTIVE SUMMARY While the passive loss limitation rules generally prevent the current deduction of rental real estate net losses, many taxpayers with real estate rental income may meet the standard for a real estate professional conducting a real property trade or business. Such status requires the taxpayer
Reporting Your Other Income
The IRS updated its “Tax Gap” series with a new fact sheet, Reporting Miscellaneous Income, which includes guidelines for reporting self-employment income, barter exchanges of goods and services, gambling winnings, prizes and awards. The series, located at www.irs.gov/newsroom/article/0,,id=158619,00.html, also includes fact sheets on reporting auction income and capital gains, tax
Stranger in a Strange Plan
Media reports highlighting the hazards of so-called stranger-originated (also known as stranger-owned) life insurance (STOLI) prompted U.S. House tax writers to ask Treasury Secretary Henry Paulson to investigate the practice as well as consider issuing guidance on its tax implications and help Congress notify “elderly taxpayers of the adverse tax
Correcting § 409A(a) Failures
The IRS has issued transition relief and guidance for correcting operational failures under nonqualified deferred compensation plans. Following the methods outlined in the guidance will avoid income inclusion under § 409A(a). The second section of the guidance explains how to obtain relief for unintentional operational failures corrected in the same
Make Tax Research Less Taxing
Selecting a Web-based tax research service is not a simple task. Commercial publishers offer a variety of premium and economy plans that can be bundled and priced in many ways. The variations make the selection process especially difficult. Although the basic pricing and services of the products
Deferred Compensation Regs Deferred
After delaying for one year new documentation requirements of IRC section 409A concerning nonqualified deferred compensation plans, the Service also extended transition relief for most other provisions until 2009. Notice 2007-86 providing the transition relief supersedes or modifies several provisions contained in Notice 2007-78. It does not affect, however, the
Life Insurance: What’s It Worth? And Who Says?
EXECUTIVE SUMMARY Gifts of life insurance policies to not-for-profit organizations can benefit both the organization and the donor, the latter in the form of an often sizeable income tax deduction. However, under the new requirements of the Pension Protection Act of 2006 (PPA), determining the fair market value
Privilege Claims Under Fire
Despite some legal setbacks, the IRS has signaled it will continue to press for a strict reading of the work product privilege that protects taxpayer documents from discovery. With Action on Decision 2007-004, the IRS said it will not acquiesce in the Sixth Circuit’s holding in U.S. v. Roxworthy that
The Intersection of FIN 48 and Tax Opinions
FASB’s Interpretation no. 48, Accounting for Uncertainty in Income Taxes, has changed how enterprises recognize and measure tax benefits associated with tax positions and disclose in their financial statements uncertainties related to income tax positions. Most enterprises have found they must take a variety of steps to
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