Tax
FICA for Medical Residents Splits Circuits
Medical residents in a teaching hospital might be eligible for a student exemption from FICA taxes, a circuit court ruled recently, adding to a split among circuits on the issue. The Eleventh Circuit vacated and remanded the decision of a Florida district court in United States v. Mount Sinai Medical
Pension Is Alimony
The Tax Court recently ruled that a taxpayer’s payments to an ex-spouse under the Uniform Services Former Spouse Protection Act (USFSPA) representing her share of his military retirement pay were deductible alimony payments. The court determined the payments satisfied the requirements of IRC § 71 even though they were listed
Dixon Award Recognizes Outstanding Service to Tax Profession
Pamela J. Pecarich, CPA, received the Arthur J. Dixon Memorial Award, the highest award given by the AICPA in the area of taxation. Pecarich has been chief policy analyst for the House Ways and Means Committee, staff director for the House Ways and Means Subcommittee on Oversight, director of the
Tax Award Honors Public Service
Two leaders of Community Tax Aid, an organization that provides free assistance to low-income taxpayers, received the AICPA’s Tax Public Service Award at the National Conference on Federal Taxes in Washington. Barb Mantegani, president of Community Tax Aid and a senior manager at KPMG LLP in Washington, has trained hundreds
Pension Is Not Alimony
In a split decision, the Ninth Circuit Court of Appeals reversed the Tax Court to hold that a taxpayer could not deduct as alimony the half-interest in his vested pension benefits he paid his ex-wife under a California divorce decree. The decision may carry implications for how divorcing couples divide
Ohio Court Turns the Tables on Annuities
What is the estate tax value of future state lottery payments? One might think it would be the present value the state used in calculating a lump sum payout. The IRS, however, relying upon the actuarial tables prescribed by IRC § 7520, came up with a higher number in an
Data Point: 56%
Households filing tax returns in 1996 that moved to a different income quintile by 2005. Source: Income Mobility in the U.S. From 1996 to 2005, www.treasury.gov.
Paper Chase
The IRS lacks an effective means of keeping track of paper case files, sometimes hampering its litigation and forcing it to abandon revenue claims, a Government Accountability Office study found. In two audits by the GAO, the IRS couldn’t produce between 10% and 14% of the case files requested. In
Pre-Tax Benefits Often Go Unused
FINANCIAL PLANNINGAnother year, another opportunity for tax savings—but only if you opt in. According to the American Payroll Association’s 2007 Getting Paid in America survey, 80% of employers offer tax-advantaged payroll deduction programs, including cafeteria plans, dependent care flexible spending accounts, travel reimbursement incentive programs and health savings accounts, but
The Service Ships Small Business Help
TAX NOTESThe IRS is now offering complimentary copies of its Small Business Resource Guide (SBRG) on CD-ROM. Small business owners and tax practitioners can order up to five copies for free on the Service’s “Small Business/Self-Employed” Web site, www.irs.gov/businesses/small/index.html, or by calling 800-829-3676. The CD-ROM,
Abusive Insurance Plans Get Red Flag
The IRS in Notice 2007-83 identified as listed transactions certain trust arrangements involving cash-value life insurance policies. Revenue Ruling 2007-65, issued simultaneously, addressed situations where the tax deduction has been disallowed, in whole or in part, for premiums paid on such cash-value life insurance policies. Also simultaneously issued was Notice
Auditing
For news from the AICPA and state societies, visit www.cpa2biz.com, which also offers online CPE, AICPA professional literature, practice management aids and links to state society Web sites. The findings were based on inspections conducted between 2004 and 2006. The PCAOB released a report on the deficiencies to help
Donor-Advised Funds: Preparing for Closer Scrutiny
EXECUTIVE SUMMARY Donor-advised funds (DAFs), as an alternative to private foundations, have been a popular means of charitable giving, but fund managers, donors and their advisers must reckon with new laws and regulations stemming from the Pension Protection Act of 2006. A DAF allows the donor
New Accounting-Change Process Proposed
The IRS is requesting comments on a proposal to revamp how taxpayers may obtain the Service’s consent to change their method of accounting for tax purposes. Notice 2007-88 describes a “standard consent process” that would become the exclusive method not only for changes currently eligible for automatic consent but other
IRS Simplifies Late Filing Relief
In Rev. Proc. 2007-62 (released Oct. 9, 2007), the IRS has provided a new simplified method for taxpayers to request relief for late S corporation elections. A small business corporation may make an election to be an S corporation at any time during the preceding tax year or at any
Indianapolis Power & Light Trips Circuits
In a split decision, the Third Circuit Court of Appeals required a grocer to include in gross income a payment characterized as a loan from a supplier. The loan could be forgiven if the grocer, Karns Prime and Fancy Foods Ltd. of Harrisburg, Pa., purchased a certain volume of goods.
Ease the Burden of Busy Season
With busy season just around the corner, here are some suggestions from firms that have learned how to make what could be their annual trial by fire less stressful and more productive. By treating their staffs with an extra measure of consideration and carefully planning and analyzing
Double Take: Unequal Taxation of Equals
by Lester B. Snyder Vandeplas Publishing, 2007, 281 pp. In the backward world envisioned 135 years ago by Samuel Butler in Erewhon , taxation is regressive, on the theory that a business fortune is evidence of society’s esteem toward its holder. Rather than the social Darwinism that Butler parodied, however,
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