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
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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
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,
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