Tax

Losses from an S corporation flow through to its shareholders, who can deduct them on their individual tax returns as long as they have sufficient basis to absorb them. Economic outlays such as capital contributions and loans by a shareholder to an S corporation will increase a shareholder’s basis. Generally,

Many taxpayers have been able to reduce their taxes in transactions involving contingent liabilities, leading Congress to change subchapter C and the Treasury Department to change the regulations under IRC section 752. In July 2006, a district court reviewed the definition of a liability and Treasury’s ability to make regulations

nder IRC section 274(n), employers generally may deduct only half their reimbursements to employees for meals and entertainment. But employee-leaseback arrangements—notably in the trucking industry—have mapped a route through the section’s several exceptions. Many smaller trucking carriers use a professional employer organization (PEO) to reduce their costs. One PEO, Transport

Are your clients using the standard formula for their refund of federal excise tax (FET) on long-distance phone service? The IRS made it easy: Just compare the FET rates on phone bills for April and September 2006—before and after phone companies quit collecting the tax on anything other than local

s a general rule taxpayers have the right to select their method of accounting—but this right is restricted by the requirement that the selected method clearly reflect income. Recently, the Seventh Circuit Court of Appeals remanded a case to the Tax Court to redetermine the method the taxpayer selected. JP Morgan

axpayers who inherit individual retirement accounts (IRAs) pay no income tax if they directly roll over the funds into IRAs in their own names. Generally, if the taxpayer receives distributions directly from the inherited IRA, the distributions are taxed, but the 10% penalty tax on premature withdrawals does not apply,