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Tax

Divorce Decree No Substitute for Form 8332

TAX BRIEF Generally, IRC section 151(c)(1) allows taxpayers an exemption for dependent children. In the case of divorced parents, the custodial parent gets the exemption. That parent, however, may release his or her claim to the exemption, allowing the noncustodial parent to claim the deduction. The custodial parent does this

Deductibility of Business Aircraft

EXECUTIVE SUMMARY SINCE SEPTEMBER 11, BUSINESSES HAVE INCREASED their use of company-owned aircraft for employee travel. To successfully defend the cost of this travel as a business expense, it must be ordinary, necessary, reasonable and not lavish. UNDER IRC SECTION 162(a), COMPANIES CAN DEDUCT travel expenses while employees are away

Taxing the Sale of a Business

   July 2003 > Tax Matters   Tax Matters   TAX CASE Taxing the Sale of a Business A taxpayer interested in selling a business must consider both the value of the business and the tax treatment of the sale. The tax rules will cover not only the sale of

Deductions for Bonus Plans

any annual bonus and long-term incentive plans provide for payments to participants within 2 1 / 2 months of the end of the employer’s tax year, so the employer can deduct the payments in the prior tax year (for example, for a calendar-year employer, payment by March 15, 2004, for

Mom-and-Pop Shops

EXECUTIVE SUMMARY SMALL BUSINESSES ARE THE CORE of U.S. enterprise—70%—and the backbone of the small and local CPA firm market. Stresses caused by the rapidity and degree of change in the business world and the culture at large are putting pressure on CPAs to provide them with an ever-more-complex range

Partnership Items

TAX CASES The courts recently faced a series of cases involving the classification of partnership items. IRC section 6255(a) (2) defines a partnership item as something a partnership must take into account during the tax year that is more appropriately decided at the partnership rather than the partner level. For

When Are Advance Payments Includible in Income?

n IRS proposed revenue procedure will allow certain taxpayers using the accrual method of accounting to defer inclusion of specified advance payments in gross income. CPAs should examine notice 2002-79 in case the rules become final so as to be able to advise eligible clients. BACKGROUND IRC section 451 provides

More Clarification on 1031 Exchanges

TAX BRIEF Many tax professionals misunderstood the rules governing IRC section 1031 tax-deferred exchange transactions between related parties. This is not surprising since the IRS’s intentions had been unclear. However, in December 2002 the service issued revenue procedure 2002-83 to establish its position: The guidance is clear—a taxpayer (including individuals,

Risk Management

As part of an ongoing government program prompted by the September 11, 2001, terrorist attacks, the Federal Reserve Board, the Office of the Comptroller of the Currency and the SEC jointly issue a report that identifies operational risks to the nation’s financial system and requires the institutions within it to

Asbestos Removal Costs Deductible

Businesses may deduct environmental remediation costs currently as repairs if the expenditures keep property in an ordinarily efficient operating condition but don’t materially increase its value or useful life. If the expenditures stop deterioration and appreciably extend the property’s useful life, the costs must be capitalized. Previously, the courts had

Government Accounting

The Department of the Treasury says the General Accounting Office (GAO) was unable to express an opinion ( www.treas.gov/press/releases/js145.htm ) on the federal government’s fiscal year 2002 financial report ( www.fms.treas.gov/fr/index.html ), released by the Treasury and the Office of Management and Budget at the end of March. According to

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.   Federal bank and thrift regulators issue revised guidance, Interagency Policy Statement on the Internal Audit Function and Its Outsourcing, prohibiting

FYI

The SEC announced in April its unanimous selection of William J. McDonough to be the chairperson of the Public Company Accounting Oversight Board ( www.sec.gov/news/press/2003-48.htm ). McDonough’s career spans three decades in banking—the last as president of the Federal Reserve Bank of New York. The PCAOB selected Douglas R. Carmichael,

International

The International Federation of Accountants’ international auditing and assurance standards board releases International Auditing Practice Statement 1014, Reporting by Auditors on Compliance with International Financial Reporting Standards, and issues two exposure drafts on assurance engagements and audits of small businesses ( www.ifac.org ). One includes a proposed International Framework for

Taxation of Pending Claims

EXECUTIVE SUMMARY A CORPORATION THAT IS SOLD OR RESTRUCTURED faces significant uncertainty about how the government will tax contingent liabilities such as environmental, tort and similar obligations. This is particularly true for taxable transactions involving a liability that depends on the outcome of a lawsuit or similar event. AN IMPORTANT

FROM THIS MONTH'S ISSUE

4 ways solo practitioners can stand out

Five years ago, a grieving Angel Zhen started his own CPA firm with no clients and no revenue. Today, he has 300 clients, $600,000 in revenue and 12 weeks of annual vacation. In this JofA article, he shares how he set up his firm and how you could do the same.

From The Tax Adviser

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Current developments in taxation of individuals: Part 3

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Current developments in taxation of individuals: Part 2

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Hedge funds: Tax structuring, planning, and compliance