Expenses & Deductions

Definitions of R&E Expenditures Are Amended Under Final Rules

The IRS issued final regulations on which amounts paid or incurred in connection with the development of tangible property, including pilot models, qualify for the Sec. 174 deduction (or amortization) for research and experimental expenditures.

Sec. 199 “Benefits and Burdens” Analysis: Key Guidance

The IRS's primary objective with respect to any contract manufacturing arrangement is ensuring that only one party to the contract can claim to have the benefits and burdens during any qualifying activity. This protects the IRS from being "whipsawed," i.e., being subject to claims by both parties to have the benefits and burdens during a qualifying activity.

IRS Issues Updated Guidance on the Examination of Milestone Payments

The IRS's Large Business and International exam division issued a directive instructing examiners not to challenge a taxpayer's application of the safe harbor to "eligible milestone payments" incurred during the course of a covered transaction if the directive's requirements are satisfied.

Retail Advertising: IRS Affirms Potential Application of Sec. 199

Retailers may be eligible to claim a Sec. 199 deduction for advertising revenue derived from producing and distributing printed fliers in cooperation with vendors. This item reviews recent IRS guidance and considers what it might mean for taxpayers that are engaged in cooperative advertising arrangements.

Proposed Regs. Clarify Research Expenditure Eligibility Under Sec. 174

The IRS in September issued proposed regulations clarifying the application of Sec. 174 to the costs to create “pilot models” or prototypes. The proposed rules state that the reason a taxpayer creates a prototype or other product, and not its subsequent sale or use, determines whether it qualifies under Sec. 174.

Repair Regulations Are Finally Issued

The IRS issued long-awaited final and proposed regulations regarding the treatment of expenditures incurred in acquiring, producing, or improving tangible assets.

The Challenge of Contributing Off-Spec Food to Charity

Donations of “off-spec” food may not result in a charitable contribution deduction greater than the tax basis of the food inventory  because of the difficulty of determining the proper tax basis and FMV for the food.

Newsletter Articles

SPONSORED REPORT

CPEOs provide peace of mind around payroll services

The creation of these new IRS-certified service providers for small businesses clarifies some issues around traditional professional employer organizations.

PRACTICE MANAGEMENT

2016 Best Article Award

The winners of The Tax Adviser’s 2016 Best Article Award are Edward Schnee, CPA, Ph.D., and W. Eugene Seago, J.D., Ph.D., for their article, “Taxation of Worthless and Abandoned Partnership Interests.”