Effective July 8, 2008, the IRS issued new temporary regulations to amend the rules under Secs. 195, 248, and 709 regarding elections to deduct startup expenditures and organizational expenditures of corporations and partnerships (T.D. 9411).
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TOPICS / CORPORATIONS
Deductions
IRS Increases Scrutiny of Performance-Based Plans Under Sec. 162(m)
Editor: Frank J. O’Connell Jr., CPA, Esq. Sec. 162(m) governs the deductibility of certain excessive employee compensation. In recent months the IRS has issued Rev. Rul. 2008-13 and Rev. Rul. 2008-32, providing for additional clarification related to certain components of the performance-based compensation rules contained within Sec. 162(m)(4)(C) and Regs.
The Economic Stimulus Act of 2008
The tax benefits the Economic Stimulus Act provides affect both individuals and businesses. The legislation’s purpose is to increase consumer and business spending in an effort to stimulate the economy.
Sec. 199 Final Regs. on TIPRA Amendments and More
This item discusses how recent final regulations interpret statutory changes to Sec. 199 and how the regulations eliminate a potential issue in calculating taxable income for purposes of the Sec. 199 deduction.
IRS Examines Treatment of Restructuring Costs
The IRS provided guidance on the treatment of costs related to investigating various corporate restructuring transactions that ultimately were not consummated.
Maximizing the Benefits of Sec. 199 in an Asset Sale
This article addresses the opportunity to claim a Sec. 199 deduction when a business is sold in an asset sale or in a stock sale that is treated as an asset sale under a Sec. 338(h)(10) election.
Federal, State, and Local Tax Incentives for Environmental Remediation Costs
This item provides a high-level overview of the most common federal, state, and local tax incentives and a brief update of the federal rules regarding the expensing of environmental remediation costs.
IRS Changes Its Position on Performance-Based Compensation for $1 Million Compensation Limit
The IRS ruled that an incentive plan is not performance-based compensation because it allows payments upon involuntary termination without cause by the employer, voluntary termination by the employee with good reason, or voluntary retirement regardless of whether the performance goals are met.
Hurricane GO Zones: An Update on Relevant Tax Provisions
The widespread devastation left in the wake of hurricanes has resulted in numerous tax provisions aimed at revitalizing and rebuilding the affected areas. Congress passed the Gulf Opportunity Zone Act of 2005, P.L. 109-135 (the GO Zone Act), in response to Hurricane Katrina and then revised it as Hurricanes Rita
New Prop. Regs. Clarify Tax Deductible Entertainment Use of Private Aircraft
Editor: Kevin F. Reilly, J.D., CPA The use of private aircraft eliminates the inconvenience of commercial flights, but clients do not normally call their CPAs in midflight to inquire about the tax ramifications of taking a detour with the family on the company jet to visit Aunt Margaret. Nevertheless, it
Tax Considerations for Corporate Aircraft
Editor: Joel E. Ackerman, CPA, MST In recent years, the number of entrepreneurs acquiring airplanes for their business operations has increased dramatically. Often the aircraft will be placed in a separate entity for legal liability protection and other reasons. Tax advisers need to be aware of the numerous federal income
Payments for Future Remediation Expenses Are Not Insurance Premiums
Editor: Joel E. Ackerman, CPA, MST The IRS ruled in Rev. Rul. 2007-47 that payments to an insurance company to cover future capped costs were not insurance payments for tax purposes. The “premium” was an amount equal to the present value of estimated future remediation costs required by the government.
Deductibility of Nonqualified Deferred Compensation in Mergers and Acquisitions
Editor: Frank J. O’Connell, Jr., CPA, Esq Determining the tax treatment and timing of an employer corporation’s deduction for amounts paid under nonqualified deferred-compensation arrangements under Sec. 404 can be a daunting task, depending on the circumstances. Even if such arrangements have not triggered any of the pitfalls in Sec.
Expensing Restaurant Smallwares
Editor: Albert B. Ellentuck, Esq. Restaurants and taverns can deduct the cost of smallwares in the year in which the smallwares are received and used, instead of having to capitalize those expenditures; see Rev. Proc. 2002-12. The smallwares method applies to businesses engaged in the trade or business of preparing
Sec. 199 Final Regs. Affect Online Software and Advertising
Editor: Annette B. Smith, CPA Sec. 199 generally provides a deduction for qualifying domestic production activities equal to 9% (3% for tax years beginning in 2005 or 2006 and 6% for tax years beginning 2007–2009) of the lesser of the taxpayer’s (1) qualified production activities income for the tax year
Taxpayer-Favorable Letter Ruling on Consolidated Worthless Stock Deduction
Editor: Mary Van Leuven, J.D., LL.M. IRS Letter Ruling 200710004 breaks new ground in determining the character of a worthless stock deduction in a consolidated group. Due to the lack of direct authorities on point and the absence of clear statutory support for the ruling’s favorable conclusions, taxpayers might consider
Tax Incentives for Businesses in Distressed Communities
Executive Summary Businesses in designated EZs and RCs may be eligible for an employment credit, increased Sec. 179 expensing, tax-exempt bond financing and other tax incentives. A capital gain deferral applies to purchased EZ assets; a 60% exclusion applies to small business EZ stock. Enterprise zone facility bonds may be
Providing Meals and Lodging to Employees
Editor: Albert B. Ellentuck, Esq. Under Sec. 119(a), meals provided by an employer—including a C corporation employer—can be excluded from an employee’s gross income if they are furnished on the business premises and for the employer’s convenience. The employer can deduct the full cost of these meals (the normal 50%
Tax Court Capitalizes Model Home Display Costs
The issue is whether the costs of placing model manufactured homes on retail sales lots to assist local independent salespersons may be currently deducted or should be included in inventory under Sec. 263A. Facts A and its related corporations buy and sell manufactured homes, constructed at a factory location and
Rethinking Sec. 199 Based on New Developments
Co-Editors: Michael Metz, CPA; Nick Gruidl, CPA, MBT Beginning in 2006, there is a new deduction available for updating or constructing commercial building property to be more energy efficient. The Energy Tax Incentives Act of 2005 (ETIA), which took four years to pass, added new Sec. 179D. With so many
employee benefits & pensions
Profits interests: The most tax-efficient equity grant to employees
By granting them a profits interest, entities taxed as partnerships can reward employees with equity. Mistakes, however, could cause challenges from taxing authorities.
