This item discusses recent taxpayer-favorable guidance provided by the IRS and the Tax Court on the tax treatment of transaction costs.
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TOPICS / CORPORATIONS
Deductions
The Proper Timing of Workers’ Compensation Deductions
For companies with more than a de minimis amount in their workers’ compensation reserve, it may be worthwhile to review the details underlying the reserve amount.
Sec. 199 Deduction and Government Contractors
Although the domestic production activities deduction (DPAD) came into law in 2004, certain types of taxpayers eligible for the deduction–including contractors doing business with the federal government–often fail to claim it on their income tax returns.
Treatment of Prior-Period Expenses under Sec. 199
Taxpayers that are eligible for the domestic production activities deduction under Sec. 199 often face the difficult question of how to properly allocate prior-period expenses between activities that created domestic production gross receipts (DPGR) and activities that did not create DPGR (non-DPGR).
Charitable Contribution of Qualified Conservation Easement
The Tax Court held that a conservation easement of air space over an historic structure that was donated by a taxpayer to a nonprofit organization did not meet the requirements to be considered a qualified conservation easement.
Sec. 162(m)(5) Implications for TARP Recipients
The Emergency Economic Stabilization Act created Sec. 162(m)(5) to impose strict limitations on the deductibility of certain executive remuneration.
Merger Termination Fee Deductible
The Tax Court held that a termination fee paid by the taxpayer to cancel a merger agreement in order to consummate a more lucrative merger was deductible.
Using Statistical Sampling to Support the Sec. 199 Deduction
As the Sec. 199 deduction percentages are phased in to the full 9% for tax years beginning in 2010, taxpayers will be faced with greater opportunities to maximize their Sec. 199 deductions and increase compliance risk.
Sec. 199 Issues Arising from Contract Manufacturing Arrangements
In order to determine whether the taxpayer or the contract manufacturer is entitled to the Sec. 199 deduction for the same manufacturing activity, the Sec. 199 rules require an analysis of which party in a contract manufacturing relationship has the “benefits and burdens of ownership” under judicially developed federal income tax principles.
Seventh Circuit Finds $20 Million Bonus Reasonable
The Seventh Circuit has reversed a Tax Court decision holding that most of an executive’s $20 million compensation was unreasonable and therefore a nondeductible dividend.
Temp. Regs. Allow Deemed Election to Expense Startup, Organizational Costs
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).
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 PRACTICE MANAGEMENT
2025 tax software survey
AICPA members in tax practice assess how their return preparation software performed during tax season and offer insights into their procedures.
