In Notice 2023-63, the IRS offered guidance on deducting remaining amortized specified research or experimental expenditures when applicable property is retired, abandoned, or disposed.
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TOPICS / CORPORATIONS
Deductions
Apportioning tax benefits among members of a controlled group
A controlled group can choose how it apportions tax benefits and other items among its members, with rules for certain credits and for pension and profit-sharing plans.
How compensatory intent affects compensation deductions
For a corporation to deduct a payment made to a shareholder/employee as compensation, compensatory intent must exist.
Home office and other business expenses denied
It is essential to emphasize the importance of substantiation to clients and to make sure they understand the substantiation requirements and to educate clients on how to maintain accurate recordkeeping and to record transactions in real time.
Navigating around limits on meals and entertainment
Deductions may be claimed for business-related meals and entertainment if taxpayers heed these rules and limitations.
Substantiation of business expenses: A review of the basics
A recent Tax Court case highlights the fact that taxpayers bear the burden of substantiating not only the amount of the deduction but also that the purpose underlying the deduction is ordinary and necessary to operating their trade or business.
Sec. 174(d) in M&As: Risks and opportunities
Taxpayers and advisers should focus on understanding the risks and maximizing the benefits of Sec. 174 when involved in M&A transactions.
FDII deduction: Options for determining taxable income
This discussion highlights uncertainties that may arise in determining a corporation’s taxable income for purposes of calculating its foreign-derived intangible income deduction under Sec. 250.
Defining software development costs
Until guidance is issued, taxpayers seeking to determine the fundamental characterization of software costs in order to evaluate what expenditures fall within the scope of new Sec. 174 may find other sources helpful, including those that have historically governed this area.
Not all employee parking lots are created equal
An employer will have to make some effort to document that the parking available at an employee parking facility has no value, many employers will find that this burden is worth bearing because it allows deducting the full expenses of operating and maintaining the facility.
State conformity to federal treatment of Sec. 174 R&E costs
This item explores which states likely conform to the amendments to Sec. 174, which states likely decouple from those changes, and the issues raised by conformity to or decoupling from the changes.
Deducting costs that are usually capitalized
Certain environmental cleanup costs, restaurant ‘smallwares,’ and certain vehicle replacement tires have expensing options that business owners may be unaware of.
M&A pitfalls for deferred research expenditures
Treasury and the IRS have issued minimal guidance on current Sec. 174, and future guidance may provide more clarity or different results than what is detailed in this item.
IRS obsoletes 1958 revenue ruling on research and experimental costs
The ruling, which is being obsoleted as of July 31, allowed a taxpayer that used the expense method for research and experimental expenditures to deduct on an amended return research and experimental expenditures the taxpayer did not deduct in prior years.
Determining compensation deductions in M&A transactions
This item explores three types of compensation paid to employees of the target.
Uncertainties remain in analyzing success-based fees
This item surveys four areas in which taxpayers face uncertainty in analyzing success-based fees.
Determining gross receipts under Sec. 165(g)(3)
This item summarizes some of the relevant authorities and then covers the facts and conclusion in Letter Ruling 202140002.
Recent changes to the Sec. 179D energy-efficient commercial buildings deduction
The energy efficient commercial buildings deduction under Sec. 179D provides taxpayers with an incentive to make certain commercial building property more energy efficient.
Issues in allocating income under Sec. 384
Although the IRS has addressed several issues in the application of Sec. 384 with letter rulings and other guidance, the Service has yet to come out with comprehensive regulations and, thus, has yet to address several issues with its application.
Deduction of startup expenses
When is a company allowed to report as deductions on a tax return the expenses that have been incurred during the time leading up to getting the doors open for business?
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