In two cases, the court rebuffed taxpayers’ attempts to restrict its inquiry to a selected subset of the projects for which they claimed the Sec. 41 credit.
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TOPICS
C Corporation Income Taxation
The CFC/PFIC overlap rule after aggregate treatment
Investors holding less than 10% of a controlled foreign corporation (CFC) are generally no longer shielded from double taxation under both the passive foreign investment company and CFC rules.
Payments for law violation are not deductible restitution
A recent Chief Counsel Advice memo determined that the deductions were disallowed as fines or penalties under Sec. 162(f).
Prop. regs. address expanded annual compensation deduction limitation
The regulations provide guidance on determining who is one of the “five highest compensated employees” under Sec. 162(m)(3)(C).
Taxpayer may not deduct penalties imposed for violating a law
An IRS technical advice memorandum examines a taxpayer’s fines and penalties paid to a state agency.
Ensuring that shareholder debt is not reclassified as equity
Owners of C corporations can take steps to ensure that transfers to the corporation are treated as debt rather than equity.
Seller beware: Repossessions in real estate installment transactions
Sellers financing a sale of real property are subject to gain recognition under Sec. 1038 if they repossess the property upon the buyer’s default.
Strategies for information return penalties and Form 945 assessments
Penalties for failure to file correct information returns and backup withholding can be waived, but timely and correct responses to IRS notices are essential.
New prop. regs. limit taxpayers’ foreign currency elections
The regulations would promote consistency with filing requirements for controlled foreign corporations and limit certain elections regarding foreign currency gains and losses.
Burden of proof: The shoebox method and 9-martini lunch
When taxpayers claim deductions for business expenses, they must meet their burden of proof with proper recordkeeping.
Employee retention credit updates
Practitioners need an understanding of claim disallowance appeals and requests for additional
information, as well as insight into how the voluntary disclosure program may affect practitioners themselves.
Planning opportunities: Sec. 179 expensing vs. bonus depreciation
As bonus depreciation phases out, practitioners need to consider Sec. 179 expensing to maximize deductions on fixed-asset purchases.
Application of Sec. 72(e) to annuity advisory fees
In a letter ruling, the IRS ruled that the investment advisory fees paid by an annuity contract would not be considered an amount received in gross income by a contract’s owner.
The Inflation Reduction Act’s prevailing wage and apprenticeship requirements
Taxpayers engaging in certain clean energy activities are eligible for increased credits or deductions for qualifying if they adhere to the Inflation Reduction Acts prevailing wage and apprenticeship requirements.
AICPA to Congress: Delay needed in BOI reporting deadline
Without a delay, “millions of small business owners become accidentally and unknowingly delinquent in their compliance,” reads the letter, signed by CEO Barry Melancon, CPA, CGMA.
CRFB leader: Tax policy may not be a Trump administration high priority
The head of the nonpartisan Committee for a Responsible Federal Budget told the AICPA & CIMA National Tax Conference that extending the Tax Cuts and Jobs Act would add $5 trillion to the national debt.
Consolidated return filing for subsidiary in receivership
An IRS letter ruling confirmed that a subsidiary member of a consolidated group remains a part of the group and its consolidated return despite being in receivership under a court order that requires its eventual liquidation and dissolution.
Corporate AMT prop. regs. impose new partnership information tracking system
This article outlines a five-step process for calculating a corporate partner’s distributive share related to the application of the corporate alternative minimum tax imposed on an applicable corporation pursuant to Sec. 56A.
Sec. 245A dividends-received deduction allowed for Sec. 78 dividend
In Varian Medical Systems Inc., the Tax Court found the company eligible for the deduction for 2018 despite a disqualifying change in Sec. 78, due a mismatch between the change’s effective date versus the effective date of then-new Sec. 245A.
Cleaning up intercompany debt
An intercompany loan between related corporations may be recharacterized as an equity contribution by the companies’ shareholders, resulting in a constructive dividend to the shareholders. This article focuses on a recent Tax Court case involving the proper characterization of purported intercompany loans between two S corporations.
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.
