Professional employer organizations (PEOs) provide comprehensive payroll, benefits, and human resource outsourcing solutions to unrelated third-party employers. PEOs are often also referred to as employee leasing companies or "co-employers." The model for providing those services, which has been relatively consistent for many decades, may change significantly because of recent legislation that will bifurcate PEOs into two categories.
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TOPICS
C Corporation Income Taxation
State Tax Consequences to Shareholders on Distributions of Property
When a company distributes property to its shareholders, tax consequences arise for the distributing corporation and the receiving shareholder. This item addresses the state tax consequences to the shareholder, which can differ between states with separate-return filing rules and states that follow the federal consolidated-return filing rules.
Compliance With Short-Period Return Rules Can Stave Off Penalties and Rejection of Elections as Untimely
The unextended due date of the return of a domestic corporation, Form 1120, U.S. Corporation Income Tax Return, generally is the 15th day of the third month following the close of the corporation’s tax year. However, when a target corporation joins the consolidated group of a purchasing corporation on a date other than the first day of the target corporation’s tax year, the due date for the target corporation’s short-period final return is determined without regard to the last day of the short period.
IRS Concludes That Banking App Does Not Qualify for Sec. 199 Deduction
Computer software provided to customers for their direct use while connected to the internet or other public or private communications network, collectively known as online software, is classified as a service provided to customers.
Desirability, Mechanics of Making Sec. 362(e)(2) Elections for State Tax Returns
Sec. 362(e)(2) acts as a barrier to prevent two taxpayers from obtaining the benefit associated with the built-in loss amount, by requiring an election to preserve the loss in either the parent or subsidiary.
IRS Issues Two Rulings on D Reorganizations
The IRS issued two corporate reorganization rulings, one of which involved a domestic corporation and a number of foreign subsidiaries while the second involved a reorganization of domestic entities with a limited liability company that elected to be a disregarded entity after the reorganization.
IRS: Corporations Cannot Circumvent Gain on Appreciated Property Using Partnerships
The IRS issued regulations that take aim at transactions that attempt to avoid the repeal of the General Utilities doctrine.
Bright-Line Test Determines Substantial Business Activities Under Inversion Rules
Final regulations were issued for determining when an expanded affiliated group will be considered to have substantial business activities in a foreign country, which allows a foreign corporation to escape application of the inversion rules.
IRS Applies Option Rule to Find Covered Transaction for 50% or Less Stock Acquisition
Some taxpayers that incur costs for taxable stock acquisitions after which they own less than 50% of a corporation may qualify for an exception.
Evolving Trends in Captive Insurance
Recent tax developments relating to captive insurance companies present potential new opportunities for some captive arrangements while raising caution about others. This item highlights current, practical considerations regarding qualification of a captive as an insurance company for federal income tax purposes.
Former Shareholders Held Liable for Corporate Tax Debt
The Tax Court held that the four former shareholders of a corporation were liable as transferees for a portion of the tax debts of the corporation arising from a land sale that occurred before they sold their stock in the corporation to a third party.
IRS Issues Final Rules on Performance-Based Compensation
IRS finalized regulations regarding the exception under Sec. 162(m)(4)(c) to the $1 million deduction limitation for compensation paid by publicly held corporations to covered employees.
Rulings Illustrate Transactions That Qualify as D Reorganizations
The IRS issued two rulings on transactions that qualify as D reorganizations and revoked Rev. Rul. 78-130.
The Principal Tax-Avoidance Purpose: A Poison Pill for Inversions?
This item considers possible challenges by the IRS using the principal tax-avoidance purpose under Sec. 7874.
Support for Corporate Structure Under State Corporate Practice of Medicine Rules
The IRS concluded that two professional corporations could file a consolidated return with another corporation, even though licensed professionals, not one of the members of the consolidated return group, were the actual legal owners of these PCs’ stock, as required by state law.
Tax Considerations for Cancellation-of-Debt Income
This item provides an overview of the U.S. income tax implications of cancellation-of-debt income that results from bankruptcy or insolvency, with a focus on the differences in the tax treatment for C corporations, S corporations, and partnerships.
Considering Alternatives to Liquidation
Shareholders might want to liquidate a corporation for several reasons, but in some cases, a plan of action other than liquidation might better meet their objectives.
Cost-Segregation Studies and the Impact of the Tangible Property Regulations
This item highlights several important aspects of the final tangible property regulations and related transition guidance that may affect cost-segregation studies and resulting changes in accounting methods.
GAAs Are a Valuable Planning Option for Tangible Property Depreciation
General asset accounts provide a valuable simplification tool for tracking tangible assets and present some tax planning opportunities.
Incorporating a Partnership and Selling to an ESOP in a Tax-Free Transaction
This item explores the main issues a partnership should consider from a restructuring perspective when considering ESOP ownership transactions.
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.
