A common strategy for shareholders of closely held corporations to avoid double tax involves the assertion that a portion of the disposition of the business relates to the sale of personal goodwill of the shareholder.
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TOPICS
C Corporation Income Taxation
IRS Allows Sec. 338(h)(10) Election Made During Spinoff of Selling Corporation
In Letter Ruling 201220020 the IRS integrated an internal stock sale followed by a spinoff and ruled that the internal stock sale was eligible for a Sec. 338(h)(10) election.
R&D Tax Credit Update: Recent Court Decisions Shed Light on Key Issues
The Sec. 41 R&D tax credit continues to be an important incentive for many companies; however, the incentive effect is often dampened by challenges in identifying, documenting, and defending the credit.
Debt vs. Equity in the Tax Court
While there is a lack of guidance from the IRS on determining whether an instrument constitutes debt or equity, there are many cases that have established a list of factors that assist taxpayers in making such a determination.
Establishing the “Fact of the Liability” for Bonus Compensation
A recent IRS legal memorandum serves as a reminder to business taxpayers to consider modifying or updating their employee bonus plans to enable a deduction for bonus compensation accrued in the year of the related services, as provided in Rev. Rul. 2011-29.
Changes to Rules on Failure to File Gain Recognition Agreements Proposed
The IRS issued proposed regulations to update the rules that apply to U.S. taxpayers that fail to file gain recognition agreements when they transfer certain property to foreign corporations in nonrecognition transactions
Appeals Court Reverses Claims Court, Disallows LILO Deductions
The Federal Circuit issued a decision reversing and remanding a case to the Court of Federal Claims, which had upheld a LILO transaction.
IRS Offers Guidance on Accounting for Black Liquor Credit Repayments
The IRS Chief Counsel’s Office addressed under what circumstances interest must accompany a repayment of the alternative fuel mixture credit received and during what year taxpayers converting the AFMC into the cellulosic biofuel producer credit should include that credit in income under Sec. 87.
IRS Issues Prop. Regs. on Allocation of Costs Under Simplified Sec. 263A Methods
The IRS has issued proposed regulations on allocating costs to property produced or acquired by a taxpayer for resale.
State Law Property Classifications Do Not Control “Like Kind” Determination
The IRS ruled that state law property classification does not control whether exchanged properties are considered of “like kind” for purposes of Sec. 1031.
Regs. Issued on Integrated Hedging Transactions of Qualifying Debt
The IRS published regulations addressing certain integrated transactions that involve a foreign currency denominated debt instrument and multiple associated hedging transactions.
IRS Issues Guidance on Corporate Equity Reduction Transactions
The IRS published the first guidance addressing corporate equity reduction transactions since the CERT rules were enacted in 1989.
IRS Clarifies When Debt Instruments Are Publicly Traded
The IRS issued final regulations clarifying the circumstances in which property is traded on an established market (i.e., publicly traded) for purposes of determining the issue price of a debt instrument.
Sec. 304 Anti-Abuse, Anti-Avoidance Rules Finalized
The IRS finalized regulations that apply to transactions subject to Sec. 304 but that are structured with the principal purpose of avoiding the statute’s application.
Prop. Regs. Provide Guidance on Meals and Entertainment Expenditures
Proposed regulations clarify the definition of a reimbursement or other expense allowance arrangement and provide guidance on the applicability of the Sec. 274(e)(3) exception under various circumstances including employer/employee, two-party, and multiparty arrangements.
Nonrefundable Milestone Fees Do Not Qualify as Success-Based
A business can expense 70% of “success-based fees,” meaning amounts that are contingent on the successful closing of a covered transaction. It is important to remember this safe-harbor election can apply to both sides of the transaction.
Rehabilitation Credits Disallowed
The Third Circuit held that a corporate partner in a partnership was not entitled to claim historic rehabilitation credits passed through to it from the partnership because the corporation was not a bona fide partner in the partnership.
Crop Insurance Proceeds: Appropriate Tax Planning Strategies
The severe drought experienced by much of the United States this year, especially in agricultural regions, is expected to produce a record number of crop insurance claims.
Measuring Insolvency Under Sec. 108
While determining if a taxpayer is bankrupt is straightforward, determining whether a taxpayer is insolvent can be tricky.
Rev. Proc. Updates Guidance on Adequate Disclosure of Return Positions
The IRS released its annual update identifying when a taxpayer’s disclosure of an item or position in an income tax return is adequate for purposes of reducing the understatement of tax penalty and the tax return preparer penalty for understatement due to unreasonable positions.
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.
