The IRS issued a notice that gives employers guidance on two new tax credits for qualified veterans and provides extra time to comply with some of the credits’ requirements.
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TOPICS
C Corporation Income Taxation
Low-Income Community Businesses and New Markets Tax Credit Regs.
The IRS issued final regulations on how entities serving certain targeted populations can qualify as active low-income community businesses for purposes of the Sec. 45D new markets tax credit.
Government Contractor Withholding Repealed and Veterans Job Credits Enacted
President Barack Obama signed into law repeal of a requirement that 3% of payments to any person for services or property be withheld by the federal or state governments or their instrumentalities or subdivisions (including multistate agencies).
Losses Related to an Insolvent Corporation
The IRS issued a general legal advice memorandum that addressed the tax consequences when an insolvent foreign subsidiary of a domestic U.S. corporation elected to be classified as a partnership.
Proposed Sec. 382 Regs. Simplify Small Shareholder Treatment
Sec. 382 and the regulations thereunder rank among some of the most complex, nonintuitive rules in federal tax law, all aimed at curbing the practice of trafficking in NOLs, or other loss attributes, in a corporation.
Final “Hot Stock” Regs. and Dunn Trust
In October 2011, Treasury issued final regulations that deal with the application of the Sec. 355(a)(3)(B) “hot stock” rule (T.D. 9548).
Increased Focus on and Potential Ramifications of R&E Expenditures
Many taxpayers may have noticed a recent increased IRS focus on R&E expenditures. As a result of this increased focus, it is time for taxpayers to increase their focus as well.
Exercise of Stock Options Results in Taxable Income and Compensation Deduction
The IRS held that a taxpayer’s cashless exercise of stock options resulted in taxable income to the taxpayer and a compensation deduction for the company that issued the options.
Prop. Regs. Require NUBIG and NUBIL Redetermination for Consolidated Sec. 382 Purposes
The IRS recently proposed revisions to the consolidated return regulations on the application of Sec. 382 and calculation of net unrealized built-in gains and losses.
Annual Update on Adequate Disclosure of Return Positions Issued
The IRS released updated guidance 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.
Using a Buy/Sell Agreement to Transfer Ownership
A buy/sell agreement is a contract that restricts business owners from freely transferring their ownership interests in the business; they are a tool in providing for a planned and orderly transfer of a business interest.
Excessive Energy Property Grant Is Includible in Gross Income
An IRS memorandum advises that grant applicants must include in gross income any amounts they received but were not entitled to under a grant program of Section 1603 of the American Recovery and Reinvestment Act of 2009.
Guidance on Characterizing Gross Receipts from Telecommunications Services
In Rev. Rul. 2011-24, the IRS provided guidance for determining whether a taxpayer that provides telecommunications services derives gross receipts from services, leasing or renting property, or a combination of the two, for purposes of the domestic production activities deduction under Sec. 199.
Corporation Is “Same Taxpayer” for Interest-Netting Purposes
The Court of Federal Claims held that, for purposes of interest netting under Sec. 6621(d), a taxpayer was the same taxpayer if it had the same identification number in the underpayment and overpayment years.
REIT May Exclude Interest-Rate Swap Income from Gross Income Tests
The IRS ruled that income a REIT receives from an interest-rate swap agreement that hedges indebtedness of the REIT’s lower-tier partnership is not includible in the REIT’s gross income for purposes of applying the 95% and 75% gross income tests.
Recognized Built-In Loss Is Subject to Sec. 382 Limitation
The IRS concluded that a taxpayer may include in its computation of taxable income or NOL only an amount of recognized built-in loss (RBIL) equal to its Sec. 382 limitation, whether or not the taxpayer has taxable income without regard to RBIL.
New Tax Provisions for 2012
With the ringing in of the new year, several new tax provisions took effect.
Regulations Issued on Continuity of Interest Rule for Corporate Reorganizations
The IRS issued final and proposed regulations on the continuity of interest (COI) requirement in Sec. 368 corporate reorganizations.
Final Regs. Issued on Low-Income Community Businesses and New Markets Tax Credit
The IRS issued final regulations on how entities serving certain targeted populations can qualify as active low-income community businesses for purposes of the Sec. 45D new markets tax credit
Net Operating Loss and Unrealized Investment Gain Tax Provision Benefit
This item reviews an anomalous situation that occurs in some cases under ASC ¶740-20-45-7 for entities generating NOLs with an investment portfolio.
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.
