The Seventh Circuit held that an accounting and consulting firm organized as a C corporation could not deduct payments to related entities because they were dividends, not compensation for services rendered by the firm’s owners.
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TOPICS
C Corporation Income Taxation
Intercompany Debt in a Deemed Asset Sale Election
This item discusses IRS guidance illustrating the impact of extinguishment of intercompany debt immediately preceding a Sec. 338(h)(10) election.
LB&I Guidance on Benefits-and-Burdens-of-Ownership Analysis Under Sec. 199
The IRS LB&I Division issued guidance to field examiners in determining whether a taxpayer conducting production activities under a contract manufacturing arrangement with an unrelated third party meets the benefits-and-burdens-of-ownership requirement outlined in the domestic production activities deduction rules under Sec. 199.
Sec. 6045B Reporting Requirements
Sec. 6045B requires an issuer of a specified security to report certain information to the IRS and to its shareholders following an organizational action that affects the basis of a specified security.
2012 Automobile Depreciation Limits
The IRS issued the 2012 inflation adjustments to the depreciation limitations and lease inclusion amounts for certain automobiles under Sec. 280F (Rev. Proc. 2012-23).
Proposed Regs. Would Require E&P to Be Allocated to Acquiring Corporations in Corporate Reorganizations
The IRS has proposed amending existing regulations under Sec. 312 and Sec. 381 to clarify that in certain corporate reorganizations, the “acquiring corporation” succeeds to the full E&P account of the transferor corporation.
Lack of Gross Receipts Does Not Preclude Taxpayers from Claiming R&D Credit
Some practitioners incorrectly assume that lack of gross receipts precludes taxpayers from taking the R&D credit. They should take a look at situations in which they may have forgone the credit because the taxpayer had no gross receipts to ensure that the taxpayer has obtained the maximum allowable credits available to it.
Double-Tax Trap in a Sec. 338(h)(10) Transaction
When a corporate buyer purchases the stock of a target corporation from a selling consolidated group, Sec. 338(h)(10) offers the opportunity for the Buyer to obtain a step-up in basis for the assets owned by Target.
Flexibility for Intragroup Restructuring and Asset Transfers
Letter Ruling 201127004 reinforces the flexibility granted to taxpayers wishing to move assets around a qualified group without triggering gains or meeting the stringent qualifications of Sec. 355.
Timing of Deduction for Bonus Accruals Under Pooled Arrangements
Rev. Rul. 2011-29 favorably upholds the current deductibility of a bonus pool that is determined based on a formula or board-approved amount by year end with employment required on a payment date within 2½ months of year end.
How Acquired Target Corporations Can Avoid Denial of Extension Requests
In some circumstances, C corporations can be surprised that the IRS denies their application for automatic extension of time to file when a consolidated return group parent company has acquired another consolidated return group.
Potential Pitfall Associated with Reorganizations Involving Chinese Subsidiaries
When a U.S. company wants to reorganize a worldwide structure that includes Chinese entities, tax issues should be carefully considered to avoid any unforeseen Chinese tax liability.
Work Opportunity Credits for Veterans
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.
IRS and OECD Separately Address Transfer Pricing Issues
The IRS announced a reorganization of its advance pricing agreement (APA), mutual agreement, and competent authority programs into one new program.
2012 Automobile Depreciation Limits Released
The IRS issued the 2012 inflation adjustments to the depreciation limitations and lease inclusion amounts for certain automobiles under Sec. 280F.
Guidance Issued on Work Opportunity Credit for Veterans
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.
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.
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.
