Congress suspended the applicable high-yield discount obligation (AHYDO) rules under Sec. 163(e)(5) for certain debt-for-debt exchanges occurring between September 1, 2008, and December 31, 2009. Notice 2010-11 extended the suspension of the AHYDO regime through December 31, 2010, but with additional requirements.
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TOPICS
C Corporation Income Taxation
Sec. 382 and the Hold Constant Principle
The IRS provided long-awaited interim guidance on Sec. 382(l)(3)(C) with the issuance of Notice 2010-50, which provides certain methodologies for taking into account, or not taking into account, fluctuations in value.
Avoiding the Below-Market Rules on Corporation/Shareholder Loans
The below-market loan rules apply to all advances, notes, and receivables between a shareholder and a corporation, regardless of the shareholder’s level of ownership.
Transparency and Compliance in Light of the New Schedule UTP
In April 2010, the IRS issued a draft of Schedule UTP, Uncertain Tax Position Statement, with Announcement 2010-30. This represents an important development in the longstanding and ongoing battle between taxpayers and the federal and state taxing authorities for access to tax accrual workpapers and other tax-related information.
The Qualified Therapeutic Discovery Project Tax Credit and Grant
Included in the 2010 Patient Protection and Affordable Care Act are a few new income tax credits. In particular, there is one that many new startups and growing health care industry enterprises may benefit from—the qualifying therapeutic discovery project credit (Sec. 48D).
Analyzing the Tax Implications of Grants Received for Investment Tax Credit–Eligible Property
The recent availability of grants in lieu of the production tax credit (Sec. 45) and the investment tax credit (Sec. 48) has become a well-documented source of funding for the installation of certain energy property.
IRS Revises Sec. 179 Expensing Amounts to Reflect HIRE Act Changes
On June 1, the IRS issued revised inflation-adjusted numbers to reflect the extension of the increased Sec. 179 expensing amount for 2010 (Rev. Proc. 2010-24).
Dismissal of Tax-Driven Bankruptcy Plan Affirmed
The Seventh Circuit affirmed a bankruptcy court’s refusal to confirm a bankruptcy plan and its dismissal of the bankruptcy proceeding because the principal purpose was to avoid taxes. The court said the filing was in bad faith and did not serve the proper purpose of bankruptcy law.
Application of Entity Classification Elections to Shelf Company Acquisitions
When electing the entity classification of a newly acquired foreign shelf company, the taxpayer must consider several procedural issues.
Allocations of Sec. 179D Deductions by Government Building Owners
To meet new emissions reduction targets, federal agencies are likely to continue including more requirements in contracting protocols throughout the government’s supply chain. While these energy-efficiency targets create opportunities for designers under Sec. 179D, they can also create challenges for suppliers and others contracting with the government when determining who has the authority to allocate these tax benefits.
IRS Taking Firm Approach to Ozone-Depleting Chemical Excise Tax Compliance
The IRS has recently reinvigorated its examination of the ozone-depleting chemicals tax, adopted a strict interpretation of the regulations, and instituted a laboratory testing program to detect ODCs in printed circuit boards.
IRS Releases Draft Schedule to Report Uncertain Tax Positions
On April 19, the IRS announced that it was releasing draft Schedule UTP and draft instructions as part of its initiative to require certain business taxpayers to report uncertain tax positions on their returns (Announcement 2010-30).
Tax Implications of the Five-Year NOL Carryback
An extended carryback period of up to 5 years is available for NOLs generated in 2008 or 2009. The author reviews some of the practical issues that should be considered when deciding whether to take advantage of the extended NOL carryback period.
AICPA Submits Comments on IRS Uncertain Tax Position Proposal
The AICPA submitted comments to the IRS on the Service’s proposal to require certain business taxpayers to disclose their uncertain tax positions on their tax returns.
Are You Properly Paying the Ozone-Depleting Chemicals Excise Tax?
In recent years, IRS excise tax examinations have focused on taxpayers that import articles potentially subject to the excise tax imposed on certain ozone-depleting chemicals (ODCs) under Sec. 4681.
District Court Allows R&D Credit for Prototype Costs
In a recent case, the court held that the taxpayer is, in certain situations, entitled to the Sec. 41 research credit for qualified research expenditures (QREs) for activities relating to the design, development, and construction of new types/classes of ships.
Debt or Equity Financing? Analyzing Relevant Factors
Debt or equity reclassification can significantly alter the intended tax consequences of financial instruments. Unfortunately, the absence of a quantitative method of weighing relevant factors within legislative and administrative authority sources has resulted in an extensive amount of litigation regarding debt-equity classifications.
Accounting for Government Grants
Letter Ruling 201003005 concludes that (1) nonreimbursable payments from the government to a corporate taxpayer to construct a plant are nonshareholder contributions to the capital of the taxpayer under Sec. 118(a) and are excluded from the taxpayer’s gross income under Sec. 61, and (2) the basis of the plant’s capital assets acquired by the taxpayer with the money contributed by the government is reduced according to Sec. 362(c).
IRS Publishes FAQs on Small Business Health Care Credit
On April 1, the IRS published on its website 22 questions and answers about the new small business health care tax credit.
Sec. 199: Domestic Production Activities Deduction
Since 2004, Sec. 199 has allowed as a deduction a percentage of qualifying production expenses, with “production” defined broadly and requiring only that it take place “in significant part” within the United States.
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.
