Deals that are taking place today bring with them many technical tax considerations that were seen much less frequently during robust economic times.
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TOPICS
C Corporation Income Taxation
Deferring Shareholder Gain by Distributing Installment Notes
When a C corporation sells some or all of its assets during the process of liquidation and takes back one or more installment notes as payment, it must recognize, in the year of liquidation, all unrecognized gains on installment receivables distributed to the shareholders (Secs. 336 and 453B(a)).
Tax Planning for Troubled Debt
Today’s volatile real estate environment presents interesting opportunities for investors and developers to alter the terms of their debts in ways that may pay off if they can retain control of their projects.
IRS Notice Provides Work Opportunity Tax Credit Definitions
The IRS has released a notice that defines the terms “unemployed veteran” and “disconnected youth” for purposes of the Sec. 51 work opportunity tax credit.
Should a Company Elect to Defer Cancellation of Debt?
The American Recovery and Reinvestment Act of 2009 provides certain business debtors with a cancellation of debt (COD) income deferral election under new Sec. 108(i) for reacquisitions by the debtor or by certain related parties of applicable debt instruments after December 31, 2008, and before January 1, 2011.
Revised Form 1120-F: Practical Issues and Missed Opportunities
In early 2007, the IRS published a substantially revised Form 1120-F, U.S. Income Tax Return of a Foreign Corporation, to be used for tax years beginning in 2007.
IRS Clarifies Guidance on Small Business NOL Carrybacks
The IRS has issued Rev. Proc. 2009-26, which clarifies the guidance in Rev. Proc. 2009-19 on how small businesses can elect to carry back 2008 net operating losses (NOLs) for three, four, or five years, as provided for by Sec. 172(b)(1) (H) (instead of the usual two years).
Correcting Employment Tax Errors
Correcting an employment tax error that is discovered in the year in which the error occurs is generally a simple process. However, employers often discover such errors after the close of the calendar year in which they paid the wages to an employee. The adjustment process to correct those errors is confusing and often leads to further mistakes.
Stock Basis Recovery in Outbound Sec. 304 Transfers
The IRS recently issued final and temporary regulations addressing recovery of basis in a stock sale subject to both Secs. 304(a)(1) and 367.
Effect of Debt Recharacterization on Worthless Securities Deductions
The IRS recently addressed concerns that the recharacterization of intercompany debt as common equity might prevent a worthless securities deduction.
Customs Valuation: A Concern for Unsuspecting Tax Practitioners
Customs valuation often involves issues that may be unfamiliar to a tax practitioner. Yet failure to recognize this tax-customs intersection may result in unexpected additional tax (nonduty) costs.
Sec. 1245 Recapture Rules Can Apply to Stock
This item discusses how a reduction in a debtor’s stock basis through application of the Sec. 108 attribute reduction rules can result in Sec. 1245 recapture on a disposition of that stock. It also examines how the consolidated return rules in certain circumstances eliminate, in whole or in part, the potential Sec. 1245 recapture on a disposition of stock of a subsidiary member.
Sec. 382 After the Bailout
Treasury issued several notices as part of the government’s response to the economic crisis. The notices allow relief from Sec. 382 for loss corporations acquired under TARP. They also provide relief for obligations and other securities issued by Fannie Mae and Freddie Mac in the recent bailout.
Circular Like-Kind Exchange Disallowed
The Tax Court disallowed tax-free treatment for a like-kind exchange transaction in which the taxpayer exchanged properties with a related entity.
IRS Reverses Position on Eligibility of Intangibles for Like-Kind Exchange Treatment
The IRS Office of Chief Counsel has announced a change in its position on the use of certain intangible property in Sec. 1031 like-kind exchanges.
Legislation Extends Aviation Taxes
The Federal Aviation Administration Extension Act of 2009. This act extends the taxes that fund the Airport and Airway Trust Fund through the end of September.
Using Statistical Sampling to Support the Sec. 199 Deduction
As the Sec. 199 deduction percentages are phased in to the full 9% for tax years beginning in 2010, taxpayers will be faced with greater opportunities to maximize their Sec. 199 deductions and increase compliance risk.
Sec. 199 Issues Arising from Contract Manufacturing Arrangements
In order to determine whether the taxpayer or the contract manufacturer is entitled to the Sec. 199 deduction for the same manufacturing activity, the Sec. 199 rules require an analysis of which party in a contract manufacturing relationship has the “benefits and burdens of ownership” under judicially developed federal income tax principles.
Final Consolidated Return Regs. on Transactions Involving Intercompany Debt
The IRS issued final regulations for transactions involving debt obligations between members of a consolidated group.
Seventh Circuit Finds $20 Million Bonus Reasonable
The Seventh Circuit has reversed a Tax Court decision holding that most of an executive’s $20 million compensation was unreasonable and therefore a nondeductible dividend.
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.
