The IRS has issued guidance on how eligible small businesses can take advantage of the increased net operating loss (NOL) carryback provisions enacted in the American Recovery and Reinvestment Act of 2009.
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TOPICS
C Corporation Income Taxation
Depreciation Options for Avoiding Corporate AMT Adjustments and Preferences
An election of a particular depreciation system affects both taxable income and the taxpayer’s administrative burden.
Like-Kind Exchanges: Deferral Is Not Always the Best Option
Sec. 1031 gives taxpayers the opportunity to defer taxation on the gains they may have on their transactions. Anytime there is an opportunity to defer tax costs, tax practitioners and their clients automatically tend to assume that they should take advantage of the opportunity. However, in the case of like-kind exchanges, it is not always in the taxpayer’s best interest to elect to defer the recognition of gain on realty.
Transfer Pricing: The New Temporary Cost-Sharing Regs.
On December 31, 2008, the IRS introduced new temporary cost-sharing regulations (T.D. 9441) that replace the old cost-sharing regulations introduced in 1995.
Discharge of Indebtedness: Conversion vs. Contribution of Indebtedness
In an effort to de-leverage, more and more creditors, particularly those also holding an equity position, are willing to accept repayment for less than the face amount of the debt. Apart from settling the debt in cash for less than its face value, there are other methods debtors and creditors may use to modify, reduce, or even eliminate debt.
New Continuity-of-Interest Regs. Expand Definition of Qualifying Stock Recipients in a Reorg.
Treasury recently finalized regulations, effective for transactions occurring after December 12, 2008, for applying the continuity-of-interest (COI) requirement to insolvent corporations (T.D. 9434).
IRS Issues Helpful Regs. on the Interplay of Active Trade and Hot Stock
In response to changes made to the active trade or business requirement in the Tax Increase Prevention and Reconciliation Act of 2005, the IRS issued temporary and proposed regulations harmonizing the Sec. 355 “hot stock” rule with the TIPRA changes
Personal Goodwill: Alive and Well?
A pair of recent decisions calls into question whether the sale of personal goodwill is still available as a tax planning strategy.
Proposed Regs. Provide Model for Stock Basis Recovery and Identification
On January 21, 2009, Treasury issued proposed regulations that provide shareholders with guidance on allocating and recovering stock basis in Sec. 301 distributions (REG- 143686-07). Their purpose is to present a single model for stock basis recovery when a shareholder receives a constructive or actual distribution to which Sec. 301
Transaction Analysis: Sponsored Spin
Sec. 355 allows a corporation to distribute to its shareholders or its security holders the stock or securities of one or more corporations that it controls without triggering income or gain to itself or its shareholders.
Notice 2008-111: Recent Guidance on Intermediary Transactions
On December 2, 2008, the IRS issued Notice 2008-111, which provides guidance on transactions it considers intermediary transaction tax shelters.
Update on Determinations of Target Stock Basis in B Reorgs.
In Notice 2009-4, the IRS has proposed to amplify the methods available to an acquiring corporation (Acquiring) to estimate basis in the stock of a target corporation (Target) received in tax-free reorganizations under Sec. 368(a)(1)(B) (a B reorganization), as well as to expand the use of such methods to certain other tax-free transactions.
Regulations Eliminate “Hot Stock” Rule for Certain Reorgs.
The IRS issued regulations that generally hold that the so-called hot stock rule is inapplicable in reorganizations where a subsidiary is a member of the distributing corporation’s separate affiliated group.
Sec. 168(k)(4) Credit in Lieu of Bonus Depreciation
As part of the Housing and Economic Recovery Act of 2008, Congress enacted a special tax benefit under Sec. 168(k)(4) that allows corporations to claim a refundable tax credit in lieu of 50% bonus depreciation for certain capital investments made during the period April 1–December 31, 2008
IRS Provides a Simplified Method for Late Filing Relief
The IRS has provided a simplified method to request relief for certain late filings under Secs. 897 and 1445.
IRS Crackdown on Form 5471: A Sign of Things to Come?
In August 2008, the IRS began sending “soft” letters to corporate taxpayers warning that beginning in 2009, the Service would automatically assert penalties on any late-filed Forms 1120 that include a Form 5471.
Final Unified Loss Rule Published
In final regulations, the IRS addressed the tax consequences of a member’s transfer of loss shares of subsidiary stock and adopted the unified loss rule contained in the proposed regulations
Understanding the Effects of Nonliquidating Distributions on Corporations
Nonliquidating corporate distributions are distributions of cash and/or property by a continuing corporation to its shareholders. At the shareholder level, a nonliquidating corporate distribution can produce a variety of tax consequences, including taxable dividend treatment, capital gain or loss, or a reduction in stock basis.
IRS Issues Guidance on Sec. 382 for Corporations in the Capital Purchase Program
The IRS has issued guidance (Notice 2008-100) on the application of Sec. 382 to loss corporations whose instruments Treasury acquires pursuant to the Capital Purchase Program.
Research Credit Extended
Emergency Economic Stabilization Act of 2008 retroactively extended the research credit to amounts paid or incurred after December 31, 2007, and before January 1, 2010.
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.
