On May 25, 2007, President Bush signed into law the Small Business and Work Opportunity Act of 2007 (SBWOA ’07) (P.L.110-28), which included several tax provisions. Return preparer penalties: The SBWOA ’07 expands the scope of return preparer penalties and alters the standards of conduct that must be met to
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TOPICS
C Corporation Income Taxation
Professional Corporations: To Be or Not to Be a Member of a Consolidated Group
Editor: Annette B. Smith, CPA Many independent professional medical and dental practices are incorporated under state law as professional corporations (PCs). Generally, these state laws require that PCs issue shares only to individuals who are duly licensed or otherwise legally authorized to render the same type of professional services as
Sec. 199 Final Regs. Affect Online Software and Advertising
Editor: Annette B. Smith, CPA Sec. 199 generally provides a deduction for qualifying domestic production activities equal to 9% (3% for tax years beginning in 2005 or 2006 and 6% for tax years beginning 2007–2009) of the lesser of the taxpayer’s (1) qualified production activities income for the tax year
Choice of Entity for Expansion of Operations into a Foreign Country
Executive Summary When flowthrough treatment is desired, a U.S. business may expand into a foreign country with a branch office or plant. A foreign partnership is advantageous when foreign operations are expected to generate flowthrough losses to a U.S. partner, and foreign taxes are high. A foreign corporate entity
How Debt Can Become Draconian Boot in a Sec. 351 Exchange
Editor: Mary Van Leuven, J.D., LL.M. Sec. 351 allows property to be transferred to a controlled corporation by one or more persons without gain or loss recognition. Example 1: Taxpayer A contributes a building (with a $1 million basis and $3 million fair market value (FMV)) to a new corporation
Taxpayer-Favorable Letter Ruling on Consolidated Worthless Stock Deduction
Editor: Mary Van Leuven, J.D., LL.M. IRS Letter Ruling 200710004 breaks new ground in determining the character of a worthless stock deduction in a consolidated group. Due to the lack of direct authorities on point and the absence of clear statutory support for the ruling’s favorable conclusions, taxpayers might consider
Avoiding Late Returns When Corporations Are Acquired by a Consolidated Group
Editor: Mary Van Leuven, J.D., LL.M. Often, a corporation will not qualify as a member of a consolidated group for its entire tax year. This could occur because an event (a “change in status”) causes the corporation to become or cease to be a member of the consolidated group on
New Regs. Clarify Stock Distribution Requirement in Acquisitive D Reorganizations
Editor: Terence E. Kelly, CPA Partly to clarify the confusion caused by Letter Ruling 200551018 as to acquisitive D reorganizations (see Burton, Karlinsky and Wright, “S Corporations: Current Developments (Part II),” TTA, November 2006, p. 670), on Dec. 19, 2006, the IRS issued Temp. Regs. Sec. 1.368-2T(l), allowing transactions to
Withholding Requirements for Nonresident Directors’ Fees
Editor: Terence E. Kelly, CPA Multinational corporations are taking advantage of worldwide expertise to adapt to the changing economic landscape. Corporations frequently have foreign nationals on their boards of directors. This item will assist U.S. companies and/or tax professionals dealing with the taxation of such directors. Cross-Border Example A resident
Non-CPA Firm Subject to PSC Rate
A, Inc., provided tax return preparation and bookkeeping services for R and other individuals. R, A’s president, owns all of its stock and provides administrative and managerial services to A as an employee, in addition to tax return services. A is not a public accounting firm; A’s employees do not
Tax Incentives for Businesses in Distressed Communities
Executive Summary Businesses in designated EZs and RCs may be eligible for an employment credit, increased Sec. 179 expensing, tax-exempt bond financing and other tax incentives. A capital gain deferral applies to purchased EZ assets; a 60% exclusion applies to small business EZ stock. Enterprise zone facility bonds may be
Providing Meals and Lodging to Employees
Editor: Albert B. Ellentuck, Esq. Under Sec. 119(a), meals provided by an employer—including a C corporation employer—can be excluded from an employee’s gross income if they are furnished on the business premises and for the employer’s convenience. The employer can deduct the full cost of these meals (the normal 50%
Tax Court Capitalizes Model Home Display Costs
The issue is whether the costs of placing model manufactured homes on retail sales lots to assist local independent salespersons may be currently deducted or should be included in inventory under Sec. 263A. Facts A and its related corporations buy and sell manufactured homes, constructed at a factory location and
Acquisitive Transactions when Acquiring Corporation Issues No Stock
Temporary regulations (TD 9313; NPRM REG-157834-06, 3/1/07) clarify older temporary regulations (TD 9303, 12/18/06) by providing that the deemed issuance of a nominal share of stock of a transferee corporation in a transaction otherwise described in Sec. 368(a)(1)(D) (a D reorganization) does not apply if the transaction otherwise qualifies as
Biomass and Notice 2006-88
As concerns for the nation’s energy supply have risen, the Federal government has periodically provided various incentives to encourage the use of renewable energy sources. Under Sec. 45, Congress provided for a renewable production credit for electricity produced by a taxpayer from qualified energy resources (wind, closed- and open-loop biomass,
S Holding Companies and F Reorgs.
In yet another in a series of F reorganization rulings, the IRS issued Letter Ruling 200701017, holding that the formation of a new corporation, followed by the contribution of S stock and an immediate qualified subchapter S subsidiary (QSub) election, will be treated as an F reorganization (i.e., a mere
Treatment of Capitalized Costs of Intangible Assets (Part I)
This two-part article examines cost recovery of intangible asset expenditures. Part I summarizes the applicable capitalization regulations, Sec. 197 cost recovery and general Sec. 167 amortization rules.
New Requirements for 2006 Business Filers
Editor: John L. Miller, CPA When filing 2006 corporate tax returns, many businesses will encounter new IRS requirements that significantly affect how they file. Some filers of Forms 1120, U.S. Corporation Income Tax Return, and 1120S, U.S. Income Tax Return for an S Corporation, will be covered by phase two
Rethinking Sec. 199 Based on New Developments
Co-Editors: Michael Metz, CPA; Nick Gruidl, CPA, MBT Beginning in 2006, there is a new deduction available for updating or constructing commercial building property to be more energy efficient. The Energy Tax Incentives Act of 2005 (ETIA), which took four years to pass, added new Sec. 179D. With so many
Energy-Efficient Commercial Buildings Deduction (April 2006)
Beginning in 2006, there is a new deduction available for updating or constructing commercial building property to be more energy efficient. The Energy Tax Incentives Act of 2005 (ETIA), which took four years to pass, added new Sec. 179D. With so many commercial buildings exceeding 15 years in age, many
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.
