The IRS held that a taxpayer’s cashless exercise of stock options resulted in taxable income to the taxpayer and a compensation deduction for the company that issued the options.
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TOPICS / INDIVIDUALS
Income
Final Regs. Issued on Exclusion of Damages for Personal Physical Injury
The IRS on Friday issued final regulations relating to the exclusion from gross income for damages received on account of physical injuries or sickness.
Year-End Individual Taxation Report
This article covers developments from the past year affecting taxation of individuals, including last year’s tax relief, health care, and small business legislation, regulations, cases, and IRS guidance.
Exclusion of Employer-Provided Cell Phones from Gross Income
A recent IRS notice has cleared up confusion about whether employers may exclude the value of cell phones provided for employees’ use from gross income.
Qui Tam Payment Included in Income
The Eleventh Circuit held that qui tam payments that a whistleblower received were includible in income. It further held that the whistleblower was liable for a 20% accuracy-related penalty.
Short Sales of Investment Real Property
This item addresses a situation that often arises in today’s economic climate: a short sale of real property held for investment, not for rental, secured by a recourse note.
The Part Sale, Part Gift Trap for Nearly Worthless Securities
This item discusses a trap for the unwary when the part gift, part sale rule applies.
IRS Issues Guidance on Tax Treatment of Business Cell Phones
The IRS issued guidance that discusses the treatment of employer-provided cell phones as an excludible fringe benefit.
Keeping Alimony from Being Reclassified as Nondeductible Payments
This column discusses the tax implications of alimony or spousal support, with a focus on the specific criteria that payments must meet to qualify as alimony.
Shareholder Loan Documentation
This item explores the importance of paying attention to details and following document terms for shareholder loans.
Relief for Late Election to Treat All Real Estate Rental Interests as One Activity
This item reviews recent IRS guidance on how certain taxpayers can make a late election to treat all interests in rental real estate as a single rental real estate activity.
Forgivable Loans in Employment Agreements
The item examines the use of forgivable loans issued at the inception of employment, where the employee receives an upfront payment of cash and the related income arising from the forgiveness of such debt is recognized over the life of the obligation provided in the agreement.
Exchange of Shares in ISO Exercise
Under Regs. Sec. 1.6045-1(d)(2), which requires that broker statements disclose securities’ adjusted basis beginning January 1, 2011, basis tracking of ISOs is more relevant than ever.
Guidance Issued on Tax Treatment of Business Cell Phones
The IRS issued a notice on September 14 providing guidance on the tax treatment of employer-provided cell phones now that they have been removed from the definition of listed property.
Tax Court Determines Character, Source of Golfer’s Worldwide Endorsement Income
The Tax Court recently decided Goosen, a case with potentially far-reaching implications for foreign athletes who perform within the United States. The decision has become the leading authority for determining both the character and the source of the endorsement income earned by international athletes.
Diversifying Concentrated Positions in the Most Tax-Efficient Manner
This item explores techniques that may be used to the advantage of investors wishing to diversify concentrated securities positions in a tax-efficient manner.
Mitigating the Results of a Failure to Carry Back an NOL
This item discusses how a taxpayer, when making a decision about when to use a net operating loss (NOL), can ensure that it is carried back and/or forward properly.
No Reasonable Cause for $3.4 Million Omission from Income
The Tax Court held that a taxpayer did not have reasonable cause for omitting from income $3.4 million from the termination of a swap transaction that was reported to him on a Form 1099.
Planning for the Unearned Income Medicare Contribution Tax
The unearned income Medicare contribution tax is scheduled to come to life at the end of next year, and it may have a significant impact on some taxpayers.
Planning for the New 3.8% Medicare Tax on Unearned Income
Effective in 2013, the Health Care and Education Reconciliation Act of 2010 will subject some individuals to a 3.8% Medicare contribution tax on unearned income. This article discusses strategies taxpayers can use to minimize the tax.
employee benefits & pensions
Profits interests: The most tax-efficient equity grant to employees
By granting them a profits interest, entities taxed as partnerships can reward employees with equity. Mistakes, however, could cause challenges from taxing authorities.
