The recently passed 2010 health care reform legislation added two additional Medicare taxes intended to help pay for the new legislation. This item looks at the details of both the 3.8% investment income tax and the 0.9% hospital insurance tax increase and reviews some of the effects they will have on estimated taxes and tax planning.
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Individuals
Grouping Rental Real Estate Activities Under Regs. Secs. 1.469-4 and 1.469-9
This item reviews fundamental relationships of the grouping of activities under Regs. Sec. 1.469-4 and the grouping of rental real estate activities under Regs. Sec. 1.469-9.
Remodel or Rebuild? How the Decision Could Affect the Sec. 121 Exclusion
The recent Gates decision forces practitioners to reexamine the types of questions they ask a client during tax planning or their annual tax interview if the client has sold his or her personal residence.
Elections to Direct Credit Card Rebates to Qualified Charities
In a letter ruling, the IRS addressed the common concept of credit card companies allowing their customers to request that their credit card rebates be donated to charity.
Classification as a Statutory Employee
Statutory employee status may be beneficial for both an employee and his or her employer; however, an employee must meet specific requirements to qualify as a statutory employee. This article discusses the rules regarding statutory employee status set out in the Code and the regulations and how these rules have been interpreted by the IRS and the courts.
District Court Rules That Same-Sex Married Couples May File Joint Returns
This item discusses the impact of a recent case in Massachusetts in which a federal district court held that Section 3 of the Defense of Marriage Act is unconstitutional because it violates the equal protection principles of the Fifth Amendment’s Due Process clause.
Sec. 121 Exclusion of Gain from Sale of a Principal Residence
This item reviews the Tax Court’s decision to side with the IRS in the Gates case denying a exclusion under Sec. 121 and the possible implications for taxpayers.
Tax Court Again Holds That Innocent Spouse Relief Limit Is Invalid
Despite being overruled by the Seventh Circuit in an earlier case, the Tax Court has again held that the regulatory two-year limitation period for filing a claim for equitable innocent spouse relief under Sec. 6015(f) is invalid. This item assesses the Tax Court’s arguments in Hall, 135 T.C. No. 9 (2010).
Individual Taxation Report: Recent Developments
This article covers recent developments affecting the taxation of individuals, including health care reform and other legislation, regulations, cases, and IRS guidance. The items are arranged in Code section order.
Maximizing the Use of the Special $25,000 Rental Real Estate Loss Allowance
Even though rental income or loss is generally passive, a special rule allows qualifying individuals and estates to offset up to $25,000 of nonpassive income with rental real estate losses and credits. This column describes the criteria needed to qualify for the $25,000 deduction.
Comparing International Tax Systems in the Introductory Tax Class
This column describes an assignment that requires a modest time commitment to bring international tax issues into the introductory tax course and to raise student awareness of differences in tax systems.
IRS Rules That Mortgages Over $1 Million Can Be Deductible
The IRS has ruled that indebtedness incurred by a taxpayer to acquire, construct or substantially improve a qualified residence can constitute “home equity indebtedness” to the extent it exceeds $1 million, up to an excess of $100,000.
Taxpayers Not Entitled to Exclude Gain from Sale of Principal Residence
The Tax Court ruled that a couple who sold a house they had never lived in could not take advantage of the Sec. 121 exclusion.
Rules Issued on Income Deferral of Canceled Debt
The IRS issued temporary and proposed regulations relating to taxpayer elections to defer recognition of cancellation of debt income.
Tax Court Rules on Medical Necessities
The Tax Court has expanded the scope of the medical expense deduction and the definition of what is “medically necessary.” This case establishes the precedent that gender identity disorder is a mental disorder (disease) for purposes of the medical expense deduction.
Per Diem Travel Rates Updated
The IRS issued updated federal per diem rates and procedures for substantiating deductible expenses or employer-paid allowances for lodging, meals, and incidental expenses incurred in business-related travel away from home.
Adoption Tax Credit Guidance Released
The IRS issued interim guidance September 29 on the child adoption credit and income exclusion for employer reimbursements of adoption expenses, as expanded by the Patient Protection and Affordable Care Act.
Treasury Announces Low-Cost Financial Account Program for Taxpayers
Treasury announced the launch of a pilot program to provide taxpayers with access to low-cost financial accounts.
Deducting Success-Based Financial Advisory Fees
The deduction of success-based financial advisory fees related to business transactions has been, and continues to be, an area of significant taxpayer uncertainty.
Tax Treatment of Expenses Incurred by Individuals Temporarily Out of Work
This article examines the tax treatment of expenses incurred by individuals who are temporarily out of work.
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.
