This item highlights the features of the still relatively new individual 401(k) plan and shows how, in certain circumstances, this type of plan can provide for a more powerful contribution.
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TOPICS
Individuals
ARRA Expands Hope Scholarship Credit
The American Recovery and Reinvestment Act includes an expansion of the Hope scholarship credit that will provide additional support to many American families that have members attending post-secondary educational institutions. The expanded credit, called the American opportunity tax credit, modifies the existing Hope credit for tax years 2009 and 2010.
Real Estate Professionals: Do Their Rentals Qualify for Nonpassive Status?
Taxpayers who make their living in a trade or business related to real property are held to a different standard than other taxpayers when it comes to the rental passive activity loss rules of Sec. 469.
Grouping Activities Under Sec. 469
Generally, a taxpayer may group one or more trade, business, or rental activities as one activity if the activities represent an appropriate economic unit in determining gain or loss for Sec. 469 purposes.
Charitable Contribution of Qualified Conservation Easement
The Tax Court held that a conservation easement of air space over an historic structure that was donated by a taxpayer to a nonprofit organization did not meet the requirements to be considered a qualified conservation easement.
IRS Provides 2009 RMD Rollover Relief for IRA, 401(k) Distributions
The IRS provided relief for taxpayers who have received required minimum distributions (RMDs) in 2009 from an IRA or similar account. Such taxpayers have until November 30, 2009 (or within 60 days of the distribution, whichever is later), to roll over the distribution into another plan.
Proposed Procedures for Simplifying Employer-Provided Cell Phone Substantiation Rules
In June 2009 the IRS published Notice 2009-46, requesting comments on several proposed procedures for simplifying the substantiation and reporting requirements of employees’ personal use of employer-provided cellular telephones.
Tax Treatment of Employment-Related Judgments and Settlements
Recent program manager technical assistance provides a detailed analysis of the IRS’s position on dealing with income and employment tax consequences, as well as appropriate reporting, of employment-related judgment or settlement payments.
Treatment of Foreign Currency Option Gains
Sec. 988 treats most (but not all) gains and losses from foreign currency transactions as ordinary in character. Depending on the taxpayer’s circumstances, this treatment can be favorable or otherwise.
New Rules Seek to Clarify Allocation and Reporting of Mortgage Insurance Premiums
The IRS recently issued temporary regulations that explain how to properly determine the deductible amount of mortgage insurance premiums.
Dependency Exemption for Divorced or Separated Parents
When a child is supported by his or her parents, the dependency exemption is normally a simple matter. However, the situation is much more complicated when it comes to divorced or separated parents.
Aggregating Activities to Avoid the Hobby Loss Rules
Sec. 183 limits deductions for activities that are “not engaged in for profit,” commonly called hobbies. To sidestep this requirement, taxpayers often attempt to combine activities that would separately be considered hobbies with other activities to avoid the Sec. 183 limits.
Res Judicata Does Not Bar Taxpayer from Claiming NOL Carrybacks
The Tax Court ruled that the doctrine of res judicata did not bar a taxpayer from claiming net operating loss (NOL) carrybacks to 1999 and 2000, despite a prior deficiency case involving those years, because the statutory scheme for NOL carrybacks includes Sec. 6511(d)(2)(B) (i), which allows a refund attributable to an NOL carryback notwithstanding “the operation of any . . . rule of law,” which includes res judicata.
Deducting Donated Services and Out-of-Pocket Expenses
A taxpayer who has limited resources but wants to make a deductible charitable contribution has limited options. While a deduction is not allowed for the value of charitable volunteer work, unreimbursed expenses may be deductible.
CPA Exam Aligns with Model Tax Curriculum
The content of the Uniform CPA Examination has been updated and now reflects many of the recommendations of the Model Tax Curriculum.
Changes to Estimated Tax Payment Requirements
For 2009 tax years, the American Recovery and Reinvestment Act instituted changes to the rules governing the amount of estimated tax that individual taxpayers with income from small businesses must pay.
Individual Taxation Report
This article covers recent significant developments affecting taxation of individuals, including cases, IRS guidance, and legislative changes.
Income from Sales or Settlements of Life Insurance Contracts
The IRS has provided guidance on the amount and character of income that taxpayers recognize in the surrender or sale of life insurance contracts and has provided guidance to purchasers of life insurance contracts for profit.
IRS Further Clarifies WOTC “Disconnected Youth” Definition
The IRS released a notice defining the terms “unemployed veteran” and “disconnected youth” for purposes of the Sec. 51 work opportunity tax credit.
Sec. 83 in the Context of Contract Manufacturing
Sec. 83 may be applied to successfully defer and possibly reduce taxable compensation to independent contractors, including contract manufacturers.
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.
