The IRS updated the rules for substantiating an employee’s travel expenses using reimbursement arrangements, per diem allowances, or the high-low method.
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Individuals
Transfers of Personal Goodwill in the Sale of a Closely Held Business
The Tax Reform Act of 1986, P.L. 99-514 (TRA ’86), changed the tax landscape in many ways. It created passive activities and at-risk limitations, eliminated many itemized deductions, and changed tax rates. However, from a business acquisition standpoint, the most important change was the repeal of the General Utilities doctrine.
Does Imprisonment Constitute a Temporary Absence When Applying the EIC Residency Rules?
Editor: Michael D. Koppel, CPA, PFS Should a person’s imprisonment be considered a temporary absence from home for purposes of the residency requirement for the earned income credit (EIC)? The Tax Court recently held that a taxpayer’s jail confinement after her arrest but before her conviction was a temporary absence
Foreign Earned Income Exclusion Housing Cost Limitations Increase
In Notice 2007-77, the IRS has adjusted the 2007 limitation on housing expenses under Sec. 911 for specific locations in countries with high housing costs relative to U.S. housing costs. The adjusted housing expense limitations are to be used in determining the housing cost amount eligible for exclusion or deduction
Subprime Lending Controversy Fuels Familiar Tax Issues
Editor: Michael D. Koppel, CPA, PFS It is difficult to winnow the subprime lending controversy down to a single sentence, a single page, or even a single discipline. Its effects are pervasive. In this environment, few participants or observers are thinking about tax issues. In fact, as in so many
Exercise of Options Using Borrowed Funds
Editor: Kevin F. Reilly, J.D., CPA Under Sec. 83(a), if property is transferred in connection with the performance of services, the employee who performed the services has gross income in an amount equal to the excess of the fair market value (FMV) of the property over the amount paid for
Tax Treatment of Compensation Received as a Nonprofessional Representative
Most baby boomers, who are now between the ages of 42 and 60, will soon face two major events in their lives: planning for retirement and the death of their parents. Many of these individuals will take on the role of personal representative (executor) of their parents’ estates when their
Gifting of a Remainder Interest in a Home
Editor: Kevin F. Reilly, J.D., CPA One of the first decisions taxpayers must make when planning their estates is what to do with the principal home. With the changing and sometimes downtrodden real estate market, this can be a difficult and time-consuming task for heirs, particularly if they do not
Hurricane GO Zones: An Update on Relevant Tax Provisions
The widespread devastation left in the wake of hurricanes has resulted in numerous tax provisions aimed at revitalizing and rebuilding the affected areas. Congress passed the Gulf Opportunity Zone Act of 2005, P.L. 109-135 (the GO Zone Act), in response to Hurricane Katrina and then revised it as Hurricanes Rita
The WOTC Expanded
Editor: Kevin F. Reilly, J.D., CPA The work opportunity tax credit (WOTC) has been in existence for years; however, the Small Business and Work Oppor-tunity Tax Act of 2007, P.L. 110-28 (SBWOTA), expanded the definition of some of the target groups, creating tax incentives that will affect more clients than
VITA, the MTC and the Modern Accounting Curriculum (Part II)
Editor: Annette Nellen, CPA, Esq. Part I of this two-part column, in the August 2007 issue, discussed setting up a Volunteer Income Tax Assistance (VITA) program. Part II, below, addresses integrating VITA into an accounting program. Integrating VITA into the Accounting Program If accounting faculty members determine that the benefits
IRS Clarifies NQDC Rules for Teachers
Sec. 409A was effective on January 1, 2005, and applies to nonqualified de-ferred compensation (NQDC), that is, compensation earned in one year but not paid until a future year. If NQDC does not meet the requirements of Sec. 409A, it will be subject to additional taxes, including a 20% additional
Final Regs. on Dependent Care Expenses
The Service has issued final regulations on the Sec. 21 credit for child and dependent expenses (TD 9354). The final regulations adopt, with changes, proposed regulations that were released in May 2006 (REG-139059-02). The final regulations apply to tax years ending after August 14, 2007. Sec. 21 allows a credit
Amended Regulations on the Student Exception from FICA Are Invalid
The Mayo Clinic (Mayo) and Mayo Foundation for Medical Education & Research (MFMER) are nonprofit corporations in Minnesota. MFMER acts as Mayo’s agent for purposes of paying withholding and FICA taxes for Mayo’s employees.Mayo operates graduate medical education programs for medical residents and fellows (residents). Most of these programs are
Meeting the Home Office “Principal Place of Business” Requirement
Editor: Albert B. Ellentuck, Esq. A self-employed taxpayer may be able to claim deductions for the business use of his or her home. These deductions include mortgage interest, real estate taxes, maintenance, insurance, utilities, and depreciation. However, certain conditions must be met, sand the IRS closely scrutinizes home office deductions
Prop. Regs. on Dependency Exemption for Noncustodial Parent
Generally, under the uniform rules defining a “qualifying child” of a taxpayer, the child must have the same principal place of abode as the taxpayer for over half the year. Special rules for parents who are divorced or legally separated or who live apart at all times during the last
Treatment of Legal Fees Incurred by Individuals
This article explains the possible tax treatments of legal fees and how to determine the proper treatment.
Opportunities to Claim Health Care Expenses as Deductions
Editor: Joel E. Ackerman, CPA, MST It is common knowledge that taxpayers may deduct qualified medical expenses for themselves and their dependent children. There are, however, other opportunities to deduct medical expenses that are not so widely known. One of those is the deduction of medical expenses that a taxpayer
Distinguishing Between Independent Contractors and Employees
Before a business entity pays for services rendered, it should consider this: Is it paying a contractor or has it hired an employee? This question arises every time a business pays a person for services rendered. At times the answer is clear, but often the minute details will present a
Some Prior-Year MTCs Will Be Refundable Beginning in 2007
Editor: Joel E. Ackerman, CPA, MST A growing number of individual taxpayers have been subject to tax under the alternative minimum tax (AMT). Sec. 53(a) provides a minimum tax credit (MTC) for AMT paid in prior years that was attributable to deferral adjustments. The MTC is carried forward to offset
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.
