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.
Advertisement
Topics
Credits
President Signs Government Contractor Withholding Repeal, Veterans Job Credits
The president signed into law the Three Percent Withholding Repeal and Job Creation Act.
Witnesses Tell Congressional Subcommittee Small Business Health Tax Credit Is Too Complicated
A tax credit enacted to encourage small businesses and tax-exempt organizations to provide health insurance coverage for employees is too complicated and is not meeting its goal, witnesses told a congressional panel on November 15.
Revisiting the New Markets Tax Credit
Treasury has proposed revisions to the new market tax credit regulations to make the program more attractive to investors in non–real estate businesses in low-income communities.
International Students and the American Opportunity Tax Credit
The tax compliance of international students is now a more critical issue because of the partially refundable nature of the American opportunity tax credit.
100% Bonus Depreciation and the Corporate Election to Increase the Minimum Tax Credit Limitation
The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 extends the 50% bonus depreciation deduction to qualifying property placed in service through 2012. Congress also provided a 100% bonus depreciation deduction for qualified property acquired and placed in service after September 8, 2010, through December 31, 2011.
Final Regs. Simplify Reduced Research Credit Election
The IRS released final regulations (T.D. 9539) that further simplify an election method by which taxpayers may use a standard rate to reduce a research credit under Sec. 41 in lieu of reducing their research expense deductions. The final regulations also clarify how members of a controlled group may make the election. The final regulations adopt with some modification proposed regulations issued in 2009 (REG-130200-08).
Health Care Premium Credit Rules Proposed
The IRS released proposed regulations implementing the health insurance premium tax credit, which is effective starting in 2014.
Alternative Simplified R&D Credit Rules Finalized
The IRS has issued final regulations governing the election and calculation of the alternative simplified research and development credit. The regulations extend the election procedures for the alternative incremental research credit to the alternative simplified credit.
Final Regulations Simplify Reduced Research Credit Election
The IRS released final regulations on July 26 further simplifying an election method by which taxpayers may use a standard rate to reduce a research credit under Sec. 41 in lieu of reducing their research expense deductions.
IRS Finalizes Alternative Simplified R&D Credit Rules
The IRS issued final regulations governing the election and calculation of the alternative simplified research and development credit.
One-Year Extension of the ARRA Grant for Specified Energy Property
This item provides an overview of the Section 1603 renewable energy grant program, which was extended for one year by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.
First-Time Homebuyer Credit Recapture Causing IRS Processing Problems
The IRS announced that it is having problems processing tax returns that involve repayment of the Sec. 36 first-time homebuyer credit for 2008 home purchases.
Sec. 168(k)(4)—Credit in Lieu of Bonus Depreciation
The election under Sec. 168(k)(4) to claim a refundable tax credit in lieu of bonus depreciation has been extended again for certain property placed in service during 2011 and 2012 as part of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.
IRS Determines That Dual Purpose Photovoltaic Property Qualifies as Energy Property
Many taxpayers calculating the amount of the energy credit available under Sec. 48 face a hurdle in determining whether certain structural components that serve a dual purpose qualify as energy property. In Letter Ruling 201043023, the IRS addresses this issue in the context of a photovoltaic (PV) curtain wall and provides a valuable road map for taxpayers to analyze such issues.
Computing the Research Credit for Consolidated Groups
This item examines how to compute the research credit for consolidated groups. The credit is determined by a calculation that is dependent on not only current-year QREs but also prior years’ activity.
IRS Revises Interim Guidance on Production Tax Credit for Refined Coal
In Notice 2010-54, the IRS modifies the definition of refined coal, allows certain processing of utility-grade coal to be taken into account for determining emissions reductions, and revises testing protocols.
Congress Votes to Limit Use of Foreign Tax Credits
P.L. 111-226 makes changes to how corporations can use the foreign tax credit and also terminates the advance refundability of the earned income credit (under Sec. 3507), effective for tax years beginning after December 31, 2010.
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.
Closing Date Deadline for Homebuyer Credit Extended to September 30
The Homebuyer Assistance and Improvement Act extends the closing date deadline to qualify for the first-time homebuyer credit from June 30, 2010, to September 30, 2010.
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.
