The IRS issued revised inflation-adjusted numbers to reflect the extension of the increased Sec. 179 expensing amount for 2010.
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TOPICS
IRS Practice & Procedure
IRS Releases HIRE Act Employee Affidavit Form
The IRS released new Form W-11 for certifying that employees are qualified employees for purposes of tax benefits under the Hiring Incentives to Restore Employment (HIRE) Act.
IRS Issues Prop. Regs. on Use of PTINs After 2010
Tthe IRS issued proposed regulations that would require paid return preparers to use a preparer tax identification number (PTIN) on all tax returns after December 31, 2010.
Penalty for Failing to Meet EIC Due Diligence Requirements Can Be Assessed Against Employer or Employee
The Office of Chief Counsel (OCC) advised that after the amendments to the regulations in T.D. 9436 in December 2008, the IRS continues to have the authority to assert the penalty against either the employee-preparer of a return or his or her employer for failing to meet the earned income credit (EIC) due diligence requirements. However, the IRS cannot impose a penalty against both an employee-preparer and the employer based on the same factual situation. In addition, the OCC advised that the signing preparer of a tax return is responsible for retaining the records showing that the preparer met the EIC due diligence requirements.
House Passes Tax Extenders Bill
The House passed the American Jobs and Closing Tax Loopholes Act, which extends a large number of expired tax provisions through 2010.
Supreme Court Declines to Hear Textron Work Product Privilege Case
The United States Supreme Court on May 24 denied a writ of certiorari in the case of Textron Inc.. The decision not to hear the case lets stand the First Circuit’s decision that a corporation’s tax accrual workpapers were not protected from an IRS summons by the work product privilege.
IRS Posts Revised Form 941 and Instructions for Claiming New Hire Payroll Tax Exemption
The IRS posted a new version of Form 941, Employer’s Quarterly Federal Tax Return, and its instructions for claiming the special payroll tax exemption that applies to new workers hired in 2010.
IRS Guidance on Small Business Health Care Tax Credit
On May 17, the IRS issued a notice providing guidance to small businesses that are eligible to claim a tax credit for employee health insurance coverage.
Defending R&D Credits
This article highlights and analyzes some recent decisions concerning the research and development (R&D) tax credit and IRS administrative practices when auditing R&D credit claims, most notably the Union Carbide decision in the Tax Court.
IRS Proposes New Tax Return Preparer Standards
The IRS released a list of recommendations calling for the registration, testing, and continuing education of currently unregulated tax return preparers.
The Road to Transparency
The IRS has more examination tools than ever to evaluate tax compliance, and, if Announcement 2010-9 is any indication, this trend is not likely to reverse.
Repairs and Maintenance Costs Method Change Designated Tier I Issue
The IRS Large and Mid-Size Business (LMSB) Division has issued two industry director directives (IDDs) relating to situations in which a taxpayer changes its method of accounting to recharacterize costs previously capitalized under Sec. 263(a) as deductible repairs and maintenance expenses under Sec. 162.
The Accuracy-Related Penalty (Part II)
This article discusses the Sec. 6664 reasonable cause and good-faith defense to the Sec. 6662 penalty.
AICPA Positions on Recent IRS Proposals
The AICPA’s Tax Division has prepared summaries of AICPA efforts regarding recent IRS proposals on return preparer registration and uncertain tax positions.
Circular 230 Best Practices
Circular 230, Section 10.33, on best practices deals with providing advice and preparing a submission to the IRS.
Assessment Period Remains Open in Partnership Case
In Blak Investments, the Tax Court applied Sec. 6501(c)(10) to extend the assessment statute of limitation for a taxpayer with an undisclosed listed transaction on a return due prior to October 22, 2004.
Passive Activity Grouping Disclosure Statements
Generally, a taxpayer may treat multiple trade, business, or rental activities as a single activity under the passive activity rules if the facts and circumstances indicate that they constitute an appropriate economic unit.
The Accuracy-Related Penalty (Part I)
This two-part article addresses the Sec. 6662 accuracy-related penalty and the defenses available to taxpayers. Part I provides an overview of the various bases upon which a Sec. 6662 penalty can be imposed.
Net Operating Loss and the IRS
Recent legislation lets taxpayers carry back a net operating loss (NOL) for a period of three, four, or five years. The IRS’s ability to make adjustments to the affected returns is an important consideration for taxpayers when deciding whether to make the carryback election and how many years to include.
IRS Updates Rules on Adequate Disclosure
The IRS has updated its guidance on the rules governing when disclosure of an item or position on a tax return constitutes “adequate disclosure” for purposes of reducing an understatement of income tax or avoiding certain tax return preparer penalties.
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.
