The IRS issued final regulations providing rules for how to determine gain or loss when property subject to depreciation is disposed of, how to determine the asset disposed of, and how to account for partial dispositions of depreciated property.
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Tax Accounting
Final Regulations for Sales-Based Royalties and Sales-Based Vendor Allowances
Treasury and the IRS in January issued final regulations addressing the capitalization and allocation of certain sales-based royalties and adjustments to inventory for certain sales-based vendor allowances.
Common Improvements Considered in Home Construction Contract Completion
In determining whether a contract qualifies as a home construction contract, taxpayers may include costs attributable to common improvements and development of infrastructure in the estimated costs. However, the IRS and taxpayers have long disagreed as to whether these costs are included in the tests for determining the date a contract is complete.
Accounting Method Change Procedures for Sales-Based Royalties and Vendor Allowances Are Announced
Taxpayers who are adopting the new rules for sales-based royalties and vendor allowances under Sec. 263A and Sec. 471 were given new procedures for obtaining automatic consent to accounting method changes to conform to those rules.
IRS Expands on Timing of Deducting Year-End Cash Bonuses
The IRS’s issuance of several items of administrative guidance over the past few years indicates its increasing focus on the timing of an accrual-basis taxpayer’s deduction of cash bonuses paid to its employees.
Tax Court Clarifies the All-Events Test for Prepaid and Accrued Liabilities
Tax Court recently held that an accrual-method corporation was not permitted to change its method of accounting to accelerate the timing of various deductions because it failed to satisfy the requirements of the all-events test.
Accounting Method Change Procedures Under the Tangible Property Regs.
The IRS issued the second part of the guidance on accounting method changes under the so-called repair regulations.
Foreign Corporations: Procedures and Pitfalls in Adopting and Changing Methods of Accounting for Purposes of Determining E&P
This item provides a high-level discussion of the general timing for certain foreign corporations’ adoption of methods of accounting for purposes of determining E&P, the procedural rules regarding how such foreign corporations change their method of accounting, and the importance of understanding when and how a method is adopted in light of the increased limitations such foreign corporations may face in changing methods.
Repair Regs. Accounting Method Change Guidance Issued
The IRS issued guidance on accounting method changes under the final regulations governing the treatment of expenditures incurred in acquiring, producing, or improving tangible assets.
Guidance on Repair Regs. Updates Accounting Method Change Procedures
The IRS issued the second part of the guidance on accounting method changes under the so-called repair regulations, which govern the treatment of expenditures incurred in acquiring, producing, or improving tangible assets.
Taxpayer Not Properly Accounting for Advance Payments
The Office of Chief Counsel advised that a taxpayer was not properly using the method of accounting for advance payments in Regs. Sec. 1.451-5 for certain payments the taxpayer received pursuant to long-term agreements for the sale of goods.
Bonus Deduction Timing: Finding the Correct Tax Year
This item focuses on an employer’s ability to deduct bonuses in the tax year they are earned rather than the tax year in which they are paid to the employee.
Transfer-Pricing Documentation: Possible Relief Ahead for Small Multinational Companies
Organisation for Economic Co-operation and Development guidance could offer cost savings to multinational companies, particularly small and compliant ones.
Guidance Issued on Accounting Method Changes Under Repair Regs.
The IRS issued long-awaited guidance on accounting method changes under the so-called repair regulations, which govern the treatment of expenditures incurred in acquiring, producing, or improving tangible assets.
IRS Issues Final Rules on Sales-Based Royalties and Vendor Allowances
The IRS issued final regulations on sales-based royalties and vendor allowance rules under Sec. 263A and Sec. 471.
Accounting for Income Taxes Standard Achieves Purpose, Panel Finds
A review panel has concluded FAS 109, addressing accounting for income taxes, generally achieves its purpose but may not have reduced complexity.
IRS Issues Repair/Tangible Property Regulations
The IRS issued long-awaited final and proposed regulations regarding the treatment of expenditures incurred in acquiring, producing, or improving tangible assets.
Repair Regulations Are Finally Issued
The IRS issued long-awaited final and proposed regulations regarding the treatment of expenditures incurred in acquiring, producing, or improving tangible assets.
Final Regs. Adopt Differential Income Stream Method for Cost-Sharing Agreements
The IRS issued regulations that govern the application of the differential income stream approach to cost-sharing arrangements.
Sale of Unrealized Receivables Not Eligible for Installment Method
The Tax Court held that the taxpayers could not report the portion of a sale of a partnership interest that was attributable to unrealized receivables using the installment method.
TAX PRACTICE MANAGEMENT
2025 tax software survey
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