The Tax Adviser back issues from February 2009:
Congress passes pension amendments.
Feb 01, 2009; ... On December 23, 2008, President Bush signed into law the Worker, Retiree, and Employer Recovery Act of 2008, EL. 110-458. The act makes various technical corrections to provisions of the Pension Protection Act of 2006, P.L. 109-280 (PPA), as well as enacting pension provisions that relate ...
Sec. 409A prop. regs. and guidance for noncompliant plans.
Feb 01, 2009; ... The IRS has issued proposed regulations on failures to comply with the timing rules of Sec. 409A (REG-148326-05). The Service also issued guidance on reporting and withholding requirements for amounts includible in income under Sec. 409A (Notice 2008-115). Sec. 409A generally ...
Taxpayers should be proactive when filing accounting method changes.
Feb 01, 2009; ... A sigh of relief usually follows when a tax practitioner informs a client that a particular accounting method change request can be filed under the automatic accounting method change procedures. That is because Rev. Proc. 2008-52, [section]6.02(3), allows a taxpayer to file an automatic ...
Treatment of gift card/certificate sales: no answers, more questions.
Feb 01, 2009; ... Gift card sales are becoming more and more a part of our retail shopping experience. The IRS is aware that the popularity of gift cards has increased "at a remarkable rate in recent years" (LMSB-04-0507-039). Gift card sales raise a variety of interesting federal income tax ...
Determining the correct FMV of private company stock when stock options are granted.(fair market value)
Feb 01, 2009; ... When a stock option is granted to an employee, great care must be taken to ensure that the exercise price is equal to or greater than the stock's fair market value (FMV) on the option's grant date. If the exercise price is lower than the FMV, resulting in a "discounted" option, the option ...
Subsequent deferral elections may bring surprises under Sec. 409A.
Feb 01, 2009; ... Now that the transition relief under Sec. 409A has expired and the Sec. 409A final regulations have gone into effect, nonqualified deferred compensation must comply with a vast set of new rules for nonqualified plans. This may include the subsequent deferral election rules, which could ...
Be careful making disclaimers where trusts are involved.
Feb 01, 2009; ... Disclaimers are very useful tools for estate planners, especially in postmortem planning. Disclaimers allow interests in property to pass to parties other than the original object of a donation or bequest. In postmortem planning, a disclaimer is often used to qualify an interest for an ...
IRS crackdown on Form 5471: a sign of things to come?
Feb 01, 2009; ... In August 2008, the IRS began sending "soft" letters to corporate taxpayers warning that beginning in 2009, the Service would automatically assert penalties on any late-filed Forms 1120, U.S. Corporation Income Tax Return, that include a Form 5471. Form 5471, Information Return of U.S ....
IRS provides a simplified method for late filing relief.
Feb 01, 2009; ... A common scenario faced by many taxpayers under the Foreign Investment in Real Property Tax Act, P.L. 96-499 (FIRPTA), relates to the failure to rebut the general presumption found in Sec. 897 that a domestic corporation is a U.S. real property holding company (USRPHC). For example, assume ...
Requirements for the creation of permanent establishment in Germany.
Feb 01, 2009; ... The Bundesfinanzhof, Germany's federal tax court, ruled in a recent decision that use of business premises or a plant does not constitute a permanent establishment under [section] 12 of the Abgabenordnung (general tax code), subject to taxation in Germany, when the foreign company does not ...
Casting doubt on the accrual of interest.
Feb 01, 2009; ... Due to the recent turmoil in the credit markets, creditors and borrowers alike are evaluating the tax treatment of interest accruals related to troubled loans. Generally under Regs. Sec. 1.446-2(a), interest is taken into account by a taxpayer according to the taxpayer's regular method of ...
New regs. govern overseas disclosure and use of taxpayer information.
Feb 01, 2009; ... Sec. 7216 and the regulations thereunder were promulgated to set guidelines and impose restrictions on the use and disclosure of taxpayer information by tax return preparers. The rules were designed to protect taxpayers from having tax return information that is furnished to preparers ...
New transaction of interest identified.
Feb 01, 2009; ... In Notice 2008-99, the IRS identified a new transaction of interest (TOI) for purposes of the reportable transaction disclosure and list maintenance rules under Secs. 6011, 6111, and 6112. A transaction of interest is defined in Regs. Sec. 1.6011-4(b)(6) as "a transaction that is the same ...
The tax return preparer standard: policy developments.
Feb 01, 2009; ... The tax return preparer standard set forth in Sec. 6694 has been subject to a series of revisions and refinements. Legislation enacted in May 2007 established a new more-likely-than-not (MLTN) return preparer standard, which required preparers to have a greater-than-50% level of confidence ...
Maryland Tax Court adopts economic substance doctrine.
Feb 01, 2009; ... Two recent decisions highlight the Maryland Tax Court's creation and use of the economic substance doctrine in cases involving the use of intangible holding companies (IHCs). The Tax Court ruled in The Classics Chicago, Inc. v. Comptroller and The Talbots, Inc. v. Comptroller, Nos ....
Dependency status for a child of divorced or separated parents.
Feb 01, 2009; ... EXECUTIVE SUMMARY * A taxpayer is allowed to claim a dependency exemption for his or her child if the child is a qualifying child (or qualifying relative) of the taxpayer. In the case of parents that are divorced or separated, a child is generally treated for a particular tax ...
Current developments in partners and partnerships.
Feb 01, 2009; ... EXECUTIVE SUMMARY * Treasury amended the Sec. 6694 penalties for nontaxshelter transactions. * The IRS issued three revenue rulings and an announcement regarding interest expense in a trader partnership. * The Tax Court determined that a deficit ...
IRS focuses on Form 1042 examinations.
Feb 01, 2009; ... U.S. taxpayers have an obligation to file information reporting forms to report certain payments to foreign corporations, foreign individuals, foreign partnerships, and certain foreign fiduciaries, trusts, and estates. (1) Generally, every U.S. person that makes a fixed or determinable ...
Tips for preparing the Form 5471 for controlled foreign corporations.
Feb 01, 2009; ... EXECUTIVE SUMMARY * Form 5471, Information Return of U.S. Persons with Respect to Certain Foreign Corporations, is designed to report the activities of the foreign corporation and to function as a roadmap for the IRS on transfer pricing. * Form 5471 requires ...
Campus to clients: adapting accounting education to the generations; working with the millennials.
Feb 01, 2009; ... [ILLUSTRATION OMITTED] THE CHANGING CHARACTERISTICS OF college students provide a challenge for accounting educators and employers. This column creates a profile from recent research of the current group of traditional students (born between 1983 and 1996) often called ...
DC currents: private companies and FIN 48.
Feb 01, 2009; ... [ILLUSTRATION OMITTED] THE GOOD NEWS IS THAT ON OCTOBER 15, 2008, the Financial Accounting Standards Board (FASB) deferred the effective date of FIN 48 (FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes) for all nonpublic companies for one year. The bad news ...
Case study: using a limited liability partnership as the entity of choice.
Feb 01, 2009; ... [ILLUSTRATION OMITTED] A NEW TYPE OF ENTITY THAT HAS APPEARED in the United States in recent years is the limited liability partnership (LLP) or registered limited liability partnership (RLLP). This entity is similar in many respects to the limited liability company (LLC). All ...
IRS issues final regulations on sec. 6694 tax return preparer penalties.
Feb 01, 2009; ... [ILLUSTRATION OMITTED] The IRS issued final regulations implementing the changes to the Sec. 6694 tax return preparer penalties made by the Small Business and Work Opportunity Tax Act of 2007, P.L. 110-28, and the Tax Extenders and Alternative Minimum Tax Relief Act of 2008, ...
IRS issues guidance on determining wagering gains and losses.
Feb 01, 2009; ... The Office of Chief Counsel issued a memorandum explaining how to determine the wagering gains and losses of casual gamblers. Scenario In the scenario in the memorandum, the taxpayer is a casual gambler on a fixed income. Therefore, she carefully limits the amount of ...