Tax Relief

Kansas Tax Relief

August 3, 2008 | Mike Habib, EA

IRS explains how to claim (or elect out of) 50% Kansas bonus depreciation Notice 2008-67, 2008-32 IRB

The Food, Conservation and Energy Act of 2008, popularly known as the Farm Act, provided temporary GO Zone-style tax relief for taxpayers in Kiowa County, Kansas, and surrounding areas, who were affected by the storms and tornadoes that began on May 4, 2007. This relief includes 50% bonus depreciation (Kansas additional first year depreciation) for qualified Recovery Assistance (RA) property placed in service by the taxpayer on or after May 5, 2007, during the tax year that includes May 5, 2007. IRS has issued detailed guidance explaining how to claim (or elect out of) this Kansas bonus depreciation.

Doctors tax penalties

August 3, 2008 | Mike Habib, EA

Doctors get socked with big tax and penalties for donations tied to consolidation of their practice

Berquistist and Kendrick, et al., (2008) 131 TC No. 2

Mike Habib, EA

Staffing company tax problem

August 3, 2008 | Mike Habib, EA

No FUTA exemption for staffing company that was considered the employer for state UI purposes Chief Counsel Advice 200827007

Mike Habib, EA

The IRS has denied a federal unemployment tax (FUTA) exemption to a staffing company because it did not consider the company to be the common law employer of the workers in question

Private Trust Companies

August 3, 2008 | Mike Habib, EA

Proposed revenue ruling gives green light to use of private trust companies Notice 2008-63, 2008-31 IRB

Mike Habib, EA

A new notice contains a proposed revenue ruling that would allow families to use private trust companies (PTCs) in their estate planning without adverse income, estate, gift or generation-skipping transfer (GST) tax consequences for the trust creators or beneficiaries in carefully defined situations. IRS requests comments on the proposed ruling.

Taxpayer Advocate Annual Report

August 3, 2008 | Mike Habib, EA

National Taxpayer Advocate annual report to Congress identifies priorities and issues for upcoming year [IR 2008-87]:

An annual report on the priority challenges and issues facing the Office of the Taxpayer Advocate (OTA) was delivered to Congress on July 8.

The report, National Taxpayer Advocate’s 2009 Objectives Report to Congress, cited three areas for “particular emphasis” in fiscal year 2009, which begins on Oct. 1.

Charitable Remainder Trust

July 9, 2008 | Mike Habib, EA

Charitable remainder trust can be divided into separate trusts without adverse tax consequences Rev Rul 2008-41, 2008-30 IRB Mike Habib, EA

In the context of two fairly detailed factual situations, a new revenue ruling makes it clear that a charitable remainder trust (CRT) can be divided into two or more separate CRTs without adverse tax consequences. If properly effected, the separate trusts will continue to qualify as CRTs, the division won’t be a sale, and no excise taxes will arise under Code Sec. 507(c), Code Sec. 4941 or Code Sec. 4945.

Background. In general, a charitable remainder trust (CRT) provides for a specified periodic distribution to one or more noncharitable beneficiaries for life or for a term of years with an irrevocable remainder interest held for the benefit of charity. A CRUT pays a unitrust amount at least annually to the beneficiaries as opposed to a charitable remainder annuity trust or CRAT, which pays a sum certain at least annually to the beneficiaries. (Code Sec. 664)

Shareholder Constructive Distribution

July 1, 2008 | Mike Habib, EA

Loan repayment to shareholder’s spouse wasn’t constructive distribution Beckley, 130 TC No. 18 (2008)

Mike Habib, EA

The Tax Court has ruled that payments made by a corporation to the wife of one of its shareholders represented repayment of money she advanced to a predecessor corporation. Despite the absence of a written loan agreement, the repayment wasn’t a constructive distribution to the shareholder.

Employment / Payroll Tax Adjustments

July 1, 2008 | Mike Habib, EA

Final regs include new process for reporting employment tax adjustments and refund claims T.D. 9405, 06/30/2008, Reg. § 31.6011(a)-1, Reg. § 31.6011(a)-4, Reg. § 31.6011(a)-5, Reg. § 31.6205-1, Reg. § 31.6302-1, Reg. § 31.6402(a)-1, Reg. § 31.6413(a)-1, Reg. § 31.6403(a)-2

Mike Habib, EA

IRS has issued final regs on employment tax adjustments and refund claims, effective Jan. 1, 2009. The final regs modify the process for making interest-free adjustments for both underpayments and overpayments of Federal Insurance Contributions Act (FICA) and Railroad Retirement Tax Act (RRTA) taxes and Federal income tax withholding (ITW).

Tax man is coming soon

June 27, 2008 | Mike Habib, EA

House Subcommittee Passes IRS Funding Bill

The House Appropriations Financial Services Subcommittee this week passed a bill that would appropriate $11.4 billion to IRS for FY 2009.

The bill would grant IRS budget authority to spend $5.1 billion on enforcement, $2.2 on taxpayer services, and $3.8 billion on operations.

Tax Scams for 2008 – Fuel Tax Credit Scams

June 16, 2008 | Mike Habib, EA

IRS Announces ‘Dirty Dozen’ Tax Scams for 2008

Phishing Scams, Fuel Tax Credits, Frivolous Arguments, Hiding Income Offshore Top the 2008 Tax Scams

WASHINGTON — The Internal Revenue Service today issued its 2008 list of the 12 most egregious tax schemes and scams, highlighted by Internet phishing scams and several frivolous tax arguments.

Topping this year’s list of scams is phishing, which encompasses numerous Internet-based ploys to steal financial information from taxpayers. New to the “Dirty Dozen” this year is a scheme, which IRS auditors discovered, that relates to unreasonable and/or excessive fuel tax credit claims.