Tax Relief Blog

Year-end charitable contributions

December 15, 2008 | Mike Habib, EA

IRS tips for year-end charitable contributions IR 2008-138

IRS reminds individuals and businesses making contributions to charity that they should keep in mind several important tax law provisions that have taken effect in recent years. One provision offers older owners of individual retirement arrangements (IRAs) a different way to give to charity. There are also rules designed to provide both taxpayers and the government greater certainty in determining what may be deducted as a charitable contribution. IRS explains some of these changes in a news release as detailed below.

Tax Relief Roadmap

December 15, 2008 | Mike Habib, EA

A roadmap to disaster area tax relief in 2008 legislation

Mike Habib, EA

The 2008 calendar year has seen more than the usual share of natural disasters in the U.S., and legislation designed to provide tax relief to the victims. By and large, legislative relief has been granted on an ad-hoc basis, with an attempt made in the last go-around (tax provisions included with the Emergency Economic Stabilization Act of 2008, referred to here as the Bailout Act, P.L. 110-343) to provide “national” disaster relief. Inevitably, there are some overlapping tax relief provisions and as-yet unanswered questions on the scope of the relief and the interplay between national relief provisions and other relief provisions. This Practice Alert, to be issued in several parts, provides practitioners with a roadmap to disaster-related provisions that may provide significant tax relief to their business and individual clients.

Expat Tax Help

December 15, 2008 | Mike Habib, EA

IRS boosts 2008 housing cost allowances for those working abroad in high-cost areas Notice 2008-107, 2008-50 IRB

Mike Habib, EA

A new Notice effectively increases the maximum housing cost exclusion for U.S. citizens and residents working abroad in specified high-cost locations. The increases are based on geographic differences in foreign housing costs relative to U.S. housing costs.

S Corp Officer Pay

December 15, 2008 | Mike Habib, EA

Fact sheet explains wage compensation of S corporation officers Fact Sheet 2008-25

Mike Habib, EA

A recently released IRS fact sheet provides useful information for S corporations and their owners concerning the proper tax treatment when corporate officers perform services for the entity. Specifically, it explains the proper employment tax treatment of payments made to officers of S corporations and how 2% shareholder-employees treat company-paid health insurance premiums.

IRS & Bank NOL

December 15, 2008 | Mike Habib, EA

Senators question Treasury’s liberalization of bank NOL rules

Mike Habib, EA

Senator Chuck Grassley (R-IA), ranking member of the Committee on Finance, and Senator Charles E. Schumer (D-NY), have questioned a controversial IRS Notice that changed the existing rules to allow banks to deduct the built-in losses of other banks that they acquired. Code Sec. 382 generally limits the amount of an acquired corporation’s losses that can be used by the acquiring corporation. After an ownership change, such as in a takeover, Code Sec. 382 limits the amount of a corporation’s taxable income in a post-change year that can be offset by pre-change losses. However, on September 30, IRS issued Notice 2008-83, 2008-42 IRB 905, which provided that a bank’s losses on loans or bad debts (including deductions for a reasonable addition to a reserve for bad debts) wouldn’t be treated as pre-change losses. IRS implemented this administrative action–which resulted in billions of dollars of tax savings for the banks (and lost tax revenue for the government)–on its own.

Farmer’s Tax Guide

December 15, 2008 | Mike Habib, EA

Farmer’s Tax Guide highlights administrative and tax law changes for 2008 IRS Publication 225

Mike Habib, EA

IRS recently released Publication 225, Farmer’s Tax Guide, for use in preparing 2008 returns on its web site. It highlights several administrative and tax law changes for 2008 and 2009.

H-1B Visa Payroll Problem

December 15, 2008 | Mike Habib, EA

IT company owes nearly $1.7 million in back wages due to H-1B Visa Program violations [DOL ESA News Release, 10/30/08]:

Mike Habib, EA

An information technology (IT) company has agreed to pay $1,683,584 in back wages to 343 non-immigrant workers after a Department of Labor (DOL) investigation found that the company had violated the H-1B visa provisions of the Immigration and Nationality Act.

Employment Tax Rulings

December 15, 2008 | Mike Habib, EA

Roundup of recent employment tax rulings

Mike Habib, EA

There have been several recent rulings issued in the employment tax area. Here is a summary:

Gambling winnings or losses?

December 2, 2008 | Mike Habib, EA

Gambling winnings or losses?

Mike Habib, EA

As a US taxpayer, you can deduct gambling losses only if you itemize your deductions on form 1040. You can claim your gambling losses as a miscellaneous deduction on IRS Form 1040, Schedule A. However, the amount of losses you deduct can not total more than the amount of gambling income you’ve reported on your return. It’s important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses.

Estate not taxed on transfer

November 11, 2008 | Mike Habib, EA

Estate not taxed on transfer of decedent’s pension to charitable beneficiary PLR 200845029

IRS has privately ruled that an estate will not be taxed on a distribution of the decedent’s pension benefits to a charitable beneficiary of the estate.

Facts. An individual, whom we’ll call, Smith, died owning an interest in a defined benefit pension plan (the Plan Interest) of which his estate (Estate) was the beneficiary. His will (Will) named Charity as a residuary beneficiary. The executor of Estate proposes to assign the benefit of the Plan Interest to Charity in partial satisfaction of Charity’s share of the residue. The Will gave the executor the power to distribute property in kind and state law further allows distributions in kind without any requirement that they be made on a pro-rata basis.