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Lorman Accounting Newsletter



Free monthly email newsletter providing updates on current issues in the accounting industry. This Accounting newsletter includes articles on recent laws, trends, and regulations in the accounting and tax industry written by leading experts from around th



Last Build Date: Sun, 24 Sep 2017 11:30:01 GMT

 



Federal Reserve Publishes Rules Implementing Provisions of the CARD Act Relating to Gift Cards, Gift Certificates and Prepaid Cards

Mon, 7 Jun 2010 15:00:00 GMT

Author: Lewis S. Wiener, B. Knox Dobbins, Gail L. Westover, Wilson G. Barmeyer, Brendan Ballard and Hannah Campbell
Organization: Sutherland Asbill & Brennan LLP

The Federal Reserve Board has published final rules implementing the provisions of the Credit Card Act of 2009 relating to gift cards, gift certificates and "general use prepaid cards." The rule applies to all covered products sold or issued to a consumer on or after August 22, 2010.



Get Ready for Onerous New 1099 Reporting Rules

Mon, 7 Jun 2010 15:00:00 GMT

Organization: Rea & Associates, Inc.

Businesses and not-for-profit organizations are accustomed to IRS rules that require them to report certain payments on annual Form 1099 information returns. However, the recently enacted healthcare law imposes surprising new Form 1099 reporting requirements. Complying with them may add significantly to your organization's paperwork burden. While the new rules don't apply to payments made before 2012, it's not too early to start gearing up to deal with them.



Exercise Diligence When Seeking Voluntary Disclosure and Settlement of Unclaimed Property Liabilities

Mon, 7 Jun 2010 15:00:00 GMT

Author: Scott D. Smith
Organization: Baker Donelson

Caution: Don't expect a state to routinely accept a Voluntary Disclosure Agreement (VDA) and settlement of your outstanding unclaimed property liabilities without question or audit. A number of states, including Delaware, provide VDA programs for holders with unclaimed property liabilities. However, the recent settlement of a case in Delaware Chancery Court illustrates holders must exercise caution and perform their own due diligence prior to participating in these programs.



House Approves Revised Extender Package with Expanded Offsets; Senate Action is Expected in June

Mon, 7 Jun 2010 15:00:00 GMT

Organization: Grant Thornton LLP

The House has voted (215 to 204) to approve legislation (H.R. 4213) to extend a number of popular existing tax incentives, continue benefits for the unemployed and extend the time for correcting certain pension shortfalls. Over $44 billion in new taxes would be used to offset a portion of the cost of these provisions.



An Overview of Form 1041

Mon, 7 Jun 2010 15:00:00 GMT

Organization: Lorman Education Services




Eligible Income to Be Included on Form 1041 When Filing

Mon, 7 Jun 2010 15:00:00 GMT

Organization: Lorman Education Services




Beyond Form 1042 – Annual Withholding Tax Return for U.S. Source Income of Foreign Persons; find out how to effectively manage global withholding tax compliance outside the U.S.

Mon, 7 Jun 2010 15:00:00 GMT

Author: John P. Garcia

More and more companies are going global; even relatively small firms. According to the May 2013 OECD Economic Outlook, world trade is expected to grow by 5.8% in 2014. [1]Setting up businesses and customers is almost always the first order of business. Many important administrative functions come later, sometimes much later. Often foreign affiliates are created to facilitate business overseas. A myriad of business transactions flow from the global effort. These transactions have tax consequences. There are a number of different tax consequences. Our objective is to address withholding taxes.



Types of Form 1099

Mon, 7 Jun 2010 15:00:00 GMT

Author: Brad Howell
Organization: Brad Howell




Key Goals for Contract Negotiation with Vendors and Suppliers

Mon, 7 Jun 2010 15:00:00 GMT

Author: Francis X. Taney Jr.
Organization: Stevens & Lee




For-Profit & Nonprofit Joint Ventures in Tough Economic Times

Mon, 7 Jun 2010 15:00:00 GMT

Author: Elaine Waterhouse Wilson,
Organization: West Virginia University College of Law




Overview of Fiscal Sponsorship: Fiscal Agency v. Fiscal Sponsorship

Mon, 7 Jun 2010 15:00:00 GMT

Author: David Levitt
Organization: Adler & Colvin




Brief Overview of New York Sales and Use Taxes

Mon, 7 Jun 2010 15:00:00 GMT

Author: Debra Silverman Herman
Organization: Hodgson Russ LLP




New York Sales and Use Tax: Nexus Generally – “Jurisdiction” to Tax

Mon, 7 Jun 2010 15:00:00 GMT

Author: Debra Silverman Herman
Organization: Hodgson Russ LLP




Collection Techniques for Landlords: The Security Deposit

Mon, 7 Jun 2010 15:00:00 GMT

Author: Kelly C. Spicher
Organization: Foley & Lardner LLP




What is Form 1096?

Mon, 7 Jun 2010 15:00:00 GMT

Author: Jennifer A. Driskill
Organization: Jennifer A. Driskill




IRS Form 1099 Reporting: File Form 1099-C

Mon, 7 Jun 2010 15:00:00 GMT

Author: Jennifer A. Driskill
Organization: Jennifer A. Driskill




IRS Form 1099 Reporting: File Form 1099-A, Acquisition or Abandonment of Secured Property,

Mon, 7 Jun 2010 15:00:00 GMT

Author: Jennifer A. Driskill
Organization: Jennifer A. Driskill







Required Documentation of the IRC Section 41 Research and Experimentation Tax Credit

Mon, 7 Jun 2010 15:00:00 GMT

Author: Phil Dottavio
Organization: Think

Section 41(a) provides an incremental tax credit for increasing research activities based on a percentage of a taxpayer's qualified research expenses (QREs) above a base amount. QREs consist of wages, supplies and contract research expenses incurred for qualifying research.  Under the Alternative Simplified Credit (ASC) method, the base amount is based on the prior three years' QREs.  Under the "regular" method, the base amount is based on the prior four years' gross receipts as well as gross receipts and QREs incurred during the 1984-88 base period.



UBIT ISSUE

Mon, 7 Jun 2010 15:00:00 GMT

Author: Lisa B. Petkun
Organization: Pepper Hamilton LLP

If a tax-exempt organization incurs indebtedness to acquire income-producing property, Sections 512(b)(4) and 514(a)(1) may require taxation of the debt-financed portion of the income as "unrelated business taxable income."  UBTI arises only if there is "acquisition indebtedness", which is indebtedness incurred in acquiring or improving property. The IRS has held in PLRs 200235042 and 200233032 that short-term borrowing to meet administrative needs is not acquisition indebtedness. These PLRs involved indebtedness incurred by a pension fund to meet deadlines for payment of pension benefits where the loan was repaid within about 20-30 days and was a relatively small amount.  In these PLRs, the IRS reasoned the loan was not incurred for the purpose of acquiring investment property, but rather for the purpose of solving temporary cash flow problem in a relatively small amount.  The debt was, in effect, traced to its use to pay pension benefits.



Gift Acceptance Policy: What Needs to be Included?

Mon, 7 Jun 2010 15:00:00 GMT

Author: Michael N. Fine
Organization: McDermott Will & Emery, LLP

Most tax-exempt, nonprofit organizations must solicit gifts to fulfill their charitable missions.  To protect the organization, board of directors should adopt formal policies and guidelines to govern the acceptance of such gifts – a gift acceptance policy (the "Policy"). The Policy should discuss who is authorized to accept gifts on the organization's behalf and describe what types of gifts may be accepted.  Types of gifts may include:  cash; tangible personal property; securities; real estate; remainder interests in property; oil, gas, and mineral interests; bargain sales; life insurance; charitable gift annuities; charitable remainder trusts; retirement plan beneficiary designations; or bequests. 



Recent Tax Changes Affect Companies Doing Business in Colorado, Massachusetts and Pennsylvania

Mon, 10 May 2010 15:00:00 GMT

Author: Stanley R. Kaminski
Organization: Duane Morris LLP

Effective March 1, 2010, Colorado expanded its sales/use tax to require a non-Colorado retailer to collect Colorado sales/use tax when it is part of a controlled group of corporations where one or more of the members has a physical presence in Colorado. This expansion of tax nexus law has been tried before unsuccessfully in other states, where it was ruled unconstitutional. However, this may create a potential tax exposure for non-Colorado businesses that are members of these controlled groups.



IRS Releases Draft Form and Instructions for New Disclosures of Uncertain Tax Positions on Tax Returns

Mon, 10 May 2010 15:00:00 GMT

Organization: Grant Thornton LLP

The IRS on April 19 released new information (Announcement 2010-30) together with draft instructions and a tax return schedule for its initiative to require corporate taxpayers to report "uncertain tax positions" (UTPs) on their returns.



Obama's HIRE Act - Explaining the Tax Provisions

Mon, 10 May 2010 15:00:00 GMT

Author: Adam C. Flock, D. Nathan Smith and Michael S. Evans
Organization: Baker Donelson

President Obama signed the Hiring Incentives to Restore Employment Act (the HIRE Act) on March 18, 2010. The HIRE Act provides $18.6 billion in tax provisions including $13 billion in tax breaks for hiring and retaining qualified workers. Additionally, the HIRE Act increases the expensing limitations under Section 179 of the Code for 2010 and expands the Build America Bonds program.



Corporations: Good Time for Tax-Wise Transactions

Mon, 10 May 2010 15:00:00 GMT

Organization: Rea & Associates, Inc.

With the passage of the massive healthcare bill, odds are the current taxpayer-friendly picture will only last through the end of this year. Unless Congress takes action to extend the status quo, higher taxes on dividends and long-term gains will kick in on January 1, 2011, when the "Bush tax cuts" are scheduled to expire.



New Avenues Open for Employers to Save on Payroll Taxes

Mon, 10 May 2010 15:00:00 GMT

Author: Nancy N. Lashnits
Organization: Ballard Spahr LLP

Employers should be alert to significant new legislative and judicial developments in the collection and payment of payroll taxes.Payroll Tax Exemption for New Hires. The Internal Revenue Service has released a new tax form to help employers claim the payroll tax exemption adopted into law by the Hiring Incentives to Restore Employment Act (HIRE Act), signed by President Obama on March 18, 2010.



Spotlight on SALT: The Global Reach of State Unitary Tax Regimes

Mon, 12 Apr 2010 15:00:00 GMT

Author: Scott D. Smith
Organization: Baker Donelson

A foreign corporation doing business in the U.S. may be surprised to learn that its income can still be included in a State's "unitary combined report" of income. Even though operating in the U.S. through subsidiary corporations, a foreign corporation should not assume that it has no State corporate income tax exposure simply because it may be protected by a United States tax treaty.



A Better Deduction for Equipment

Mon, 12 Apr 2010 15:00:00 GMT

Organization: Rea & Associates, Inc.

Make sure your company takes full advantage of one of the best tax breaks available to business owners today -- the "Section 179" first-year depreciation allowance for equipment.



IRS Loses Major International Tax Case: Ninth Circuit Changes Course, Affirms Decision in Xilinx

Mon, 12 Apr 2010 15:00:00 GMT

Author: W.S. Bassett, William F. Colgin, Jr. and Neal A. Gordon
Organization: Morgan, Lewis & Bockius LLP

In a decision filed on March 22, the U.S. Court of Appeals for the Ninth Circuit reversed course and affirmed the U.S. Tax Court's decision in favor of the taxpayer in Xilinx, Inc. v. Commissioner of Internal Revenue. Xilinx is perhaps the most closely watched tax case of the last decade. The Ninth Circuit had previously decided in favor of the Internal Revenue Service (IRS), but after a flood of criticism from the tax community, the court subsequently withdrew its opinion.1



Second Circuit Reverses Tax Court on Deductibility of Sales-Based Royalties

Mon, 12 Apr 2010 15:00:00 GMT

Organization: Grant Thornton LLP

The Second Circuit Court of Appeals has reversed the Tax Court's holding (TC Memo 2009-9) in Robinson Knife Manufacturing Co. v. Commissioner (No. 09-1496) on the deductibility of sales-based royalties under Section 263A.



Obama's 2011 Budget: Check-the-Box off the Table; Subpart F Expanded

Fri, 2 Apr 2010 15:00:00 GMT

Organization: Morgan, Lewis & Bockius LLP

On February 1, the Treasury Department released the General Explanations of the Administration's Fiscal Year 2011 Revenue Proposals (2011 Green Book), which includes the Obama administration's plans to significantly reform the U.S. international tax system. The revenue provisions in the new budget alter previous proposals in at least two important aspects: the 2011 budget does not include the previously proposed limitations on "check-the-box" elections but replaces them with a dramatic expansion of the subpart F antideferral rules.



At Last! A Correction Program for 409A Plan Documents

Fri, 2 Apr 2010 15:00:00 GMT

Author: Jane Francis and Brenda Berg
Organization: Holland & Hart LLP

The IRS has issued Notice 2010-6 that offers employers an opportunity to correct documents that are not compliant with Internal Revenue Code Section 409A.  Section 409A imposes strict rules on nonqualified deferred compensation plans and other deferred compensation arrangements.  Deferred compensation plans were required to be in documentary compliance with Section 409A by December 31, 2008.  The IRS previously provided an opportunity to correct certain 409A operational failures under Notice 2008‑113; however, until the issuance of Notice 2010-6, there was no method for correcting document failures.



Not-for-Profit Entities Face Closer Scrutiny on "Good Governance"

Fri, 2 Apr 2010 15:00:00 GMT

Organization: Rea & Associates, Inc.

IRS auditors know what good governance practices are, and they're not afraid to test them on your not-for-profit organization.  Tax-exempt organizations represent a significant and growing industry. There are more than 1.9 million exempt organizations, not including those with religious exempts, and more than 200 new applications are approved each day. With such large numbers, it's not surprising the agency is placing increased focus on this area.



The Role of Forensic Accountants in Divorce Engagements

Fri, 2 Apr 2010 15:00:00 GMT

Author: Barbara A. Ruth & Michael A. Gillen
Organization: Duane Morris LLP

It is no surprise that financial issues are among the most contentious in divorce actions. The financial aspects associated with marital disputes and dissolution are often complex and consume most of the effort and attention of the parties. Forensic accountants (most often CPAs) possess unique skills that allow them to provide valuable support to divorcing spouses and their attorneys.



IRS Announces It Will Require the Disclosure of Uncertain Tax Positions

Mon, 8 Feb 2010 16:00:00 GMT

Author: Jerome B. Libin, Mary E. Monahan, Marc A. Simonetti and Joseph M. DePew
Organization: Sutherland Asbill & Brennan LLP

In a speech January 26, 2010 before the New York State Bar Association, IRS Commissioner Douglas Shulman announced that, for certain corporations and other business taxpayers, it will require disclosure of uncertain tax positions on tax returns, but that it is otherwise retaining its policy of restraint on requesting tax accrual workpapers.



Ready, Set, Convert...to a Roth IRA

Mon, 8 Feb 2010 16:00:00 GMT

Author: Wendy Schick, CPA CFP
Organization: Rea & Associates, Inc.

Taxpayers who convert a traditional IRA into a Roth IRA can enjoy a number of tax advantages, which are described below.  However, there's always been a problem for higher-income folks. You couldn't convert a traditional IRA into a Roth in a year when your modified adjusted gross income (MAGI) exceeded $100,000. The good news is the $100,000 restriction has disappeared. You can now convert a traditional IRA into a Roth no matter how high your income (assuming Congress doesn't change the law).



Tax Legislation Fills End-of-year Congressional Agenda

Mon, 11 Jan 2010 16:00:00 GMT

Organization: Grant Thornton LLP

Several major tax bills are set for consideration as the congressional calendar winds down for 2009. Some of these items could slip into 2010, while others are likely to be wrapped up before the end of the year.



Estate Tax Repealed - But for How Long?

Mon, 11 Jan 2010 16:00:00 GMT

Organization: Doug H. Moy

Literally, barring a late eleventh-hour passage of a critical extension by the U.S. Senate, the federal estate tax is repealed for decedents whose deaths occur in 2010. On December 16, 2009, the U.S. Senate failed to extend the federal estate and generation-skipping transfer taxes to 2011.



Proposed Legislation Would Subject Offshore Investments and Foreign Entities to Significant New Reporting and Withholding Requirements

Mon, 11 Jan 2010 16:00:00 GMT

Author: Barton W.S. Bassett
Organization: Morgan, Lewis & Bockius LLP

The Foreign Account Tax Compliance Act of 2009 (H.R. 3933 and S. 1934) was introduced on October 27 by Senate Finance Committee Chair Max Baucus (D-Mont.) and Ways and Means Committee Chair Charles B. Rangel (D-NY). The proposed legislation, which is projected to raise $8.5 billion over 10 years, revitalizes previously introduced anti-tax haven legislation that aims to prevent the use of offshore entities to avoid U.S. taxation of income and assets. President Obama and Treasury Secretary Geithner have already endorsed the proposal.



Have a Small Business? Access Up to $35,000 Interest-Free from SBA

Mon, 11 Jan 2010 16:00:00 GMT

Organization: Rea & Associates, Inc.

Since September, the Small Business Administration has been offering the America's Recovery Capital loan program, or ARC, as part of its economic recovery efforts. ARC loans provide an immediate infusion of capital to small businesses to assist with making payments of principal and interest on existing debt. These loans allow borrowers to redirect cash flow from making loan payments to investing in their businesses, to help sustain the business and retain jobs. For example, making loan payments on existing loans with proceeds from an ARC loan can allow a business to focus more funds on core operations, such as buying inventory or making payroll. Loans for up to $35,000 are available.



Gift Card Management - When Income Tax and State Unclaimed Property Laws Converge

Mon, 7 Dec 2009 16:00:00 GMT

Author: Scott D. Smith
Organization: Baker Donelson

When Income Tax and State Unclaimed Property Laws ConvergeAs we head into the 2009 holiday shopping season, the popularity of gift card programs for retailers, restaurants and other hospitality businesses and their customers becomes apparent. "Breakage," that portion of gift card balances that are not redeemed for food, beverage or merchandise, also can be an important short-term cash flow benefit for the card issuer. Yet, a number of States will treat unredeemed gift card balances as unclaimed property.



The Three Categories of Meal and Entertainment Expenses

Mon, 7 Dec 2009 16:00:00 GMT

Author: Linda S. Zevnik, CPA
Organization: Rea & Associates, Inc.

As you record and document the expenses in your business, a common sticking point occurs when trying to determine meal and entertainment expenses that are nondeductible, 50 percent deductible and 100 percent deductible. To help ease recordkeeping for both you and your employees, consider establishing these three separate expense categories within your company's expense report.



Tax-Planning Strategies for Stock Market Gains

Mon, 7 Dec 2009 16:00:00 GMT

Author: Michael A. Gillen and Barbara A. Ruth
Organization: Duane Morris LLP

Few can be pleased with the stock market's performance over the last year or so. However, the market's recent rebound has raised the question of whether now is the time to capitalize on some of those newly realized gains on stocks purchased during the downturn. While taxes should not be the main factor in this decision, they should be considered, given that taxes can significantly impact the investment return.



IRS Will Audit 6,000 Companies – Make Sure Your Employment Taxes Are In Order

Mon, 7 Dec 2009 16:00:00 GMT

Author: Nicholas C. Tomlinson
Organization: Baker Donelson

An employment tax audit may be in your very near future. In an interview given to Bloomberg by John Tuzynski, IRS Chief of Employment Tax Operations, on September 18, 2009, Tuzynski said that the IRS will spend three years auditing 6,000 companies beginning in February 2010. The companies will be selected at random and will include large and small companies. They will be selected from across many different industries. This marks the first comprehensive examination of employment tax issues by the IRS since 1984.



10 Tips to Ensure Year-End Charitable Contributions Can Be Deducted

Mon, 7 Dec 2009 16:00:00 GMT

Organization: Grant Thornton LLP

The year-end charitable giving season is upon us, and Grant Thornton LLP wants to make sure Americans don't miss out on the federal tax rewards available for their charitable contributions.  "Generosity is its own reward, but that doesn't mean you should miss out on the tax benefits of your gifts," said Justin Ransome, a partner in Grant Thornton's National Tax Office. "Many people don't realize how detailed the charitable giving rules actually are."



IRS Removes Roadblock to Modifying Securitized Loans

Mon, 2 Nov 2009 16:00:00 GMT

Author: John P. O'Neill and Scott Andrew Sterling
Organization: Holland & Knight

On September 16, 2009, the Internal Revenue Service (IRS) attempted to remove one of the many roadblocks to modifying securitized loans that are not yet in default but are likely to be in default at or prior to maturity. Revenue Procedure 2009-45 provides a safe harbor allowing real estate mortgage investment conduits (REMIC) to modify certain mortgage loans without triggering certain negative tax consequences to the REMIC.



What's Ahead for International Accounting Standards?

Mon, 2 Nov 2009 16:00:00 GMT

Organization: Rea & Associates, Inc.

The Securities and Exchange Commission has established a "roadmap" with 2014 as the year when companies that currently issue 10-K reports must convert to International Financial Reporting Standards (IFRS).



Family Entities Continue as Viable Planning Tool

Mon, 2 Nov 2009 16:00:00 GMT

Author: D. Nathan Smith
Organization: Baker Donelson

Two recently-litigated taxpayer victories underscore the continuing viability of family entities (family limited partnerships or LLCs, or FLPs) as an estate planning tool. These entities serve the purpose of organizing management and control of family assets, and at the same time typically generate estate and gift tax discounts on transferred shares of the entity. Although the Obama Administration proposed earlier this year that the discounts generated by family entities should be reduced or eliminated, these cases indicate that current law still respects the advantages, both tax and non-tax, that can be achieved through these entities.



To Defer or Postpone, That is the Question "Exchanges Over Two Tax Years May Be Treated as an Installment Sale"

Mon, 2 Nov 2009 16:00:00 GMT

Author: Scott Saunders
Organization: Asset Preservation Inc.

In a delayed exchange transaction structured to satisfy the requirements of §1031, an exchanger has up to 180 calendar days to acquire like-kind replacement property measured from the day the relinquished property is sold. Once initiated, the delayed exchange may be successfully completed (resulting in complete tax deferral), partially completed (resulting in recognition of some capital gain) or it may fail if no like-kind replacement property is acquired (resulting in the recognition of all capital gain generated by the sale).



Update on Proposed Changes to Federal Estate Tax Law

Mon, 5 Oct 2009 15:00:00 GMT

Author: Michael D. Grohman, Marianna F. Schenk and Adam C. Kachurak
Organization: Duane Morris LLP

Summer has given way to fall, and Congress has returned from its August recess. In addition to facing other substantial initiatives, it has less than three months to address federal estate tax law. Current federal estate tax law provides each individual dying in 2009 with a $3.5 million federal estate tax exemption and establishes a maximum federal estate tax rate of 45 percent. If Congress does not act prior to January 1, 2010, the federal estate tax temporarily would expire for 2010—each individual dying in 2010 would have an unlimited federal estate tax exemption for that year.



Speed Up Payment on Receivables

Mon, 5 Oct 2009 15:00:00 GMT

Organization: Rea & Associates, Inc.

Receivables don't have much value if they aren't turned into cash.  Your company really needs to keep tight control on its invoices outstanding so you can get an accurate picture of the receivables situation and take steps to improve the turnover of those accounts.



Retirement Plans for Small Businesses – Penalty Assessments Causing Unintended Fear

Mon, 5 Oct 2009 15:00:00 GMT

Author: Bill Norwalk
Organization: Ireland San Filippo, LLP

In light of recent penalties imposed relating to retirement plan deductions, is it prudent for a business to adopt a retirement plan?  To an experienced tax practitioner, this may seem like a ridiculous question.  We recognize the benefit of getting current tax deductions combined with tax deferred growth in the funds (assuming positive investment returns).  Additionally, we realize that a deferred benefit plan for an older employee-owner can legally defer almost $200,000 of income for that individual. So why did one of my clients recently come to me, expressing discomfort with even considering this strategy?



Expatriation to Avoid Taxation

Mon, 5 Oct 2009 15:00:00 GMT

Author: Asher Rubinstein
Organization: Rubinstein & Rubinstein, LLP

We've noticed an interesting trend lately: more and more clients are asking about EXPATRIATION options. They feel that they are paying too much in taxes, their taxes will keep increasing, and the benefits of U.S. citizenship or a green card just aren't worth the burden of taxes. Cognizant that many foreign countries are excellent places to live, and don't have tax regimes as onerous as that of the U.S., clients envision a low-tax lifestyle in Europe, the Caribbean or elsewhere.



IRS Voluntary Disclosure Program Update

Mon, 14 Sep 2009 15:00:00 GMT

Author: Thomas W. Ostrander
Organization: Duane Morris LLP

On August 19, 2009, the Internal Revenue Service (IRS) and the U.S. Department of Justice announced a settlement agreement with UBS regarding certain accounts held at the bank by U.S. persons. The offshore voluntary disclosure program announced in March 2009 is scheduled to expire on September 23, 2009. IRS Commissioner Doug Shulman has stated there is no "present intent" to extend this deadline.



Employers Paying Severance Have Opportunity to Reduce FICA Taxes

Mon, 14 Sep 2009 15:00:00 GMT

Author: Michelle Lara, Tom Reicher and Thomas Welk
Organization: Cooley Godward Kronish LLP

The current economic climate has caused many employers to institute reductions in force. In doing so, employers often provide their former employees with severance pay in an effort to soften the impact of unemployment. Normally, both the employer and the employee recipient incur taxes imposed by the Federal Insurance Contributions Act ("FICA")1 on these payments. However, it is possible for both employers and employees to reduce FICA taxes by structuring some or all of these severance payments as supplemental unemployment benefit payments ("SUB-Pay").



Can You Shield Work Papers From the IRS? Understanding the Boundaries of the "Work Product Doctrine"

Mon, 14 Sep 2009 15:00:00 GMT

Organization: Rea & Associates, Inc.

A controversial new court case has led to anxiety at some corporations around the country. The decision, by the First Circuit U.S. Court of Appeals, stated that the IRS can peruse a company's internal tax accrual work papers created to determine if it could withstand an IRS audit.



Accounting Firm Found Not Liable to an Investor Claiming "Indirect Reliance" on an Audit Report

Mon, 14 Sep 2009 15:00:00 GMT

Author: Matthew M. O'Leary, Esq.
Organization: LeClair Ryan

In Imprimis Investors, LLC v. KPMG Peat Marwick, LLP, 69 Mass. App. Ct. 218 (2007), the Appeals Court dealt for the first time with the issue of whether an investor could "indirectly rely" on an audit report in making its decision to invest in a company. Imprimis Investors, LLC ("Imprimis") claimed they relied on a final signed audit report and an unqualified opinion prepared by KPMG Peat Marwick, LLP ("KMPG") when making their decision to invest in First New England Dental Centers, Inc. (the "company"). They also claimed the company's financial statements, which were audited by KPMG contained a number of specific and material misrepresentations and omissions.



Prioritze Fraud Dectection and Prevention

Mon, 10 Aug 2009 15:00:00 GMT

Organization: Rea & Associates, Inc.

Hardly a day goes by without dire recession news hitting the airwaves. Consumer confidence is down and unemployment is up. Homes and retirement plans are generally worth less than they were a couple years ago."Intense financial pressure during the economic crisis has led to an increase of fraud," according to a survey done earlier this year by the Association of Certified Fraud Examiners. Survey respondents expect fraud to continue to rise in coming months - especially cases of employee embezzlement.



IRS Rules that Developer Can Deduct Payments in Lieu of Taxes (PILOTs)

Mon, 10 Aug 2009 15:00:00 GMT

Author: Michael S. Evans and Jed S. Beardsley
Organization: Baker Donelson

Local governments frequently encourage economic development by acquiring property with public bonds, then leasing the property to real estate developers. Because the local government owns the property, it is exempt from real property taxes. The local government can preserve its tax base by requiring the real estate developer to make payments in lieu of taxes, called PILOTs, to the local government. What has not been clear is whether the federal income tax deduction for real property taxes applies to PILOTs.



IRS Completes Process of Declaring Selected Pre-2007 § 403(b) Guidance Obsolete

Mon, 10 Aug 2009 15:00:00 GMT

Author: W. Mark Smith and Vanessa A. Scott
Organization: Sutherland Asbill & Brennan LLP

In Revenue Ruling 2009-18, to be published in the July 6, 2009, Internal Revenue Bulletin, the Internal Revenue Service (IRS) completed the process of declaring obsolete certain guidance under § 403(b) issued prior to the 2007 promulgation of new regulations under that provision. The preamble to the 2007 regulations listed various guidance documents, issued since the prior § 403(b) regulations were promulgated in 1964, that the IRS proposed either (i) to declare obsolete in light of intervening statutory changes or (ii) to preserve following the 2007 regulations. Having received no comments on the proposal, the IRS acted in Rev. Rul. 2009-18 on the basis proposed.



Applications Open for Tribal Economic Development Bonds

Mon, 10 Aug 2009 15:00:00 GMT

Author: Nancy M. Lashnits, Roxann S. Gallagher and Zachary D. Sakas
Organization: Ballard Spahr LLP

On June 23, 2009, the Internal Revenue Service released Notice 2009-51 to solicit applications for allocations of the $2 billion national bond volume limitation for issuance of Tribal Economic Development Bonds (TEDBs) pursuant to the newly created Section 7871(f) of the Internal Revenue Code of 1986, as amended. TEDBs create new economic development opportunities for tribes by expanding the types of projects they can finance with tax-exempt bonds.



Foreign Account Disclosure

Mon, 6 Jul 2009 15:00:00 GMT

Organization: Cooley Godward Kronish LLP

Recent informal guidance from the IRS suggests that certain venture capital and private equity funds—and certain fund LPs and GPs—may be required to file Treasury Department Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts) with respect to their ownership interests in such funds. Affected funds may wish to notify their U.S. LPs about this potential filing obligation (although funds are not legally obligated to notify LPs). The filing deadline for the 2008 calendar year is June 30, 2009.



Challenging Times: Rethinking and Reshaping Estate Plans in New Tax and Economic Environments

Mon, 6 Jul 2009 15:00:00 GMT

Author: Barry L. Small and Laura E. Stegossi
Organization: Duane Morris LLP

Recent changes to the estate, gift and generation-skipping transfer (GST) tax systems, along with historically low interest rates and depressed asset values, may have a significant impact on carefully crafted estate plans. However, these challenging economic times may provide unprecedented planning opportunities. Now is the time for individuals to review their current estate plans and contemplated transactions to ensure that their goals and needs are achieved.



Justify Salaries with Facts and Data

Mon, 6 Jul 2009 15:00:00 GMT

Organization: Rea & Associates, Inc.

The IRS sometimes challenges the compensation of corporate shareholder-employees and decides the amounts are too high or too low. If auditors determine your salary is unreasonable, you company could be hit with back taxes and penalties. Here are two cases of taxpayers who contested IRS salary determinations in court, along with some ways to justify a reasonable salary.



Waiting For a Tax Garnishment - Ouch That Hurts!

Mon, 6 Jul 2009 15:00:00 GMT

Author: Anthony Cannon
Organization: Do It Yourself Tax Relief

One of the worst things that can happen if you are a tax debtor is an IRS garnishment or tax levy. Tax debtors can go for years before IRS collection activities finally catch up to them. It seems the sluggish bureaucracy lulls one into a false sense of security. While the delay from tax due to tax levy may be sluggish, the action of a tax garnishment is not. In fact, it may be the harshest financial event you ever experience and should be avoided if at all possible.



IRS Rules on Partnerships Converting to S Corporations

Mon, 8 Jun 2009 15:00:00 GMT

Organization: Grant Thornton LLP

The IRS has ruled in Rev. Rul. 2009-15 that an entity classified as a partnership for U.S. federal tax purposes that becomes a corporation may elect to be an S corporation without a deemed short year as a C corporation.



The Truth About Using Retirement Funds to Start Your Own Business

Mon, 8 Jun 2009 15:00:00 GMT

Author: Jamie J. Raskulinecz, CPM
Organization: Entrust Northeast, LLC

We routinely have clients and prospective clients ask us how they can start or buy their own business using retirement plans.  More often than not, they have heard about this either from a franchise seller or from companies that heavily promote this technique.



Exchange Expenses: How to Find the Hidden Boot in a 1031 Exchange

Mon, 8 Jun 2009 15:00:00 GMT

Author: Janna Shearman
Organization: First American Exchange Company

Many investors know that in order to have a completely tax deferred 1031 exchange, they need to acquire replacement property that is equal or greater in value compared to what was sold, and they need to use up all of their cash.  What is not understood as well is that using exchange money to pay for certain expenses at a closing can result in the transaction being partially taxable.



The FBAR Form: The Government's Big Hammer

Mon, 8 Jun 2009 15:00:00 GMT

Author: Jacob Stein, Esq.
Organization: Boldra, Klueger and Stein, LLP

Last time we discussed the new Voluntary Disclosure program rolled out by the Treasury beginning of April and expiring on September 22, 2009.  The goal of this program is to bring into the fold undisclosed foreign bank accounts and with them, a lot of tax revenue.  The voluntary disclosure program is confiscatory and will be a tough pill to swallow for many taxpayers with undisclosed accounts.  As of our last writing, we have the following update from Switzerland: UBS will not be allowed to disclose any more names.  That is, at least, the word on Bahnhofstrasse.



IRS Proposes Income Allocation Regulations for Transfers of Partnership Interests

Mon, 4 May 2009 15:00:00 GMT

Author: Wayne R. Strasbaugh
Organization: Ballard Spahr LLP

The IRS has released proposed regulations regarding income allocation when partnership interests are transferred or partners have varying interests for other reasons.  The long-awaited proposed regulations, issued April 13, principally provide guidance under Section 706(d), a provision added to the Code by the Deficit Reduction Act of 1984. They will take effect upon adoption, but no earlier than the first partnership taxable year beginning in 2010.



Red Flag Rules Try to Take a Bite Out of Identity Theft

Mon, 4 May 2009 15:00:00 GMT

Organization: Rea & Associates, Inc.

May 1, 2009, becomes a red letter day for the Red Flag Rules. And if your business operates with credit, it's an important day for you, too. The rules result from 2003 legislation and require businesses to create policies to prevent identity theft.



FSP Addresses Inactive Markets and Distressed Transactions

Mon, 4 May 2009 15:00:00 GMT

Organization: Grant Thornton LLP

The Board recently issued FASB Staff Position (FSP) FAS 157-4, "Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly."



On Guard! 5 Accounting Missteps to Watch For

Mon, 4 May 2009 15:00:00 GMT

Author: Rose Hightower
Organization: IDEAL Consulting Solutions International, LLC

Whether you call it creative accounting, accounting irregularities or accounting missteps, you need to be on guard!  "On guard!" as in finding out about the things that you don't know.  When all's said and done, it's those things that you don't know you need to know about which can harm your business.



IRS Audit - Don't Panic

Mon, 6 Apr 2009 15:00:00 GMT

Author: Manuel Davis, Jr.
Organization: BackTaxesHelp.com

IRS audit. Are there two words in the English language that can instill fear such as those? If the idea of an audit doesn't scare you there is something wrong with you. The phrase literally conjures up thoughts of going broke and years in prison. We have been conditioned to think that the IRS audit is the end of the world. In reality, you chances of being audited by the IRS are pretty slim. The statistics state that 80% of all tax payers will be audited so even though it is unlikely it will be you, understanding audits is important.



The 5 Most Overlooked Tax Deductions

Mon, 6 Apr 2009 15:00:00 GMT

Author: Al Lewis
Organization: CPA Resource

In order to minimize your tax bill and maximize your tax refund, you need to make sure to take advantage of every deduction and credit you're entitled to. To make this a little easier for you, we've highlighted 5 deductions that most taxpayers are entitled to take, but often overlook when filing their tax returns.



A Deeper Look at Tax Issues for Domestic Partners and Same Sex Couples

Mon, 6 Apr 2009 15:00:00 GMT

Organization: Roni Lynn Deutch, A Professional Tax Corporations

As Benjamin Franklin famously said, "nothing in this world is sure but death and taxes". Unfortunately, this is more than true for domestic parents and same-sex couples all across the country. What many people do not realize is that there are significant tax disadvantages for non-married couples that nearly all gay couples face every year. Even though dozens of states and over 50% of Fortune 500 companies offer domestic couple benefits, the federal government does not offer any.



Inheritance Tax Planning

Mon, 6 Apr 2009 15:00:00 GMT

Author: Lloyd Hester
Organization: CPA Resource

Inheritance tax planning is very essential if you really want that your estate goes in the hands of whom you want to. This demands a very strong and calculated financial planning and if all ends meet in a proper way, your family will be free from any further finance problems in future. Now, isn't that what you want?



New Tax Breaks and Burdens for Business

Thu, 1 Jan 1970 00:00:00 GMT

Organization: Rea & Associates, Inc.

The latest economic stimulus law, enacted on February 17, 2009, contains tax incentives designed to get the stagnant U.S. economy moving again. Here are 10 significant changes that might have an impact on your business.



IRS and DOL Issue Guidance on COBRA Subsidy

Thu, 1 Jan 1970 00:00:00 GMT

Author: Kari Knight Stevents
Organization: Blank Rome LLP

The IRS and DOL have issued initial guidance on the government-funded COBRA subsidy resulting from the passage of the American Recovery and Reinvestment Act of 2009 ("Act"). Under the Act, the federal government will subsidize, for up to nine months from termination of employment or enactment (if later), 65% of the COBRA premium for involuntarily terminated employees and their families who elect COBRA coverage under an employer-sponsored group healthcare plan.



Like Kind Exchanges Involving Vacation Homes - Updated

Thu, 1 Jan 1970 00:00:00 GMT

Organization: Stuart T. Freeland

In February, 2008, the Internal Revenue Service issued Rev. Proc. 2008-16, 2008 IRB 547, which provides a safe harbor that, when satisfied, assures a party to an exchange that the requirement in Section 1031(a)(1) that the an exchange property be held for productive use in a trade or business or for investment has been satisfied.



Madoff Fraud Response Team - Tax Implications and Opportunities for Defrauded Investors

Thu, 1 Jan 1970 00:00:00 GMT

Author: Paul A. DiSangro
Organization: Nixon Peabody LLP

While investor losses from the Madoff fraud appear to be substantial and in some cases catastrophic, potential tax benefits should permit some recovery from the IRS. With thoughtful and timely planning, investors should have the opportunity to harvest their losses and obtain tax refunds. The favorable tax aspects include the following:



Stimulus Tax Bill Advances in House and Senate

Mon, 9 Feb 2009 16:00:00 GMT

Organization: Grant Thornton LLP

The House has voted 244 to 188 to approve a stimulus bill (H.R. 1) with a $275 billion tax package, and the Senate Finance Committee has passed its own slightly larger tax title that will soon move to the Senate floor.  The House did not modify the tax title passed by the House Ways and Means Committee before its vote. Senate tax writers, however, made several changes to their original tax package during markup, including the addition of alternative minimum tax relief for 2009.



Market Volatility and Your 401(k)

Mon, 9 Feb 2009 16:00:00 GMT

Organization: Lillian Dikovitsky

It is easy to get caught up in all of the headlines lately regarding the economy and the stock market. But it is important to remember that during market volatility, you may need to remain steadfast in your investment strategy. Don't make 401(k) decisions based on short-term trends or emotions. Don't abandon your investment strategy. If you try to play catch-up later, it can result in even greater risk. The best approach is to maintain a long-term disciplined investment approach. Here are some principles to investing in your 401(k) in a volatile market.



Having Trouble Staying Current With Payroll Taxes?

Mon, 9 Feb 2009 16:00:00 GMT

Author: Mark Fearon
Organization: Rea & Associates, Inc.

Do you process your own payroll? If so, do you ever find it challenging to stay current on the filing and payment of your payroll taxes? If so, you are not alone. The Government Accountability Office recently estimated that 1.6 million businesses are behind on paying their payroll taxes. It estimates that, collectively, these businesses owe approximately $58 billion in payroll taxes.



Protecting Madoff Investors

Mon, 9 Feb 2009 16:00:00 GMT

Author: Jacob Stein, Esq.
Organization: Boldra, Klueger and Stein, LLP

It is bad enough that most of the people who invested with Madoff will lose a significant amount of their wealth. It is also possible, in fact, likely, that many of the investors who received distributions from Madoff or pulled their money out in time may have to return the money.  When the inevitable bankruptcy engulfs Bernard L. Madoff Investment Securities, the bankruptcy trustee will have the ability to require a return of previously paid distributions to share them with other victims of the Ponzi scheme.



Surviving the Perfect Financial Storm

Mon, 12 Jan 2009 16:00:00 GMT

Author: Craig Tractenberg
Organization: Nixon Peabody LLP

The credit crunch has affected all retail industry and consumer discretionary spending. Franchisors need to take bold steps to survive, much less prosper, during this storm. Banks are reducing their customers' borrowing capacity because of the need for banks to have sufficient capital to support the potential draws on their credit lines. Here are some strategies that can make a difference for both franchisors and franchisees.



The Upside of Charitable Giving in a Downturned Economy

Mon, 12 Jan 2009 16:00:00 GMT

Author: Stephen H. Gariepy
Organization: Hahn Loeser & Parks, LLP

Defying gravity, some charitable giving plans can levitate or even sky rocket in a low interest rate environment or sluggish economy. With a little creativity, donors can achieve their philanthropic, economic and tax goals, even in times of economic uncertainty. Among the star performers are Charitable Gift Annuities, Charitable Remainder Trusts, Personal Residence Remainder Gifts, Charitable Lead Trusts and IRA Charitable Rollovers.



Speed Up Payment on Receivables

Mon, 12 Jan 2009 16:00:00 GMT

Organization: Rea & Associates, Inc.

Receivables don't have much value if they aren't turned into cash. Your company really needs to keep tight control on its invoices outstanding so you can get an accurate picture of the receivables situation and take steps to improve the turnover of those accounts.



Rev. Proc. Provides Temporary Guidance for REIT Distributions of Stock

Mon, 12 Jan 2009 16:00:00 GMT

Organization: Grant Thornton LLP

New guidance issued by the IRS (Rev. Proc. 2008-68) provides that a real estate investment trust may in certain circumstances treat distributions of its stock to its shareholders as a distribution pursuant to Section 301.



Barack Obama Won the Election: Tax Planning to Consider Now

Mon, 8 Dec 2008 16:00:00 GMT

Organization: Baker Donelson

History was made in the 2008 presidential election. Congratulations to President-elect Barack Obama on this momentous occasion, whose campaign was focused upon the need for change. However, not to be lost among these congratulatory remarks is the fact that the Obama administration will push Congress during 2009 for changes in our federal tax system consistent with his Comprehensive Tax Plan. Whether all or just parts of the plan are enacted is too early to forecast. However, there certainly will be both winners and losers from any combination of these changes.



9 Tax Tips for Navigating the Credit Crunch and Slow Economy

Mon, 8 Dec 2008 16:00:00 GMT

Organization: Grant Thornton LLP

The down economy and credit crunch will force many businesses to look for stategies that reduce expenses and raise cash. Managing your tax burden is one area where appropriate planning and action can put much-needed cash back in your pocket. Your best approach depends on your industry and the structure of your business. The following tax tips are intended to be general observations and to highlight ideas that may be helpful. Facts and circumstances vary, so check with Grant Thornton for help in determining how these planning opportunities may apply in your situation.



FASB Updates Key Accounting Standard

Mon, 8 Dec 2008 16:00:00 GMT

Author: Philip Tilton
Organization: Briggs and Morgan

Revisions to a key U.S. accounting standard governing business combinations have great potential to affect deal making, deal flow and overall strategy in 2009. In an effort to improve financial reporting and harmonize U.S. and international accounting standards, the Financial Accounting Standards Board recently updated Statement of Financial Accounting Standards No. 141 to emphasize fair value accounting. This is the first significant product of converging FASB and International Accounting Standards Board agendas for the benefit of global business.



Problems with Unpaid Owner Debt in Pass Through Entities

Mon, 8 Dec 2008 16:00:00 GMT

Organization: Stuart T. Freeland

Owners of pass through entities should be careful about the use of shareholder debt to capitalize a business because the failure of the company to repay or service the indebtedness can cause problems for both the owners and the company. If the company is a pass through entity, one of these problems is cancellation of indebtedness income attributed to the company if the debt is forgiven or the company is dissolved without repaying the debt in accordance with section 61(a)(12) of the Internal Revenue Code of 1986 as amended. Section 108(a) of the code provides an exemption from recognition of C.O.D. income to bankrupt debtors and to insolvent debtors to the extent of their insolvency; however, as described below, it does not provide complete protection, and there is a price to be paid for the protection that is provided.



A Higher Standard: Complying With 'FIN 48'

Mon, 10 Nov 2008 16:00:00 GMT

Organization: Rea & Associates, Inc.

Since the implementation of FIN 48 — an accounting standard dealing with uncertain tax positions — numerous questions and issues have arisen. We'll answer some of them but first, here is a little background information.



IRS Proposes Regulations on Discharges of Partnership Debt

Mon, 10 Nov 2008 16:00:00 GMT

Author: Wayne R. Strasbaugh
Organization: Ballard Spahr LLP

On October 30, the IRS released proposed regulations implementing a 2004 statutory change to the federal income tax treatment of discharges of partnership debt. Under the statutory provision, Internal Revenue Code § 108(e)(8), partnerships that issue equity interests to their creditors in exchange for release of liabilities are deemed to satisfy the discharged debt with an amount equal to the fair market value of the interests issued. The remaining portion of the discharged debt is recognized as ordinary income by the partnership and allocated among its partners in accordance with the percentage interests that they held immediately before the debt was discharged. The term fair market value is undefined in the code and regulatory guidance on its determination would be helpful to partnerships engaged in negotiating workout arrangements with their creditors in the current financial crisis.



A New Business Entity May Give Charitable Ventures Access to More Financing Opportunities

Mon, 10 Nov 2008 16:00:00 GMT

Author: Susan Cobb, Megan Christiansen and Sarah Barris
Organization: Blank Rome LLP

In this time of financial crisis, charitable ventures may want to consider utilizing a new business structure — a Low-Profit Limited Liability Company to access additional financing opportunities. An L3C is a new type of limited liability company that is a for-profit entity formed to engage in socially beneficial activities.



SEC Revises the Cross-Border Tender and Exchange Offer Rules

Mon, 10 Nov 2008 16:00:00 GMT

Author: Lloyd H. Spencer
Organization: Nixon Peabody LLP

The Securities and Exchange Commission recently voted to amend its rules that govern cross-border business combinations. In an effort to encourage bidders to include U.S. stockholders in cross-border transactions, the commission, in 1999, adopted exemptive rules in connection with tender offers and registrations under the Securities Act of 1933, as amended, for cross-border tender and exchange offers, business combinations and rights offerings relating to the securities of foreign companies. The purpose of the exemptions is to address conflicts between U.S. and foreign regulation, thereby facilitating the inclusion of U.S. investors in cross-border transactions.



Emergency Economic Act Implements Major Tax Changes and Tax Relief

Mon, 13 Oct 2008 15:00:00 GMT

Organization: Baker Donelson

On October 3, 2008, the President signed The Emergency Economic Stabilization Act of 2008 into law. The act contains three distinct divisions: Division A, which addresses the current economic crisis, provides for a troubled assets relief program to stabilize the economy, and contains tax reform and relief provisions; Division B, which provides for energy improvements, extensions and modifications of energy tax credits; and Division C, which contains alternative minimum tax relief, extensions of expiring individual and business tax provisions, disaster tax relief and other miscellaneous tax provisions.



Ready or Not, Here Comes IFRS

Mon, 13 Oct 2008 15:00:00 GMT

Author: Jeff Tucker, CPA, Shareholder/Director of Audit Services
Organization: Rea & Associates, Inc.

The move away from U.S. Generally Accepted Accounting Principles to International Financial Reporting Standards is becoming a reality more quickly than once anticipated. CFOs should start thinking now about how IFRS will affect their companies so they'll be ready when it comes.



Economic Downturn a Boon for Asset Protection

Mon, 13 Oct 2008 15:00:00 GMT

Author: Jacob Stein, Esq.
Organization: Boldra, Klueger and Stein, LLP

The economic woes that have already impacted so many businesses are a boon for those of us who practice in the area of asset protection. About one year ago the flood gates opened and mortgage bankers, mortgage brokers and real estate developers poured in. There is still a steady flow of real estate developers and investors who have signed personal guarantees on bank loans. Now that their properties are upside-down and they are looking to default on the loans, the personal guarantees are becoming a major problem.