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IRS Announces 2015 Tax Adjustments

  The IRS has released the annual inflation adjustments for a number of provisions for tax year 2015, including tax rate schedules, tax tables, and cost of living adjustments for some items. In total, the IRS posted more than 40 updates. You can read them in full here. You can also find an excellent overview of all the changes at Forbes.com through the link below. ...

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Year-End Smart Small Business Tax Moves

  With just six more weeks to go until 2015 is rung in, small business owners and managers can take simple steps now to minimize their tax bill next April, according to business advisory services firm Skoda Minotti. Below are five ideas small business owners and managers can consider from now until December 31: Make those needed office or plant repairs. For the most part, expenses for minor business pr ...

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Taxing the Cloud

  In the last several years, at least within Internet circles, everyone has been talking about the cloud. Ask ten different people and you’ll get ten different answers, but the truth is, no one really knows what or where the cloud is. That’s okay. Lack of concrete definitions and clarity never stopped government from taxing something or in this case nothing. As best can be explained, the cloud is an In ...

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CPAs File Class Action Against IRS

  Two CPAs in Washington D.C. have filed a class action lawsuit against the IRS for requiring a yearly registration and related fee in order to maintain a preparer tax identification number (PTIN). The suit, which involves 700,000 practitioners, seeks to recover $150 million in fees that the IRS has collected since the regulation passed in 2010. Four years ago, the IRS put the new rule into effect as a ...

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AICPA Protests IRS Regulation for Tax Preparers

  The American Institute of CPAs (AICPA) recently sent a letter to the IRS calling a proposed “voluntary” certification program for unenrolled tax return preparers “unlawful and improper”. In a recent ruling, Loving, No. 13-5061 (D.C. Cir. 2/11/14), it was held that the IRS does not have the statutory authority to regulate tax return preparers. In the aftermath, IRS Commissioner, John Koskinen, stated ...

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77,000 Banks Turn Over Data under FATCA

  In a windfall for the IRS, 77,000 foreign banks have turned over data on American account holders as part of the Foreign Account Tax Compliance Act (FATCA). The U.S. devised tax law with global reach requires all foreign banks to submit full data on all American accounts with a balance of $50,000 or more. Financial institutions that are non-compliant risk being frozen out of U.S. markets and a 30 per ...

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Hawaii’s 367,000 Percent Marginal Tax Rate—That’s not a misprint.

Believe it or not, Hawaii’s top marginal tax rate is 367,100 percent. That makes France’s 75 percent and 100 percent tax rates seem like a downright bargain. A new paper released by the University of Hawaii at Hilo, Texas Tech University and The Institute for Business and Finance Research details how state tax laws in Hawaii create a tax cliff of epic proportions where a single extra dollar in income can tr ...

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IRS Grants Relief To Small Estates

(…and possibly their valuation consultant?) Rev. Proc. 2014-18 provides a simplified method for certain taxpayers to obtain an extension to elect portability under Code Sec. 2010(c)(5)(A). This method allows a widow or widower to apply a deceased spouses unused exclusion (DSUE) amount to the surviving spouse's subsequent transfers during life or at death. In these situations, the ability to file and use the ...

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IRS Names Bitcoin Property, Not Currency

Where the IRS stands on the classification of Bitcoin and the purchases made with it has been ambiguous. There are a lot of questions surrounding the virtual currency, not the least of which is how it factors in tax matters. While Bitcoin operates like real currency in some situations, the fact still stands that it has no legal recognition as currency in any jurisdiction. In spite of this contradiction, the ...

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U.S. Department of Justice Pursues 20K Tax Cheats Shielded by Credit Suisse

You could call it UBS, Part II.  Back in 2009, the U.S. Department of Justice (DOJ) uncovered 4,700 names of American citizens avoiding taxes with the help of Switzerland’s largest bank, UBS.  Most notably, Beanie Babies creator and billionaire, Ty Warner, was caught in the sting that cost UBS $780 million in fines and netted the IRS $6 billion in taxes and fines from a voluntary disclosure program for petr ...

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Top Five Things Missed in Valuing Equity in Most Asset Holding Entities

The days of applying Mandelbaum and referencing a few IPO and restricted stock studies are over. This article addresses what is often omitted from most asset holding entity valuation reports. By failing to include issues like the ones outlined, the resulting adjustments are less empirical and more a "guesstimate". Valuation practitioners and their advisory clients have a duty to the users of our reports to ...

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IRS Loses Bid to Mandate Continuing Ed for Tax Preparers

While CPAs and tax attorneys must currently meet professional standards for tax preparation and other services, a recent decision by the U.S. Court of Appeals for the District of Columbia has ruled that the IRS has no authority to force continuing education or similar standards on tax preparers.  The case stems from a 2011 IRS proposal of a system that would have established tax preparer registration and re ...

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16 Mistakes to Avoid in Valuations, Part 2

According to Tax Court decisions Part 2 of this article examines the remaining eight most common mistakes made in valuation, based on U.S. Tax Court decisions. Court rulings may be right or wrong, but without taking sides, this article confirms the truism that experience is the best teacher. . ...

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Tax Issues and Intellectual Property

Income from intellectual property continues to be an increasing contributor to economic growth.  Too often, however, the creator and financial advisor find themselves in a gray area when it comes to the changing tax laws surrounding patents and copyrights.  Proper planning and a clear understanding of the most recent developments are essential when it comes to affecting the creator’s tax liability.  In a th ...

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Beyond the GAAP Income Statement

  More often than not, a company’s income statement isn’t a definitive disclosure of its revenue and expenses that investors can interpret clearly, easily and accurately.  This is largely because income and expenses, as classified under GAAP, can be difficult to define.  According to McKinsey & Company, savvy investors often have to reengineer statements to come up with figures that they’re even re ...

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Transferring High-Value Collectibles to the Next Generation

Fine art collectors and estate taxes Tax and estate planning is complex and constantly evolving. Choosing the appropriate strategy depends on the specific circumstances involved. It is critical for tax professionals, estate planning attorneys, and valuation analysts to understand the client’s precise needs and work collaboratively to achieve their stated goals. ...

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Beating the Market

While the idea of beating the market is more suited to the financial investment sector, McKinsey & Company recently applied some of the same principles to business strategy.  In a review of 3,000 large nonfinancial companies, this overview examines the players that avoid profit depletion and maximize value creation, even during economic downturns.  Tried and true business practices are tested as the num ...

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Tax Court Says IRS Standards Too High for Qualified Appraisal

In Friedberg v. Commissioner, the Tax Court rejected the claim by the IRS that the appraisal submitted by the taxpayer was not qualified because it wasn’t reliable, and improperly applied the methodology to value a property.  In the Tax Court’s ruling, it stated that the appraisal was “qualified” as defined in Treasury Regulation 1.170A-13(c)(3) and rejected the IRS’s attempt to disqualify the appraiser.  I ...

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Multi-national Companies Face Tax Risk with Transfer Pricing

How would you value a three-year old video game company that only has two games on the market and just 130 employees?  Apparently, the answer is $3 billion.  How does a valuation come up with this kind of number and more importantly, can it even be accurate?  Check out this Forbes.com profile of the deal between Japanese internet giant, Softbank, mobile online gamer, Gungho and the hot property, Supercell. ...

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Multi-National Companies Face Tax Risk with Transfer Pricing

Because of increased IRS audit procedures, multi-national corporations face great risk when it comes to transfer pricing from both a compliance and tax planning perspective.  The familiar multi-nationals like Amazon or Microsoft have made headlines regarding transfer pricing disputes and adjustments that run into the billions.  In an excellent article by the Journal of Accountancy, small, closely-held compa ...

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