Understanding the fractions rule can enable tax-exempt organizations to invest in partnerships that hold interests in debt-financed real property without being subject to the tax on unrelated business income under Section 512. Michael Hoffman, CPA, Washington, explains. To read the full article in The Tax Advisor, click: What Proposed Regulations on the Fractions Rule Mean for Tax-Exempt Organizations.
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The Value of a Business is Not Always What it Seems (Part I of II) Personal goodwill is taxed at the individual capital gains tax rate, not the higher corporate income tax rate. Therefore, a credible personal goodwill calculation can amount to significant tax savings. One that is not adequately defensible invites risk of an audit. Every personal goodwill calculation is unique to each business, and the management interview is crucial. In this first of a two-part article, the author discusses when goodwill may need to be calculated and answers whether goodwill is only present if a key employee is…
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Although some types of entities have required tax years, not all do. Karen Messner helps you find out how to adopt a tax year other than a calendar year by planning ahead. To read the full article in the The Tax Adviser, click: Accounting Period Planning may Provide Preferred Year.
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Does the IRS or Anyone Care? (Part II of II) Part one of this article presented the “current method” and “option pricing method” (OPM) for allocating value to common stock for 409a valuations, and how these two methods differ in pricing of common stock. Part two examines the implied changes made by OPM and how it affects stakeholders. The article begins with a brief review of the key impacts on the valuation problem.
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Does the IRS or Anyone Care? (Part I of II) In part one of this two-part article, the author presents the two methods for allocating value to common stock for 409a valuations, and then show how they affect the pricing of common stock. By way of background, to meet FMV, the standard of value requires measuring value under the representation of a hypothetical willing buyer and a hypothetical willing seller, both with equal knowledge of the facts, that engage in an arm’s-length transfer. Yet, the Option Pricing Method (OPM) used to price common stock is based on a model of…
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Knowing what to do when your client receives a notice from the Internal Revenue Service can be a useful skill. Here are 13 pointers, from what to do when the IRS sends a notice of deficiency to whether to extend the statute of limitation. To read the full article in The Tax Adviser, click: IRS Notice Response Tips Everyone Should Know.
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The Internal Revenue Service issued a revenue procedure stating that it will once again issue letter rulings to taxpayers on whether a corporate reorganization in which debt is issued before a spinoff qualifies for nonrecognition treatment, which it has not ruled on since 2013. Sally Schreiber, senior editor for Tax Adviser, explains. To read the full article in The Tax Adviser, click: Leveraged Spinoffs Removed From IRS No-Ruling List.
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The statute of limitation defines the time within which the IRS may initiate an audit of a tax return. According to Sec. 6501(a), the statute of limitation for income tax returns is three years from the filing date of the return or the due date if the return is filed early. Marilyn Young discusses the issue. To read the full article in The Tax Adviser, click: The Statute of Limitation for Net Operating Losses.
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Clinical Services (Part I of IV) In the March/April 2017 issue of The Value Examiner, the authors gave a detailed description of how clinical services for physicians can be calculated. QuickRead is pleased to present an overview of this series, which will be presented in four parts. Please look for the more detailed analysis in The Value Examiner.
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IRS Division Releases List of Examination Issues The Internal Revenue Service Large Business and International Division has released a list of 13 issues that could be the focus of upcoming examinations. Tammy Whitehouse summarizes the guidance. To read the full article in Compliance Week, click: IRS Identifies 13 “Campaigns” for Tighter Compliance Scrutiny.
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Form 990-EZ, Short Form Return of Organization Exempt From Income Tax, which can be filed by small exempt organizations that meet certain gross receipts and assets tests, now has 29 help icons on various parts of the form that link to explanations, instructions and other resources, the Internal Revenue Service announced Tuesday. Sally Schreiber, JofA senior editor, explains. To read the full article in the Journal of Accountancy, click: New Form 990-EZ has Help Icons to Aid Exempt Organizations in Filing.
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The Internal Revenue Service issued its annual revenue procedure containing inflation-adjusted amounts for the 2017 tax year, affecting more than 50 Code provisions, as well as the new tax-rate tables for individuals and estates and trusts. Sally Schreiber, JofA senior editor, takes us through the revenue procedure. To read the full article in the Journal of Accountancy, click: IRS Issues 2017 Inflation Adjustments for Many Tax Provisions.
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As cybercriminals become more sophisticated and cast a wider net, tax practitioners should take a number of steps to protect themselves and their clients. Shannon Smith Retzke, Esq., explains that practitioners need to be careful about everything they do online as cybercriminals proliferate. To read the full article in The Tax Adviser, click: Phishing Scams Target Tax Professionals.
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More widespread use of videoconferencing could ease burdens on taxpayers who must meet in person with Internal Revenue Service Appeals personnel, but stringent privacy rules limit its use. Joseph Brophy, CPA, ABV, explores what it would take to expand this service. To read the full article in The Tax Adviser, click: Will Your Next Tax Appeal be a Videoconference?
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NACVA Present at the Congressional Hearings on the Proposed Regulations In 2015, the IRS issued proposed section 2704 regulations. The proposal would severely impact valuations of family held businesses that are the subject of gifts. On December 1, 2016, hearings were held in Congress regarding the impact of the proposed regulations. NACVA members, Peter Agrapides, Robert Grossman, and Mark Hanson testified at the hearing. In this article, Mr. Agrapides shares some of what occurred at the Congressional hearing.
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What NACVA is Doing to Protect Our Industry On August 4, 2016, the U.S. Treasury in lock-step with the Internal Revenue Service (IRS) published Proposed Treasury Regulation 163113-02 (hereafter, the “proposed regulations”) which intend to drastically alter the application of current Internal Revenue Code §2704, particularly as it applies to valuations of family owned businesses and family farms. The proposed Treasury regulations were long-expected and released nearly a year beyond when they were first intended to be released. However, along with the late release, the proposed regulations contain a very short fuse as they intend to put these new rules…
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By developing expertise in a new practice area, a CPA can increase income and become a more well-rounded professional. Robert M. Caplan, CPA, shares his helpful insights on how to help you and your practice. To read the full article in The Tax Adviser, click: How to Add a New Specialty to Your Practice.
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Demons and witches are scary, but the Creatures from Schedule C and the Overstatement Ogre can be downright terrifying, especially if they generate a notice from the Internal Revenue Service. Not sure who they are? Ann Marie Maloney, communications manager for AICPA, says, read on, if you dare. To read the full article in AICPA Insights, click: 5 Scary Tax Characters to Watch Out For.
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The IRS issued its annual updates of per-diem rates for use in substantiating certain business expenses taxpayers incur when traveling away from home on or after Oct. 1, 2016. Sally Schreiber, senior editor for JofA, explains. To read the full article in the Journal of Accountancy, click: IRS Issues 2016–2017 Special Per-Diem Rates for Travel.
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Under legislation enacted last year, the IRS is required to use private debt collection agencies to collect outstanding inactive tax liabilities. The IRS has awarded contracts to four companies to participate in the program in spring 2017. Sally Schreiber, JofA senior editor, explains what this all means. To read the full article in the Journal of Accountancy, click: Private Collection Agencies to Start Collecting Tax Debts in the Spring.