The Internal Revenue Service issued three sets of regulations last week that address issues of disguised sales of property by or to a partnership and allocations of excess nonrecourse liabilities to partners. Alistair Nevius, The Tax Adviser’s editor-in-chief, explains these regulations. To read the full article in The Tax Adviser, click: Disguised-Sale and Partnership Liability Allocation Rules Issued.
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Golden parachute payments can lead to significant tax consequences for both the company and the individual. Lucas Parris, senior member of Mercer Capital’s Financial Reporting Valuation Group, discusses strategies to mitigate these tax risks to reduce the likelihood of additional excise taxes. To read the full article in Mercer Capital’s Financial Reporting Blog, click: Noncompete Agreements for Section 280G Compliance. This article is republished from Mercer Capital’s Financial Reporting Blog. It is reprinted with permission. To subscribe to the blog, visit: http://mercercapital.com/category/financialreportingblog/.
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IRS Wins, Business Founders and their Families Lose Is cheap debt good for closely held families? Are closely held business overleveraged? Are FLP discounts about to come to an end? Why aren’t business founders and their families doing more to counter the proposed regulations that would target family business transfers? What should valuation professionals do in this environment? Dr. Sheeler answers these questions and argues in favor of a “holistic approach to wealth building of alternative assets held by these families by more dynamic leaders in these professions,” and suggests considering exit strategies that preserve family businesses; the nimble and…
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Federal Agencies Plan Amendments to Form 5500 Employee benefit plans would face new reporting requirements under extensive changes to Form 5500, Annual Return/Report of Employee Benefit Plan, proposed by the federal government last month. The federal agencies are also proposing to require all group health plans to file Form 5500 along with a new Schedule J. Sally P. Schreiber, Tax Adviser senior editor, explains. To read the full article in The Tax Adviser, click: Agencies Propose Amendments to Employee Benefit Plan Reporting.
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Worker Classification in the Gig Economy With one-third or more of Americans working as freelancers, the traditional factors for classifying workers as employees or independent contractors are becoming obsolete. Here’s what tax practitioners need to know about changing employment relationships in the gig economy. To read the full article in The Tax Adviser, click: Worker Classification and the Evolving Service Delivery Model.
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Forum Discusses Future State of the IRS Nina Olson, the national taxpayer advocate, heard from tax practitioners and taxpayer groups on how the Internal Revenue Service can modernize its taxpayer services. Troy Lewis, chair of the AICPA’s Tax Executive Committee, called for better training and technology and IRS cooperation with stakeholders. Ann Marie Maloney, AICPA communications manager, reports. To read the full article in the Journal of Accountancy, click: IRS Future State is Not a One Size Fits All.
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Don’t Let Clients Fall into This Social Security Tax Trap Social Security recipients may face disproportionately high tax rates because of the way the IRS calculates income with respect to Social Security. So-called combined income includes adjusted gross income as well as tax-free income, half of Social Security income and some add-ons. Paul Norr, certified financial planner with Bucks County Financial Planning Group, discusses how advisers can help clients manage the tax bite in several ways. To read the full article in Financial Planning, click: Social Security: Keeping Exorbitant Tax Rates at Bay.
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The Case of Trademarks and Brands Since the adoption of fair value accounting governed by SFAS 141 (in 2001) and IFRS 3 (in 2004), hundreds of thousands of different intangible assets have been valued, audited, and reported in financial statements of public companies all over the world. After fifteen years of fair value accounting, the debate about the accuracy of such values and their relevance for readers is no less controversial than at its beginning. This is a pity because, in its essence, fair value data is an excellent resource for corporate finance professionals to understand more about the value…
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Nuances Valuing and Normalizing an Auto Dealership There are many reasons an auto dealership may require a business valuation; buy-sell agreements, shareholder disputes, employee stock ownership plans (ESOPs), and estate planning and gifting strategies. In many instances, there will be an opposing party that questions the validity of the final value, whether it be a dissenting stockholder or the Internal Revenue Service. It is imperative the dealer be aware of the basic characteristics of a valuation so the dealer is able to make sure the valuation analyst is using sound judgments and that, if challenged, the value will be defensible.
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Here are the IRS’s Top “Dirty Dozen” Tax Scams for 2016 The Internal Revenue Service released its annual list of the “dirty dozen” worst tax scams, starting with identity theft and winding up with frivolous tax arguments. Sally P. Schreiber, senior editor of JofA, lists what taxpayers and practitioners need to watch out for. To read the full article in the Journal of Accountancy, click: 2016’s Dirty Dozen Tax Scams.
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Settlement of a Valuation Case Before the U.S. Tax Court This article discusses issues found in a case that is pending before the United States Tax Court (the “Tax Court”). The specific issues relate to issues regarding sales of closely held stock to grantor trusts in exchange for promissory notes. Specifically, the IRS took issue with two grantor sale trust transactions. The two cases were filed on December 26, 2013, as (1) Estate of Donald Woelbing v. Commissioner, Docket No. 30261-13, and (2) Estate of Marion Woelbing v. Commissioner, Docket No. 30260-13.
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How to Determine Household Workers’ Tax Status The so-called “nanny tax,” which actually applies to any form of household employment, can be complicated for clients to deal with. A client is treated as an employer if he or she pays more than $2,000 to a household worker per year. Whether that worker is an employee or an independent contractor depends on the nature of the business arrangement. Karen DeMasters, of Financial Advisor, explains how to handle this often tricky situation. To read the full article in Financial Advisor, click: Complicated Nanny Taxes Can Trip Up Families.
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T.C. Memo. 2015-249: A Checklist to Address 2036 Concerns The issue raised in Estate of Purdue v. Commissioner was whether the “decedent’s desire to have the marketable securities and the building interest held and managed as a family asset constituted a legitimate non-tax motive for the transfer of property to PFLLC.”
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Regulations Clarify Arm’s-Length Standard for Transfer-Pricing Rules The temporary regulations provide that the arm’s-length standard of Sec. 482 applies to all controlled transactions without regard to the form or character of the transactions, and they are particularly concerned with tax-favored transfers of assets outside the U.S. Jay L. Camillo, M.A. (international relations), Atlanta, and Kenneth P. Christman Jr., J.D., Washington, explain. To read the full article in The Tax Adviser, click: Temporary Regs. Under Sec. 482 Coordinate Transfer-Pricing Rules with Other Code.
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The IRS announced that it is withdrawing proposed regulations released last September that would have allowed charities to file information returns with the IRS and donors instead of providing contemporaneous written acknowledgments of charitable donations (REG-138344-13). Charities that elected to use the new procedure would have been required to obtain donors’ Social Security or other tax identification numbers (TINs) to complete the information return. Sally Schreiber, Tax Adviser senior editor, explains. To read the full article in The Tax Adviser, click: Controversial Charitable Donation Rules Withdrawn.
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When clients die, tax practitioners can take a number of steps on their clients’ individual income tax returns for their final year that can help the family save on taxes. Karen Cohen, CPA, explains what they are. To read the full article in The Tax Adviser, click: Taking Control of the Final Form 1040.
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How to Get Ready for the 2016 Filing Season As taxes get more complex, the to-do list to prepare for next year gets longer. Annette Nellen, Esq., CPA, CGMA, looks at recent developments and discusses what tax practitioners can do to get ready. To read the full article in The Tax Adviser, click: Preparing for the 2016 Filing Season.
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Filing Tax Returns Early May Foil Identity Thieves People may be able to thwart crooks targeting their tax refunds by filing their 2015 tax returns as early as possible. Russ Wiles for USA Today, explains how clients can get some of the supporting paperwork completed now so their returns can be filed as soon as the Internal Revenue Service starts accepting them. To read the full article in USA Today, click: To Beat Crooks to Your Tax Refund, Start Taxes Now.
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This article covers recent developments in employee benefits, examining, among other things, the Affordable Care Act’s complicated reporting requirements, the proposed fiduciary responsibility rules, and updated procedures to correct employee plan failures. Terry Richardson, principal, and Bryce Tholen, manager, both with PwC LLP in Dallas, take an in depth look at what’s involved.. To find out more on The Tax Adviser article, click: Current Developments in Employee Benefits and Compensation.
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IRS will Provide Tax ID Victims Copies of Fraudulent Returns The Internal Revenue Service announced procedures for victims of tax ID theft or their authorized representative to request copies of bogus returns filed by identity thieves. This change of policy will allow identity theft victims to better assess what personal information was compromised and how it was used. Paul Bonner, JofA senior editor, discusses the IRS posting instructions for requesting the returns and explaining the circumstances under which they will be disclosed. To find out more on this Journal of Accountancy article, click: Tax ID Theft Victims may Obtain Copies…