IRA’s Cannot Hold Sub-Chapter ‘S’ Stock: Trusts Can Though

To be taxed as an S corporation, a C corporation must elect S status by filing IRS Form 2553. Electing S status is fairly simple for a new or existing corporation, but meeting the requirements for S status can be more complex when the C corporation is not owned by an individual. Eligibility is based on §1361, which states only a “small…

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Protective Tax Refund Claim

Protective refund claims are filed to preserve a taxpayer’s right to claim a refund when the taxpayer’s right to the refund is contingent on future events like future litigation, and may not be determinable until after the statute of limitations expires. Without a protective refund claim, taxpayers will only have a three-year statute of limitations in which to seek a refund. For example as…

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Heavy Highway Vehicle Use Tax Return (IRS Form 2290) Deadline Extended Until 11/3011

The Internal Revenue Service advised truckers and other owners of heavy highway vehicles that their next federal highway use tax return, usually due Aug. 31, will instead be due on Nov. 30, 2011. In general, the highway use tax applies to trucks, truck tractors and buses with a gross taxable weight of 55,000 pounds or…

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Time Limit to File IRS Innocent Spouse Claim

The Internal Revenue Service announced that it will extend help to more innocent spouses by eliminating the two-year time limit that now applies to certain relief requests under IRC 6015(f). The IRS launched a thorough review of the equitable relief provisions of the innocent spouse program earlier this year. Policy and program changes with respect…

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Domestic Partners: Income Reporting

The IRS issued three rulings in 2010 to address how the income of registered domestic partners in California should be reported and taxed for both state and federal income tax purposes. In Chief Counsel Advice 201021050, the IRS determined that for tax years beginning after December 31, 2006, registered domestic partners in California are to report one-half of the community income,…

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The Use of Quick Books by IRS Auditors

In January 2011 IRS agents began to audit Quickbooks data files and will require a copy of your QuickBooks data, if used, to help them with the audit. YIKES! These are some of my suggestions to prepare for a tax audit involving Quickbooks. Make an annual backup that matches the tax return and store it away offsite to be…

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“NOL Carry Back Allowed to Reduce Outstanding Tax Liability”

Check out what I read in a recent edition of the NATP’s TaxPro Weekly publication about Net Operating Loss Carry backs (NOL)…. “Chief Counsel Advice (CCA) 201049035 cleared the air regarding whether there is any limitation period applicable to reducing a taxpayer’s tax liability based on a net operating loss (NOL) carry back. Generally, a claim for…

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Characterizing Partner Distributions

Generally if payments are in exchange for partnership property, the amount received in excess of the partner’s outside basis in his/her partnership interest is taxed as capital gain. However if the payments represent a distributive share of partnership income or are deemed to be guaranteed payments, the payments are taxed as ordinary income. According to Tax Court Memo 2009-243 Wallis v. Commissioner, retirement payments to…

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32,000 Taxpayers Adversely Affected: Did Not Receive Proper IRS Tax Lien Notification

I had to read this report twice today. Check it out the IRS is not always following it’s own procedures or governing statutes when it comes to properly issuing tax liens. What? Really? How can this be? Before anyone gets too mad, I know as a matter of fact there are good hard working people…

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