Grouping Passive Activities – IRS Disclosure Rules

As part of the IRS’s continuing efforts to require greater disclosure of tax positions and strategies on returns, it recently released new, mandatory disclosure rules for grouping passive activities. Rev. Proc. 2010-13 for the first time mandates that passive-activity groupings and regrouping, as required under Code Sec. 469 regulations, be disclosed on the taxpayer’s return.…

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*****S Corporations and Self Employment Tax

The American Jobs and Tax Loopholes Act, currently in Congress, would subject to Self Employment Taxes (FICA, FUTA, SUTA) all distributions from S Corporations which are “personal service” corporations. This is HUGE. This is not good for the small business owner. If you thought your taxes were high now you’re going to be in for…

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Hedge Funds Buy Tax Whistle-Blower Claims

New York Times, Whistle-Blowers Become Investment Option for Hedge Funds, by David Kocieniewski: Hedge funds have found a new market to invest in: whistle-blowers. Informants who turn in tax cheats have to wait years to get their share of any reward from the IRS’s recently expanded whistle-blower program. So hedge funds, private equity groups and…

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Therapeutic Discovery Tax Credit

The Treasury Department released new guidelines for applying for tax credits to fund promising new therapies, with small medical research firms eligible to receive up to $5 million each out of a $1 billion pie. The Therapeutic Discovery Credit was established as part of the health care reform bill. The program will provide tax credits…

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1099-S example involving multiple property owners

Question: Tax payer produced Form 1099-S from the sale of property she owned jointly with her brother. The Form 1099-S had the full amount reported to her and the brother did not receive a Form 1099-S. What should be done? Answer: The IRS explains in the General Instructions for Forms 1099, 1098, 3921, 3922, 5498,…

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Net Operating Loss Carry Back (NOL)

The key to determining the optimal carry back period may be correctly calculating the minimum tax credit net operating loss. The American Recovery and Reinvestment Act of 2009 (ARRA) permits an eligible small business to elect to increase the net operating loss (NOL) carry back period for a 2008 NOL from two years to five…

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Options Traders and taxes

The 1099-INT and 1099-DIV reported to the Internal Revenue Service details how much you received in interest and dividends through your account, while form 1099-B reported the total proceeds of your sales of stocks and bonds during the year. The amounts shown as interest and dividends should have tallied with your own records. But if…

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Cost Basis

On October 3, 2008, President George W. Bush signed the Emergency Economic Stabilization Act of 2008. Tucked away in the Act is a provision that moves the responsibility of basis determination from the shoulders of the taxpayer to the shoulders of the securities industry. After December 31, 2010, every broker that is required to file an information…

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Employer Misclassification of Workers

The IRS and Department of Labor have joined forces to reduce employer misclassification of workers. Last fall, the IRS began auditing 6,000 companies to determine if they have misclassified workers as independent contractors or properly classified the workers as employees and paid the required employment taxes. If an individual who has been treated as an…

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