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Tax Articles

IRS Form 7004 Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns.

If your corporation, partnership or estate operates on a calendar year basis the tax return is due March 15th which is coming up! If you need additional time to file tax returns for these entities file IRS Form 7004 which is an application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other…


IRS Notice 2008-1 Health Insurance Costs of 2% Shareholder-Employees

Under IRS Notice 2008-1, if you are an owner of more than 2% of an S corporation and you have a health insurance policy in your name with premiums paid by the corporation basically a plan has been established by the corporation for you the shareholder. This is not a self insured plan. It is simply health insurance premiums paid or furnished by…


Health Insurance Premium Tax Credit

The IRS has issued final regulations, TD 9611, relating to the health insurance premium tax credit enacted by the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010. These final regulations provide guidance to individuals related to employees who may enroll in eligible employer-sponsored coverage and who wish…


How to calculate stock and loan basis in an S Corp for tax purposes

If you are a shareholder of an S corporation you are responsible for keeping track of your own basis (investment value) in the S corporation of which you own shares. Tracking shareholder basis is usually not the S corporation’s responsibility. You can have stock basis and loan basis, adjusted each year based on the S corporation’s operations.  It is important to annually calculate…


IRS Targets – Don’t Be One.

In 2013, the IRS will focus the significant majority of their enforcement budget and subsequent activity in my opinion on three specific areas: 1. Abusive transactions and under reported income on partnership returns (IRS Form 1065). 2. Officer compensation as well as losses taken in excess of basis in Sub-chapter S Corporations (IRS Form 1120-S).…


Trafficking under IRC § 280E

The Internal Revenue Code is a complex beast.  In the lunacy of it all I’ve been asked to define ‘trafficking’ as it relates to 26 USC § 280E – Expenditures in connection with the illegal sale of drugs which states as follows: “No deduction or credit shall be allowed for any amount paid or incurred during the taxable…


Denver Colorado IRS Stakeholder Meeting Notes

Bessie Castro-Zepeda, Colorado Department of Revenue Tax Practitioners only helpline; M-F 8am – 430pm (303) 232-2419 Capital Gain Subtraction: For 2012 returns, the department will make every effort to verify required documentation was included in the filing of the return before contacting the taxpayer for more information. That is why it is important the following…


Centennial Anniversary of the 16th Amendment to the US Constitution is approcahing

Most anniversaries are celebrated with joy and jubilation.  But on February 3rd, 2013, I doubt that anyone will be celebrating this anniversary or should I say centennial – after all, it is the  100th anniversary of the 16th Amendment to the US Constitution, the amendment that gave the federal government the right to impose the…


Loving v. IRS deals blow to IRS Regulation of Tax Return Preparers

In Loving v. IRS the IRS’ authority to regulate commercial tax return preparers has been successfully challenged. United States District Court for the District of Columbia Judge James E. Boasberg granted Loving’s motion for summary judgment describing the IRS Rules as “Ultra Vires.” “Ultra Vires” as I understand is a legal term meaning “beyond the powers” referring to an…


The New Home Office Deduction Safe Harbor – IRS Rev. Proc. 2013-13

The Internal Revenue Service announced a simplified option that many owners of home-based businesses and some home-based workers may use to figure their deductions for the business use of their homes. The new simplified option is available starting with the 2013 return most taxpayers file early in 2014. Further details on the new option can…


Tax-Free Transfers to Charity in January 2013 Can Still Count for 2012 For IRA Owners 70½ or Older

Act now! According to the IRS IRA owners age 70½ or older have until Thursday, Jan. 31 2013 to make a direct transfer, or alternatively, if they received IRA distributions during December 2012, to contribute, in cash, part or all of the amounts received to an eligible charity. The American Taxpayer Relief Act of 2012,…


American Taxpayer Relief Act 2012

The American Taxpayer Relief Act of 2012 makes permanent many otherwise expiring tax provisions. The following is my summary of what I believe to be relevant provisions: Ordinary income above a certain threshold is taxed at a higher rate. The thresholds are: taxable income of $400,000 (for an unmarried taxpayer), $425,000 (for a head of…