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Sec. 6676 imposes a penalty on a taxpayer who files a claim for refund or credit of income tax in an amount that is determined to be excessive. The penalty, effective for claims filed after May 25, 2007, was intended to close what was commonly considered a procedural loophole. Prior to the enactment of Sec. …
Continue reading Sec. 6676 erroneous claim for refund penalty
The IRS is working on a draft version of the 2018 Form 1040, U.S. Individual Income Tax Return, that reduces the size of the form to two half-pages in length and eliminates more than 50 lines, compared to the 2017 version of the form. The draft form moves many items that The 2018 draft form, …
Continue reading Form 1040 to be shorter but with more schedules
The IRS and Treasury published final regulations (T.D. 9829) on Jan. 2, 2018, that provide guidance on electing out of the new centralized partnership audit regime introduced by the Bipartisan Budget Act (BBA) of 2015, P.L. 114-74. It is important that partners, partnerships, and their representatives be aware of the rules in the final regulations …
One of the more important provisions in P.L. 115-97, known as the Tax Cuts and Jobs Act, enacted Dec. 22, 2017, is new Sec. 199A, the deduction for qualified business income (QBI). Sec. 199A allows a deduction for up to 20% of QBI from partnerships, limited liability companies (LLCs), S corporations, trusts, estates, and soleproprietorships. …
Continue reading Mechanics of the new Sec. 199A deduction for qualified business income
Not only can workers’ compensation help protect injured workers from having to pay expensive medical bills, it can potentially prevent them from suing their employer to recoup their medical expenses.A recent poll conducted by Insureon and Manta found that of the more than 900 small business owners surveyed who have employees, 26 percent do not …
Continue reading 1 Out of Every 4 Small Businesses with Employees Lacks Workers’ Comp Coverage
In Notice 2018-28, the IRS answered important questions about the new business interest limit in Sec. 163(j), as amended by P.L. 115-97, known as the Tax Cuts and Jobs Act (TCJA), and asked for general comments on regulations it plans to issue. Under amended Sec. 163(j), the deduction for business interest is limited to the …
Continue reading IRS issues first guidance on new business interest limitation
EXECUTIVE SUMMARY The deduction for an individual's personal casualty loss of property not connected with (1) a trade or business or (2) a transaction entered into for profit arising after Dec. 31, 2017, and before Jan. 1, 2026, has been eliminated, with several exceptions. Business taxpayers may deduct amounts paid for repairs and maintenance to …
Continue reading Casualty losses and expenditures under Sec. 162 or 165
During the pendency of a divorce, a taxpayer was ordered by a family court to transfer funds to an individual retirement account (IRA) in his spouse's name. Where the taxpayer received a distribution of funds from his IRAs and then wrote checks to the spouse, the exclusion from taxation available under Sec. 408(d)(6) was inapplicable, …
Continue reading IRA distribution to pay spousal support is taxable
As tax practitioners prepare to counsel clients about the loss of dependency exemptions on 2018 tax returns, there is good news to offer in the form of the enhanced child tax credit. The legislation known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, doubled the credit amount, increased the refundable portion, and expanded …
Continue reading Child tax credit now higher, more widely available
Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation (Regs. Sec. 1.274-2(b)(1)). Meal and entertainment expenses incurred by a taxpayer to entertain a client, customer, employee, or other business associate are deductible only if the expenses satisfy the following strict requirements imposed by the Code: Ordinary and necessary: Meal or entertainment expenses …
Continue reading Proving a Business Connection for Meals and Entertainment
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