Category: Tax Planning & Compliance
IRS releases technical advice memorandum impacting significant participation activities under the passive loss rules
The IRS has released a Technical Advice Memorandum (TAM)[1] addressing the question of whether, for passive loss limitation purposes, an activity qualifies as a significant participation activity in a taxable year where the taxpayer previously satisfied the significant participation activity test for material participation with respect to that activity in…
IRS Issues New Form 7203 to Track and Report S Corporation Basis
The subchapter S rules apply basis limitations in various circumstances, including the ability of an S corporation shareholder to deduct S corporation losses. An S corporation shareholder has basis in his/her stock and if he/she is also a creditor of the corporation, he/she has basis in her debt. Basis is…
IRS proposes new “clawback” regulations
There is a computational quirk (that tax lawyers call “clawback”) in the manner in which the federal estate tax is calculated. What is “clawback” of estate tax? Because the estate tax and the gift tax are accumulated into a single “transfer” tax, a problem occurs when the lifetime exclusion from…
Payment of tax generated by partnership audits at the partnership level – adjusting partnership items
In the 2015 Bi-Partisan Budget Act (“2015 Act”), Congress enacted new centralized audit procedures for entities taxed as partnerships for Federal Income Tax purposes. Because these rules are fairly complex, both for taxpayers and the IRS, they did not become effective until tax years beginning in 2018. The default rule…
RMD Proposed Regulations – The Good, The Bad, and The Ugly
The proposed regulations consist of 64 pages printed in the Federal Register and are subject to a comment period which ended on May 25, 2022. Once the IRS considers the comments it will move towards finalization and adoption after which they will become effective. The IRS has received 119 comments…
New Jersey Deductions for Higher Education Expenses and Savings
Beginning in 2022, the New Jersey College Affordability Act allows New Jersey taxpayers tax deductions for certain educational expenses. The deductions are targeted for taxpayers with gross income of $200,000 or less. Deductions are allowed for contributions to the NJBEST college savings plan, in-state higher education tuition costs and NJCLASS…
Failure to Carefully Review Tax Return Results in Costly Mistake for Taxpayers
Whether you prepare your tax return yourself with tax preparation software or rely on an accountant to prepare your return, it is important to remember to meticulously review your returns before filing. The cost of such failure to review could potentially lead to substantial penalties, including a twenty (20%) percent…
New Jersey Property Tax Assessment Appeals
Many New Jersey property owners believe their property tax assessments are uncompromising. The truth is property assessments are not. Property assessments hinge on the tax assessor’s calculation of the market value of a property, and often such calculations may not be accurate or reflective of current market value. Tax assessors…
Expenses Paid with PPP Loan Proceeds Reduce Other Adjustment Accounts, According to Draft Instructions for S-Corporation Returns (Form 1120-S)
Background. The Coronavirus Aid, Relief, and Economic Security (CARES) Act did not specify whether expenses paid using funds received from a Paycheck Protection Program (PPP) loan would be deductible for federal income tax purposes. Congress subsequently passed the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the “Economic…
Split Among Federal Circuit Courts on the Application of the “Non-Willful” FBAR Penalty
Any individual that has direct ownership, signatory authority or beneficial ownership over a foreign bank account that has a balance of $10,000 during any point of the year is required to file a Report of Foreign Bank and Financial Accounts (“FBAR”). The penalties for failing to file an FBAR can…