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Insights

Flashes/Alerts 2014

Watch and Money
 

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Tax Flash

President Barack Obama signed H.R. 5771, The Tax Increase Prevention Act on Friday, December 19, 2014. The tax team at Marcum has been following the progress of the Act and can now report that the bill is signed and taxpayers can be confident in planning to close out the year.


Tax Flash

As a follow up to our recent Tax Flash reporting the House of Representatives passage of the Extenders Act on December 3, on December 16, the Senate passed the Tax Increase Prevention Act of 2014 ("Extenders Act").

 


International Taxation

United States citizens (and green card holders) residing outside the U.S. often lose sight that they are required to file an annual income tax return with the Internal Revenue Service and report their world-wide income. An expatriate who learns about the U.S. filing requirement often does not know where to begin, especially if they have been living overseas for many years and have not been filing U.S. tax returns.

 


Tax Flash

As we mentioned last week in an earlier Insights and Alerts Tax Flash, on December 3, the House voted to retroactively restore for 2014 nearly all of the tax provisions that expired at the end of 2013.

 


Corporate Taxation

Be prepared for the new requirements of Accounting Standards Update 2013-08 (the ASU�) and so that you can evaluate the requirements of this ASU to make sure that you maintain compliance with this new standard.

 


Tax Flash

The IRS has recently released Revenue Procedure 2014-61, providing its annual inflation adjustments for various tax provisions, including the tax rate schedules, standard deduction, personal exemptions, and other items.

 


Tax Credits & Incentives

The U.S Department of Labor (DOL) released its list of FUTA credit reduction states for 2014.

 


Tax Flash

The IRS has recently issued Notice 2014-58, which provides additional guidance on certain aspects of the economic substance doctrine. A transaction has economic substance if the transaction changes (in a meaningful way) the taxpayer's economic position and the taxpayer also has a non-federal income tax business purpose for entering into the transaction.

 


Tax Flash

As mentioned in our prior News & Events Alerts, during June 2013, Governor Andrew Cuomo unveiled a START-UP NY program which aims to foster entrepreneurialism and job creation through the introduction of tax-free zones throughout the state. These zones are created through partnerships with New York colleges and universities.

 


Tax Flash

New York State withholding tax returns (Form NYS-1- "Return of Tax Withheld" and NYS-45- "Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return") due on or after April 30, 2015 must be electronically filed and electronically paid using the NYS Department of Taxation and Finance website.

 


Corporate Taxation

On December 30, 2013, the Internal Revenue Service (IRS) issued guidance explaining the circumstances in which it will not challenge partnership allocations to its partners under IRC Section 47, The Rehabilitation Credit.

 


Tax Return Compliance

A recent Tax Court decision (Bobrow V. Commissioner) held that the language of the Internal Revenue Code limits a taxpayer to one IRA rollover contribution per year, on an aggregate basis.

 


Tax Flash

The New Jersey Division of Taxation has announced a limited-time opportunity for individuals and businesses with unpaid tax liabilities to enter into closing agreements with the state and resolve these liabilities. The program covers all types of taxes from 2005 through 2013 and will end on November 17, 2014.

 


Tax Return Compliance

The IRS released a Chief Counsel Memorandum on September 5, 2014 which provides guidance on the treatment of the exemption from self-employment tax for a limited partner's share of profits.

 


Tax Flash

The Massachusetts Department of Revenue has granted a limited amnesty program for taxpayers with existing personal and/or business liabilities. Participation in this program for eligible taxpayers could result in significant savings of assessed penalties.

 


International Taxation

One of the latest trends in the world of taxes is inversion. Tax inversion occurs when a company moves to a different country in order to avoid their home country's high tax rate. Many companies are leaving the United States in search of better tax benefits and to avoid the U.S.'s corporate tax rate, which may currently peak at 39.1%.

 


Trusts & Estates

When a spouse inherits an IRA from their deceased husband or wife, there are several planning strategies that the surviving spouse can follow to suit specific needs. Spouses who are designated the sole beneficiary of the IRA have special options that are not permitted for other beneficiaries.

 


Corporate Taxation

A technical termination of a partnership occurs when there is a sale or exchange of 50% or more of the total interest in the profits and capital of a partnership within a 12-month period.

 


Tax Return Compliance

The IRS has recently issued final regulations that allow the use of truncated taxpayer identification numbers (TTINs) on payee statements and certain other documents.

 


Tax Flash

The State of Connecticut is facing some difficult economic times in the near future. The state maintains its budgets on a biennial basis and the 2013-2014 and 2014-2015 were approved during 2013. Due to a reduction in the projected budgeted surplus, together with a projected deficit of approximately $2.8 billion for the 2016 and 2017 fiscal years, the Income Tax Rebate program proposed by the Governor was withdrawn from consideration.

 


Modern Family & LGBT Services

The IRS has recently provided guidance on how an employee should treat amounts erroneously included in W-2 income for the premiums paid by the employer for a same-sex spouse's health insurance. The IRS advises the employee to request a corrected W-2 from the employer or, if unable to obtain a corrected W-2, to take specific steps to report the correct amount of taxable income.

 


Trusts & Estates

Navigating the world of investments can be daunting to say the least, but when your child's future is at stake, it can be downright unnerving. Saving money for college is one of the most important investments you will make in your lifetime.

 


Tax Return Compliance

In recent months, the Marcum Tax Professionals have warned our readers related to many of these IRS phone scams. Federal law enforcement (FBI, Homeland Security, IRS Criminal Investigation, and Treasury Inspector General or TIGTA) are jointly investigating the "boiler rooms" that originate these calls. The TIGTA believe these operations are located in India and they are pursuing aggressively.

 


Tax Flash

On June 19, Rhode Island Governor Lincoln Chafee signed the state's fiscal year 2015 budget bill. The bill enacts sweeping changes to the RI tax landscape across a number of taxes. The most significant changes will be to the corporate income tax but changes were also made that affect personal income, sales and use taxes and estate tax.

 


Tax Flash

Not since Congress demanded a 'kinder gentler IRS' in 1998, has the individual owner of bank accounts and other financial assets maintained outside the US, seen that side of the Internal Revenue Service.

 


Trusts & Estates

On May 8, 2014, the Internal Revenue Service issued final regulations regarding the treatment of administrative costs for non-grantor trusts and estates. These final regulations are similar to the 2011 proposed regulations but provide some clarifications, and are effective for tax years beginning on or after May 9, 2014.

 


Tax-Exempt Business

Every year, Tax Exempt Organizations go through the frustrating task of filing their annual Organization Exempt from Income Tax Return (Form 990). Below is some useful information for organization executives and board members to consider carefully before filing their next Form 990 so the organization can benefit from this public record of disclosure.

 


Tax Credits & Incentives

The Research Fee filing deadline is July 31, 2014 for all selffunded medical plans and HRAs.

 


International Taxation

If you have a financial interest in or signature authority over a non-U.S. financial account, you're probably familiar with Form TD F 90-22.1. Starting with the 2013 tax year, U.S. tax filers must instead file new FinCEN Form 114. Normally referred to as the FBAR (or Foreign Bank Account Report), it is due June 30th of each year, for the previous calendar year. This form does not have an extension of time to file and there could be substantial penalties for the failure to timely file.

 


Tax Flash

On June 2, 2014, the IRS announced changes to the Research and Development Tax Credit allowing the Alternative Simplified Credit (ASC) calculation methodology to be utilized on amended returns.

 


Tax Return Compliance

The recent Tax Court decision in Charles Gragg and Delores Gragg v. Commissioner of Internal Revenue, stressed the importance of taxpayers correct determination of material participation in rental real estate activity to avoid passive loss treatment. Only participation on the rental real estate activities may be considered when determining if the taxpayer materially participates.

 


Tax Return Compliance

The 2013 Tax Court decision in Michael D. Brown and Mary M. Brown v. Commissioner of Internal Revenue, stressed the importance of ensuring the proper date is used for placing an asset in service. The Court disallowed the bonus depreciation and regular MACRS depreciation claimed on a plane the taxpayer acquired and used in December of 2003.

 


Tax Flash

On March 31, 2014, Governor Andrew Cuomo signed into law a Budget Bill that contains broad and sweeping tax reform provisions that impact both businesses and individuals.�These new laws include changes which will impact tax base, tax rates, apportionment methodology, nexus, tax credits and estate tax reform.�Except where noted, the changes below are effective for taxable years beginning on or after January 1, 2015.�

 


Tax Flash

This week the Senate Finance Committee approved a two-year extension of tax provisions that expired at the end of 2013. This is the first step towards a broader discussion on tax changes Congress will work through during the year.

Key tax extenders – include the Research and Experimentation (R&D) Tax Credit and the Energy Efficient Commercial Building (Section 179D) – were passed with bipartisan support with few adjustments.

 


Tax Return Compliance

During the last week of March 2014, the Tax Court, in the Frank Aragona Trust Case, held that a trust can qualify as a real estate professional under the passive activity loss rules based on the participation of trustees acting as employees of the rental activities. In its analysis, the Court addressed the issue of how a trust can determine material participation in a business. This decision becomes applicable to a broad range of businesses and not limited to real estate rentals.

 


Tax Flash

In an 8-0 decision, the U.S. Supreme Court, on March 25, ruled that retailer, Quality Stores Inc., a large specialty agricultural retailer, was not entitled to a refund of FICA paid on severance payments the company paid to its employees due to layoffs.

 


Tax Return Compliance

Now that we are in the midst of a busy tax season, Marcum LLP would like to remind all readers to beware of callers demanding taxes and threatening arrest or revocation of licenses.

 


Tax Flash

In 2013, Massachusetts implemented a new procedure requiring annual certification by any entity that seeks to be included in the "Annual List of Corporations Subject to Tax in Massachusetts."

 


Tax Return Compliance

In mid-January 2014, the IRS introduced the ability for taxpayers to instantly view and print tax transcripts. Prior to the introduction of this new online service, taxpayers were able to request either returns or transcripts, which would take approximately 5-10 days to be delivered.

 


Tax Flash

This week, the Obama Administration issued its 2015 Budget Plan. Overall, the President's tax plan, included in the overall budget, focuses on reducing the deficit while enforcing taxpayer compliance measures. Some of the main tax provisions call for making the research and development tax credit permanent, treating carried interest as ordinary income, reducing tax breaks for the oil and gas industry, and limiting interest deductions for multinational companies.

 


Tax Flash

The New Jersey Division of Taxation recently announced two limited-time voluntary disclosure initiatives. One initiative, the Intangible Asset Nexus Initiative, is for companies that hold intangible assets and derive income from the use of those assets in New Jersey. 

 


Tax Return Compliance

Recent cyber-attacks involving companies such as Target and Neiman Marcus remind us that identity theft and credit card fraud occurs every day. Major companies have become victims of criminal security intrusion, which affects not only the success of their business, but their customers.

 


Tax Flash

Governor Cuomo introduced his Executive Budget for 2014-2015 on January 21, 2014 to the New York State Legislature. The Bill provided a number of changes impacting Estates of New York Residents.

 


Tax Return Compliance

Net investment income, as defined within the US Internal Revenue Code, includes interest, dividends, annuities, royalties, rents, and certain net gains attributable to the disposition of property, among other items. One of the provisions within The Affordable Care Act imposes a tax on net investment income, effective January 1, 2013. The tax applies to individuals, as well as some trusts and estates.

 


Tax Flash

Information on the final repair / capitalization regulations issued by IRS was provided in the Marcum Tax Flash of December 16, 2013. The new rules will require most taxpayers with capitalized assets to make changes to their existing capitalization methods and policies in order to comply. There may also be opportunities for tax savings available by taking advantage of some of the elections and safe-harbors provided by the new rules.

 


Tax Flash

New York Governor Andrew Cuomo presented his Executive Budget for fiscal year 2014-2015 yesterday. The Governor's budget (the 4th of his current term) builds on the success of the prior three years of controlled spending which has turned a $10 billion State deficit into a $2 billion surplus and created 330,000 jobs.

 


Tax Flash

On January 14, 2014, the New York Court of Appeals, the state's highest court, declined to hear a challenge to the Metropolitan Commuter Mobility Tax, the payroll tax levied in counties served by the Metropolitan Transit Authority.

 


Tax Return Compliance

In a recent U.S. Tax Court decision, taxpayers were denied a deduction for the cost of tuition for a Masters of Business Administration (MBA) program.

 


Tax Flash

The New Jersey Economic Opportunity Act of 2013 was recently enacted into law on September 18, 2013 to attract new business development in the State of New Jersey and enhance job creation and retention efforts with the goal of strengthening New Jersey's competitive position in the global economy.

 


Tax Flash

New York State Governor Andrew Cuomo issued a press release on January 6, 2014 outlining a $2 Billion tax relief plan targeting businesses and individual taxpayers. The governor touts a $2 billion surplus in the state budget based on current spending estimates. This represents a turnaround from a $10 billion deficit three years ago.

 


Tax Flash

Governor Andrew Cuomo has signed the New York Nonprofit Revitalization Act of 2013 ("Act") which is the first major sweeping change for New York's not-for-profit entities in four decades. The intent of the new Act is to allow for an easier formation process, improve governance and operations, modernize not- for-profit corporate laws and reduce the reporting burden for smaller nonprofit organizations.

 


Tax Return Compliance

The IRS recently announced the 2014 filing season will open on January 31, 2014 for individuals and on January 13, 2014 for most businesses, estates, and trusts. The January 13th start date does not apply to unincorporated small businesses that report income on Schedules C, E, or F on Form 1040. Business returns the January 13 start date applies to include, but not limited to, Forms 1120, 1120S, 1065, and 1041.

 

 
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