Tax Law

    • 20 Dec 2011

    Preserving the Deceased Spousal Unused Exclusion Amount for the Surviving Spouse: IRC Section 2010(c) and Notice 2011-82

    By Diane L. Mutolo INTRODUCTION: The Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of 2010 amended IRC Section 2010(c) to allow, after December 31, 2010, a surviving spouse to increase his or her applicable exclusion amount by the deceased spouse's unused exclusion amount. 1 Under the amended provision, the surviving spouse's applicable exclusion amount is the sum of the surviving spouse's...
    • 19 Dec 2011

    Pamela Revak on Education Tax Credits

    By Pamela Revak Background In the not too distant past, the cost of a post-secondary education was considered a non-deductible personal expense paid to acquire the skills necessary to obtain a job; deemed an investment in human capital that would be repaid over time in the form of enhanced future earnings. For tax years beginning in 1998, Congress passed as part of the Tax Relief Act of 1997, the HOPE Credit, which...
    • 12 Dec 2011

    Tax Tips for Forestland Owners

    By Darwin L. King and Edward D. King * Timber Tax Overview - The Big Picture ... The IRS has three possible classifications or categories for forestland owners. The timber owner may be holding the property as either a hobby, an investment, or as a for-profit business. There are different tax regulations affecting each of these categories. If the taxpayer is holding the property as a hobby the land is typically...
    • 21 Nov 2011

    Real Estate Investment Trusts

    By Kara M. Kraman Esq. A Real Estate Investment Trust ("REIT") is a special form of business entity that is used to own real estate. A REIT can take the form of a corporation, but it can also be a trust or association. A REIT provides investors with a way to invest in real estate that would be beyond their means as an individual by allowing them to invest as part of a group with other like-minded investors...
    • 14 Nov 2011

    The Intersection of Bankruptcy and Taxation

    By Daniel M. Press and Brett Weiss The intersection of bankruptcy and taxation is, in many respects, a complicated area of the law, and entire treatises can and have been written about it. 1 This article does not attempt to provide a complete survey of this area of the law, but only to provide information on some of the key points about taxation as it relates particularly to individual chapter 11 debtors. Separate...
    • 25 Oct 2011

    Research and Development Tax Credits: Do IRC Sections 174 and 41 Really Matter?

    I n the l ate 1940s and early 1950s, Robert Paxton McCulloch almost built a steam-powered automobile, but abandoned the project in 1954. A foreman with his company claimed that the abandonment was caused by unfavorable tax laws. Perhaps the most ironic thing is that the same complaints about the state of the R&D tax laws pre-1954 still exist to this day. Things were complex and uncertain then; things are still...
    • 24 Oct 2011

    Kawashima v. Holder: What Is an "Aggravated Felony" for Immigration Purposes?

    By Jennifer M. Chacon This is a case involving tax, criminal, and immigration law. In Kawashima v. Holder, the U.S. Supreme Court can clear up some of the confusion about just what crimes are aggravated felonies. The crimes in the case were filing, and aiding and abetting the filing of, a false statement on a corporate tax return under 26 U.S.C. § 7206. Professor Jennifer Chacon analyzes both sides' arguments...
    • 24 Oct 2011

    Unfolding AML/CTF (Anti-Money Laundering/Counter-Financing of Terrorism) Complex System

    By Dionysios S. Demetis Anti-Money Laundering (AML) and the Counter-Financing of Terrorism (CFT of CTF) have undoubtedly emerged as two important contemporary themes that have generated considerable attention over the past two decades. In their core, they constitute the broader responses to the phenomena through which they have gained their existence to begin with; namely, money laundering (ML) and the financing...
    • 22 Oct 2011

    Addressing and Sustaining Compliance with Uncertain Tax Position (UTP) Requirements

    By Laura L. Roman Oil and gas companies face considerable uncertainties. Massive capital investment decisions hinge on projected international price trends. Shifting political climates in the United States and abroad affect the viability of business models. Even with the most sophisticated technology, exploration and production efforts present so many unknowns. Amidst such concerns, oil and gas companies must also...
    • 20 Oct 2011

    Methods of Inventory Valuation - General Principles

    By Leslie J. Schneider J.D. C.P.A. Cost of goods sold is generally one of the largest offsets to a business owner's taxable income. But cost of goods sold is an accounting concept that is often difficult to calculate because it cannot be computed directly. Instead, cost of goods sold is calculated by first determining inventory. Consequently, inventory determination and valuation practices are the keys to determining...
    • 18 Oct 2011

    Repatriation of Dividends from Wholly Owned Foreign Sub are Taxable under CA Law

    By Mark Muntean The California Court of Appeal recently held that the repatriation of earnings from a controlled foreign corporation, in this case a wholly owned foreign subsidiary, were applied to current year earning first before applying the dividends to prior year earnings on a LIFO basis. Apple, Inc. v. Franchise Tax Board, Nos. A128091 and A129090 Court of Appeals, 1st Dist., Div. 5 (9/12/11), Apple, Inc. v....
    • 18 Oct 2011

    Amazon Fights to a Draw in CA: Status of the "Amazon Law" on Sales Tax Nexus

    By Eileen Kuo and Charles W. Swenson * ... On September 23, Governor Jerry Brown of California signed legislation that would give Amazon until September, 2012 before the State starts to enforce its so-called "Amazon Law," which requires Amazon to collect sales taxes on sales made through its affiliates in California. The intent is to give Amazon time to potentially persuade Federal lawmakers to enact Federal...
    • 5 Oct 2011

    Georgia Income Tax on Estates & Trusts and Amended Definition of Taxable Nonresident

    By Diane L. Mutolo In Georgia, estates & trusts are subject to state income tax. In 2010, the state legislature amended the definition of taxable nonresident to include nonresidents who regularly engaged in certain financially profitable transactions or received deferred compensation or income from stock options in the state in a prior year. Ga. Code Ann. § 48-7-20. 2 Ga. Code Ann. § 48-7-20(d) provides...
    • 13 Sep 2011

    Tax Aspects of Nonqualified Deferrred Compensation: Avoiding Constructive Receipt

    Employers and executives must be sure to avoid the doctrine of constructive receipt when drafting deferred compensation arrangements. Specific provisions required by IRC Section 409A must be included in deferred compensation plan, and adhered to by the parties. Statutory requirements include election timing requirements, distribution parameters, non-acceleration of benefits, and funding re-striction. ... The general...
    • 1 Sep 2011

    Cross-Border Benefits of Malta's Tax System and the U.S.-Malta Tax Treaty

    By Mitchell R. Kops , Sanford J. Davis , William J. Kambas , and Theodore C. Ahlgren The authors would like to thank Angela M. Klemack , an associate at the firm, for her valuable assistance in the preparation of this article. ... Malta has emerged as an increasingly attractive jurisdiction for multinational enterprises. In recent years, Malta has entered the EU and revised its banking and tax regimes to attract...
    • 29 Aug 2011

    IRC Section 751 Treatment of Hot Assets

    By Matthew Cavitch, The Cavitch Law Firm, Memphis, TN The linchpin of taxing transfers of partnership interests is IRC Section 751. Under IRC Section 741, when a partner sells his interest, he is entitled to capital gain treatment, except as provided in IRC Section 751. Under IRC Section 731, when a partner receives a partnership distribution in liquidation of his interest, he is entitled to capital gain treatment...
    • 18 Jul 2011

    Reporting Requirements for U.S. Owners and Grantors of Foreign Trusts

    The Hiring Incentives to Restore Employment Act ("the HIRE Act"), signed into law by President Obama on March 18, 2010, amended and added provisions of the Internal Revenue Code with the aim of increasing foreign account tax compliance. The provisions of the Foreign Account Tax Compliance Act (FATCA), enacted as part of the HIRE Act, added Sections 6038D, 1471, 1472, 1473, and 1474 to the Internal Revenue Code...
    • 12 Jul 2011

    Important New DOD Reg on Internal Controls for Contractor Business Systems

    The Department of Defense (DOD) has promulgated DFARS 215.407-5-70 that demands almost perfect internal control for contractor business systems and includes significant sanctions and penalties for failure to comply. Failure to comply with the regulation may have dire financial consequences for DOD contractors due to these sanctions being more stringent than the traditional response to a weakness or lack of internal controls...
    • 27 Jun 2011

    State Taxation of Multinationals: Combined Reporting

    by Suellen Wolfe * In many states, related entities with certain intercompany transactions must file a combined tax report to more accurately reflect their unitary business operations. Combined reporting is generally required only where there is a high degree of interdependence among related entities. Combined reporting can take one of two forms: worldwide, which includes income from all operations, and water's...
    • 20 Jun 2011

    Lease Accounting Changes to Impact Financial Reporting

    by Barbara Apostolou - Professor, University of West Virginia, Nicholas Apostolou - Visiting Professor, University of West Virginia, and Jack W. Dorminey - Assistant Professor, University of West Virginia On August 17, 2010, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) jointly released exposure drafts (ED) of proposed accounting standards that, as currently...
    • 17 Jun 2011

    New Jersey Corporate Tax Planning and the Apportionment Sales Factor

    A State Tax Practice Insights Commentary by Irwin Mittelman INSIGHT In recent years, there have been major changes that have affected apportionment for corporations doing business in New Jersey. In 1995, the corporate apportionment factor was changed to double-weight the sales factor, thus making it fifty percent of the overall allocation factor. The most recent change, made by legislation enacted in 2011, will...
    • 6 Jun 2011

    Taxation of Canadian Mining Operations - Provincial Taxes

    By Peter C. Maxfield, Robert M. Allen CPA and J. Andrew Miller CPA Editor's Note: This Emerging Issues Analysis is an edited excerpt from Chapter 13 of the LexisNexis Matthew Bender title Taxation of Mining Operations . ... Each of the provinces and territories of Canada imposes its own corporate income tax at its own tax rate. Most provinces apply their provincial tax rate against taxable income computed...
    • 23 May 2011

    Rendering Retirement Plan Investment Advice for a Fee

    Every retirement plan governed by the Employee Retirement Income Security Act (ERISA) must be established and maintained pursuant to a written agreement that must provide for one or more "named fiduciaries" who have the authority to control and manage the operation and administration of the plan. Under ERISA, an entity is generally considered a fiduciary to the extent that it holds any discretionary authority...