Tax Law

    • 7 Aug 2012

    Massachusetts Delays FAS 109 Relief to Corporate Taxpayers - Again

    In 2008, Massachusetts enacted combined reporting for corporate income taxes. As tax practitioners are well aware, there are serious financial consequences to such changes, which go beyond the mere composition of the entities in the combined report. One such consequence is the financial accounting impacts on deferred tax assets and liabilities. When combined reporting was being considered in 2008, corporations were outspoken...
    • 26 Jul 2012

    Florida DOR on Hedging: Mixed Bag or Safe Bet to Plan Future Transactions?

    A Florida taxpayer was engaged in three types of hedging activity: (1) hedges on materials related to its inputs; (2) hedges related to the commodity it sells; and (3) hedges unrelated to items it purchases or sells. In deciding whether the hedging revenue was properly included in the taxpayer's sales factor, the Florida Department of Revenue (DOR) in TM 12C1-007 (the "Ruling") establishes a rule based on...
    • 17 Jul 2012

    Proposed Regs Clarify Charitable Hospital Organization Requirements

    The Patient Protection and Affordable Care Act added IRC Section 501(r) , which imposes detailed conditions on a hospital organization seeking exemption under IRC Section 501(c)(3) . In addition to satisfying the requirements of IRC Section 501(c)(3) , hospital organizations must also meet the: community health needs assessment requirements in IRC Section 501(r)(3) ; financial assistance policy requirement in IRC...
    • 2 Jul 2012

    City by the Bay Takes on Panhandlers, Puppies, Payroll Tax Reform

    Last month, in what could be referred to as an "Only in San Francisco" moment, the City of San Francisco announced a new program called "Wonderful Opportunities for Occupants and Fidos" (WOOF, for short) to try to curb the problem of panhandling in the city. Under this new program, to begin in August, panhandlers will be offered $75 per week to stop panhandling and instead foster puppies from the city's...
    • 6 Jun 2012

    IRS Considers Tribal Benefit Taxation and the General Welfare Exclusion

    A few weeks ago, I had the privilege of hearing Tribal Judge Abby Abinanti speak at an event for women lawyers. Judge Abinanti, a former Commissioner for the California Superior Court, is currently chief judge for the Yurok Tribal Court in Klamath, California. An advocate for restorative justice (as contrasted with punitive justice), and a Native American herself, Judge Abinanti is no stranger to the challenges facing...
    • 6 Jun 2012

    Illinois Closer to Establishing Tax Court

    Illinois HB 5192 was recently passed in both houses of the Illinois legislature. If signed into law by Illinois Governor Quinn, the new court would be established as an independent agency separate from the Illinois Department of Revenue (IDOR). This court will be comprised of no more than four administrative law judges appointed by the Governor with the advice and consent of the Senate of which one will serve as the chief...
    • 22 May 2012

    Final Regs Guide Large Employer Health Care Plan Compliance

    As large employers are now well aware, beginning January 1, 2014, employers with more than 50 full-time employees must offer to all full-time employees and their dependents the opportunity to enroll in minimum essential coverage (MEC) under an eligible employer-sponsored plan. Large employers who fail to meet the heath care coverage requirements under IRC Section 4980H will be subject to a penalty. At first glance, IRC...
    • 2 May 2012

    Click-Through Nexus Struck Down in Illinois

    As state tax policy has continued trying to keep up with the evolving changing of our nation's economy, one key issue has been the proper means of subjecting Internet-based retail transactions to state level sales & use taxation. Following the 2008 enactment of a click-through nexus law in New York, Illinois (like several other states) enacted its own "click-through nexus" statute that went into effect...
    • 24 Apr 2012

    Final Regs on Income Ordering Rules for Payments to Charitable Beneficiaries

    For a trust to qualify for the charitable deduction, a charitable contribution must be made from gross income. [ See IRC § 642(c) .] IRC Section 642 requires tracing since the source of the charitable contribution must be gross income rather than principal. The provisions of the governing instrument which specify the source of the payments will control in determining whether the amounts of income paid or set aside...
    • 13 Apr 2012

    2012 ALEC-Laffer Report Strikes Familiar Theme

    The just-released 5 th edition of Rich States, Poor States , the American Legislative Exchange Council's (ALEC) report on economic competitiveness of the states, reaches familiar conclusions shadowing those set forth in preceding editions: How the 50 states, described in the report as "laboratories of democracy," measure up in the ongoing pursuit of economic "wellness" is largely a function of...
    • 12 Apr 2012

    IRS Gone Rogue? Investigating Policy on RICs’ Commodity-Related Investments

    Higher prices at the pump got you down? Recent news stories suggest that commodity speculation may be a significant factor. (See, e.g., "Pump Prices Climb to Record High Level," Los Angeles Times (February 7, 2012)). The Commodity Futures Trading Commission (CFTC) oversees the financial market for oil. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, P.L. 111-203 (July 21, 2010), gave the...
    • 4 Apr 2012

    Illinois Amnesty Period Double Interest Penalty Restricted

    The Illinois Court of Appeals, First Division, held that a taxpayer was not subject to a double interest penalty provided under an amnesty program for additional income taxes that could not be determined at the time of the amnesty period. Metro. Life Ins. Co. v. Hamer, 2012 Ill. App. LEXIS 144 (Ill. App. Ct. 1st Dist. 2012) . State tax amnesties are nothing unique. States have been using this tactic as a means of temporarily...
    • 19 Mar 2012

    Favorable, Unfavorable Exemption Rulings Available for Public Review

    With the issuance of final Treasury Regulations, the IRS will now make available for public review favorable and unfavorable exemption rulings. The IRS for a while now has been making available for public inspection favorable exemption letters issued by the National Office. These rulings are made available for public inspection pursuant to IRC Section 6104 and Notice 92-28 . In final Treasury Regulations the IRS has now...
    • 1 Mar 2012

    Combined Tax Reporting Proposals on 2012 Sate Legislative Agenda

    The 2012 state legislative season is shaping up to be another banner year for combined reporting proposals in the various statehouses around the nation. At least eight state legislatures are considering such proposals, 1 but the prospects for enactment vary widely. The following is a brief overview of some of the more interesting aspects of these proposals. Alabama H.B. 1999 would require a "unitary business"...
    • 21 Feb 2012

    Estate Portability Election Extended

    As all estate practitioners are now aware, IRC Section 2010(c) permits the estate of a decedent who is survived by a spouse to make a portability election, permitting the surviving spouse to apply the decedent's unused exclusion to the surviving spouse's own transfers during life and at death. The portability election may be made only by the estates of decedents dying after December 31, 2010. In Notice 2012...
    • 17 Feb 2012

    In the Wake of Dim Sum Scandal, POTUS to Sign Payroll Tax Cut Extension

    On February 16, 2012, President Obama (or, as is becoming the trend in internet slang, the "POTUS") was photographed in San Francisco picking up a lunch of dim sum from a famous Chinese eatery . In town for a fundraising event, the President looked the part of any well-dressed businessman picking up a quick lunch. He warmly chatted with locals enjoying plates full of pork buns and dumplings. Later it was revealed...
    • 1 Feb 2012

    Subsidiary Stock Sale Proceeds Included in Sales Factor Denominator

    In Oracle Corp. v. Dep't of Revenue State, 2012 Ore. Tax LEXIS 21 (Or. T.C. Jan. 19, 2012) , the Oregon Tax Court held that the gains from the sale of stock of a subsidiary which constituted business income were includible in the taxpayer's sales factor denominator. Oracle Corporation ("Oracle") sold the stock of two different subsidiaries generating substantial gains. The subsidiaries were engaged...
    • 24 Jan 2012

    Proposed Regs Detail Broker Reporting for Debt Instruments, Options

    The Energy Improvement and Extension Act of 2008 (the "2008 Act") amended IRC Section 6045 and thereby expanded the broker reporting requirements. Beginning January 1, 2011, brokers, in addition to reporting the gross proceeds from sales of stock by their customers, are required to report the adjusted basis and holding period of certain "covered securities" (including stock) acquired and sold by their...
    • 17 Jan 2012

    SCOTUS Showdown: Oral Arguments Heard in Home Concrete Case

    On January 17, 2012 before the U.S. Supreme Court, Deputy Solicitor General Malcolm Stewart and Gregory Garre , partner at Latham & Watkins, LLP presented oral argument in United States v. Home Concrete & Supply, LLC, et al. In broad terms, at issue is whether the IRS has three years, or six, for an extended assessment. Mr. Stewart was challenged extensively on the meaning of section 6501(e)(1)(A) in the context...
    • 16 Jan 2012

    SC Supreme Court Says No to Excluded Dividends-Related Expenses Deduction

    An out-of-state corporation that filed a South Carolina corporate income tax return excluded dividends generated from South Carolina income of certain wholly owned subsidiaries. However, the South Carolina Supreme Court ultimately decided that the taxpayer was not entitled to exclude expenses associated with the production of such income. See Emerson Elec. Co. v. S.C. Dep't of Revenue, 2011 S.C. LEXIS 390 (S.C. Dec...
    • 6 Jan 2012

    Tableau! Extended Payroll Tax Cut + Sick SS Trust Fund + Keystone = Political Knavery

    Around this time last year, I wrote about the year-long payroll tax cut enacted by Congress under The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ) (the "Job Creation Act"). See "Just in Time for the Holidays: A Temporary Tax Compromise" (Lexis Tax Staff Analysis, Dec. 18, 2010) . I remarked then about my concerns over the deficit and my hope that...
    • 5 Jan 2012

    Few or None Mourn Ethanol Tax Credit's Demise

    Back in August, when the debt ceiling legislation was finally passed after considerable debate, one tax provision that had been considered as part of that legislation, and seemed to have bipartisan support, was left out. (In fact, no tax provisions were actually included in that legislation.) Thus, the ethanol tax credit, which had been the subject of a great deal of debate throughout the year, was allowed to remain until...
    • 22 Dec 2011

    SCOTUS Oral Argument: Does Overstated Basis = Omission from Gross Income?

    Editor's Note: View blog discussion on this site of, and hyperlink to, the January 17th oral arguments before the Supreme Court : SCOTUS Showdown: Oral Arguments Heard in Home Concrete Case ... For some time now, the tax bar has been wringing its hands with frustration over when, and under what circumstances, overstated basis constitutes substantial omission from gross income. This issue percolates around the...
    • 9 Dec 2011

    Robin Hoods Aim Their Bows at Financial Transactions

    Legend has it that Willie Sutton, bank robber extraordinaire, when asked by the FBI why he robbed banks, stated that it was "because that's where the money is." To a certain extent, this reasoning-to look to where the money is--might provide a decent starting point for the government in determining the most effective way to generate additional revenue. Recent legislation introduced in the House by Representative...
    • 9 Dec 2011

    IRS Adds Flexibility to Trusts

    As estate planning practitioners are well aware, IRC Section 2042 includes in the gross estate: insurance proceeds on the life of the decedent receivable by the executor; and insurance proceeds on the life of fhe decedent received by others, where the decedent possessed any incident of ownership over the policy Because life insurance trusts and other types of trusts whose assets include life insurance are common...