Jul 02

Final rules permit truncated TINs on W-2s

Final rules permit truncated TINs on W-2s In its continuing effort to reduce identity theft, the IRS issued final regulations that permit employers to use truncated taxpayer identification numbers (TTINs) on Forms W-2, Wage and Tax Statement, issued to employees (T.D. 9861). The regulations finalize proposed rules issued in September 2017 with no substantive changes […]

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Jul 02

W-2 wages and Sec. 199A

W-2 wages and Sec. 199A Under new Sec. 199A, taxpayers other than C corporations can deduct up to 20% of their qualified business income (QBI) from taxable income. The deduction benefits many taxpayers, but its calculation is complex. This column provides visual and mathematical aid for the calculation and suggests strategies that may help maximize […]

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Jul 02

S corp. expenses not personally deductible by shareholder as a sole proprietor

S corp. expenses not personally deductible by shareholder as a sole proprietor A district court granted summary judgment denying an attorney’s claim for reimbursement of assessed taxes, penalties, and fees because he was not entitled to the disallowed deductions claimed on his individual tax return. It held that there was no clear evidence that he […]

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Jul 02

Infographic: Mapping a path forward after Wayfair

Infographic: Mapping a path forward after Wayfair The U.S. Supreme Court in South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018), eliminated the physical presence requirement for states to require businesses to collect and remit state sales tax. It established economic nexus as the sales tax nexus standard. CPAs may face professional liability claims […]

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Jul 02

Defining a trade or business for purposes of Sec. 199A

Defining a trade or business for purposes of Sec. 199A New Sec. 199A provides a deduction for qualified business income (QBI) from sole proprietorships and relevant passthrough entities (RPEs). Sec. 199A allows individuals (and some trusts and estates) to deduct up to 20% of the combined QBI from qualifying trades or businesses, subject to certain […]

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Jul 02

Broadened definition of Sec. 152 dependents

Broadened definition of Sec. 152 dependents The child tax credit was revised to make it available to more taxpayers, under the law known as the Tax Cuts and Jobs Act (TCJA), P.L. 115–97, making it a good time to revisit the expanded definition of dependents under Sec. 152. New provisions enacted in 2017, including changes […]

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Jul 02

Financial disability provision does not suspend statute of limitation on taxpayers’ refund claims

Financial disability provision does not suspend statute of limitation on taxpayers’ refund claims A district court dismissed a married couple’s claim for refunds due to a lack of subject–matter jurisdiction because they did not timely file the claims with the IRS. It ruled that the statute of limitation was not suspended because the couple did […]

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Jul 02

Second Circuit expands Tax Court’s jurisdiction for hearing refund claims

Second Circuit expands Tax Court’s jurisdiction for hearing refund claims In an issue of first impression, the Second Circuit reversed the Tax Court and held that the lookback period in Sec. 6512(b)(3) amounts to three years when no return is filed, removing a “six–month black hole” created by the Tax Court. The Second Circuit thus […]

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Jul 02

Tax Court denies microcaptive insurance arrangement

Tax Court denies microcaptive insurance arrangement The Tax Court held that a purported insurance arrangement involving family–owned manufacturing companies, a microcaptive insurance company, and two fronting carriers was not insurance because the fronting carriers were not bona fide insurance companies that issued insurance policies, and the reinsurance of those policies by the captive insurance company […]

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Jul 02

Line items

Line items EIN applicants now limited to holders of SSNs and ITINs In May, the IRS began accepting employer identification number (EIN) applications only from individual taxpayers who have either a Social Security number or an individual taxpayer identification number, as the responsible party on the EIN application (see IRS News Release IR–2019–58). EINs are […]

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