IRS Data Book Shows Jump in Higher-income/Small Business Audit Rates
The just-released 2011 IRS Data Book provides statistical information on IRS examinations, collections and other activities for the most recent fiscal year ended in 2011. The 2011 Data Book statistics, when compared to the 2010 version, shows, among other things, a notable increase in the odds of being audited within several high-income categories...

IRS Expands Fresh Start Initiative to Help Economically-distressed Taxpayers
Building on earlier steps to help taxpayers buffeted by the economic slowdown, the IRS recently enhanced its "Fresh Start" initiative. The IRS has announced penalty relief for unemployed individuals who cannot pay their taxes on time and has increased the threshold amount for streamlined installment agreements...

Contemporaneous Tax Records - Are You Keeping Up?
Everybody knows that tax deductions aren't allowed without proof in the form of documentation. What records are needed to "prove it" to the IRS vary depending upon the type of deduction that you may want to claim. Some documentation cannot be collected "after the fact," whether it takes place a few months after an expense is incurred or later, when you are audited by the IRS...

How Do I - Amend a Return
Sometimes in a rush to file your income tax return, you may unintentionally overlook some income that had to be reported, or a deduction that you should or should not have taken. Now what? The solution is usually straightforward: you should file what is called an amended return...

FAQ - What is a Disregarded Entity?
A disregarded entity refers to a business entity with one owner that is not recognized for tax purposes as an entity separate from its owner. A single-member LLC ("SMLLC"), for example, is considered to be a disregarded entity. For federal and state tax purposes, the sole member of a SMLLC disregards the separate legal status of the SMLLC otherwise in force under state law...

April 2012 Tax Compliance Calendar
As an individual or business, it is your responsibility to be aware of and to meet your tax filing/reporting deadlines. This calendar summarizes important tax reporting and filing data for individuals, businesses and other taxpayers for the month of April 2012...

Transfer of Winning Lottery Ticket to S Corp is Taxable Gift
A lottery winner recently tried to get lucky twice by beating the IRS on taxes owed on the winnings. Unfortunately, she lost that round with lady luck, with the Tax Court ruling that she was liable for gift tax on a maneuver with an S corporation designed to spread some of the winnings out to certain family members...

Unmarried Co-owners Must Apply Single Mortgage Interest Limit
The Tax Court has found that two unmarried co-owners of two California properties cannot each individually deduct the interest paid on their personal residence indebtedness. The debt limitations are based on the number of residences, rather than the number of taxpayers...

Individual Adjusted Gross Income Rebounds
In the IRS's just-released Winter 2012 Statistics of Income bulletin, the agency reported that individual adjusted gross income (AGI) had increased in 2010 after a decline in 2009. The recession peaked in 2009, a year which saw the lowest percentage of taxable returns in more than 20 years. Based upon the latest IRS taxpayer data...

Change of Accounting Rules/Audit Instructions Issued on New Repair Rules
At the end of 2011, the IRS issued comprehensive and far-reaching temporary regulations on the capitalization of costs relating to tangible property. The regulations are generally effective for tax years (or costs incurred in tax years) beginning on or after January 1, 2012. The IRS has now followed up with transitional guidance on how taxpayers can obtain IRS approval...

2012 Vehicle Depreciation Dollar Limits Increase
The IRS recently announced revised Code Sec. 280F dollar limitations for vehicles first placed in service during calendar year 2012. Code Sec. 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service within its business and for each succeeding year. Under Code Sec. 280F(d)(7)...

Tax Alerts - March 2012

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