Tax practice

A spinoff or other distribution by a company of subsidiary stock is not always tax free, due to the anti-Morris Trust rules under Code Sec. 355(e).The code requires that a distributing parent corporation recognize gain on an otherwise tax-free spinoff of its controlled subsidiary's stock, if this is done "as part of a plan (or series of related transactions)" to have one or more persons acquire a 50 percent or greater interest in either the parent or the controlled corporation.

The co-directors of a data research center have filed a federal Freedom of Information Act lawsuit against the Internal Revenue Service, claiming that the agency is illegally withholding information about its operations.

The recent Internal Revenue Service report indicating that it collected $3.2 billion from 1,165 taxpayers from the "Son of Boss" tax shelter scheme may just be the tip of the iceberg when it comes to filling government coffers. Hundreds of individuals and corporations are still fighting in court, while most likely thousands of other tax shelter participants who have yet to be investigated should consider stepping forward, rather than waiting to be targeted.While usually poker-faced, the IRS this time around seems publicly pleased with what it has achieved, and the odds are good that we will see more of these kinds of settlement offers to help clean up a number of other popular abusive tax shelters. As numerous stories reported, the IRS recently announced a settlement initiative for executives who transferred millions of dollars of compensatory stock options to trusts and other vehicles owned by family members and then claimed that the exercise of those options and sale of the stock was not taxable to them.

The Internal Revenue Service has named Janice J. Lambert as its chief financial officer.

Members of the President's Advisory Panel on Federal Tax Reform are set to discuss "return-free" filing, among other things, at their next meeting, slated for May 17.

The types of activities that allow a state, under its own rules, to tax a business entity vary widely. In fact, the same company with relatively light activity within one state might be subject to tax in that state, yet not be taxed in a state where its activity is greater.

STF Services Corp. president Charles F. Ter Bush has left the Syracuse, N.Y.-based tax forms company to join LexisNexis as vice president for the tax and accounting market segment.

A newly issued revenue procedure, Rev. Proc. 2005-28, makes it easier for some taxpayers to adopt a simpler method of allocating and apportioning interest expenses in determining their net U.S. and foreign-source income for foreign tax credit purposes.

H&R Block Inc. reported total tax prep and related fees through April 15 of $2.4 billion -- up 7.3 percent over last year.

The President's Advisory Panel on Federal Tax Reform will hold its eighth meeting this week, said the body's chairman and vice-chairman, senators Connie Mack and John Breaux.

In light of recent changes to the rules that guide practitoner conduct, the Internal Revenue Service will host a Webcast next week focusing on the agency's Office of Professional Responsibility and Circular 230.

The Internal Revenue Service is hosting a number of seminars for tax practitioners on the latest information on the agency's policies and programs.

The Internal Revenue Service is requesting membership nominations for the Information Reporting Program Advisory Committee, a body that provides recommendations to IRS leaders on information reporting and administration issues.

The Internal Revenue Service has selected seven new members for the Advisory Committee on Tax Exempt and Government Entities, a formal body of external stakeholders in the specialized areas of tax-exempt organizations, employee retirement plans, tax-exempt bonds, and federal, state, local and Indian tribal governments.

IRS SOLICITS MEMBERS FOR ADVOCACY PANEL: The Internal Revenue Service is accepting applications for joining its Taxpayer Advocacy Panel.

The Internal Revenue Service's tough stance on settling the "Son of Boss" tax shelters matches the call by the IRS Oversight Board for increased compliance funding, as well as the tax gap findings of the National Research Program. Together, they signal a sea change from the kinder, gentler, post-1998 hearings IRS.

Washington - The Winter 2004-2005 Statistics of Income Bulletin, a quarterly compilation of information on various topics from federal tax returns and other documents, has been released by the Internal Revenue Service.

It's official: Taxpayers who file paper returns are in the minority, the Internal Revenue Service reported.

As of this writing, bankruptcy reform legislation had passed the Senate and was expected to move quickly through the House and be signed by President Bush. The Bankruptcy Abuse and Prevention and Consumer Protection Act of 2005 may already be law as you read this column.

In recognition of National Small Business Week, the Internal Revenue Service has made available a number of free online resources to help the nation's 45 million small business and self-employed taxpayers with their tax responsibilities.