Tax practice

IRS TO CHALLENGE CERTAIN S CORP AND EXEMPT ENTITY TRANSACTIONS: The Internal Revenue Service said that it intends to challenge certain transactions involving S corporations and tax-exempt entities, such as charities, that improperly shift taxation away from S corporation shareholders. In Notice 2004-30, the IRS declared that these abusive transactions are considered “listed transactions.” Participants in a listed transaction must disclose their participation, and promoters must keep lists of investors and, in certain cases, register the transactions with the IRS.

by Roger Russell

The Supreme Court has recently decided two tax cases.

Washington — The Internal Revenue Service will disallow deductions for theft losses claimed by taxpayers with respect to decreases in the market value of stock purchased in the open market that may be attributable to the fraudulent misrepresentations or other illegal misconduct of corporate officials.

Washington — Commissioners of the tax administrations of Australia, Canada, the United Kingdom and the United States have begun discussions to form a joint task force to increase collaboration and coordinate information about abusive tax transactions.

GRASSLEY, BAUCUS INVESTIGATE IN-KIND CHARITABLE CONTRIBUTIONS: Sen. Chuck Grassley, R-Iowa, chairman of the Committee on Finance, and Sen. Max Baucus, D-Mont., ranking member, have advanced their review of in-kind charitable contributions by asking the Internal Revenue Service to explain its actions to prevent abuse and for key documents detailing such contributions.

Now that the most pressing deadlines for filing 2003 tax returns are behind us, it’s time to switch gears and return to a more planning-driven mindset.

by Roger Russell

SENATORS EXPAND LEASING TAX SHELTERS PROBE: Federal agencies may have played a role in approving abusive tax shelter leases using federally funded infrastructure assets, according to Sen. Chuck Grassley, R-Iowa, chairman of the Senate Finance Committee, and ranking member Sen. Max Baucus, D-Mont.The senators have been investigating how major U.S. companies receive huge tax deductions by pretending to lease the infrastructure of cities and foreign countries, and then pretending to lease them back.

by J. Edward Ketz

New York — EMoney Advisor has released the latest version of its Web-based AdvisorPlatform planning software, which includes the ability to get live client net-worth statements nightly that advisors can submit to banks on behalf of clients who need to verify their assets quarterly for lines of credit.

by George G. Jones and Mark A. Luscombe

by Roger Russell

NATIONAL SALES TAXES HIT RECORD LEVELS IN 2003: The sales tax rates levied by states, counties, cities and districts reached all-time highs in 2003, resulting in the largest overall increase in more than a decade, according to a report by tax technology company Vertex Inc.

Washington — The Treasury Department and the Internal Revenue Service say that they will propose regulations regarding the treatment of amounts that facilitate certain tax-free and taxable transactions and other restructurings, and that are required to be capitalized under Code Section 263.

New York — AccountMate, a developer of modifiable accounting and business management software for mid-market companies, is now offering a human resources solution through a new partnership with Ascentis and its AHROffice product.

by George G. Jones and Mark A. Luscombe

by Roger Russell

SOFTWARE GLITCH THAT CAUSED E-FILE REJECTS FIXED: A computer glitch that caused thousands of e-filed tax returns to be rejected in the first days of the filing season has been fixed, the Internal Revenue Service said.

by George G. Jones and Mark A. Luscombe