Tax News

CCH (cch.taxgroup.com) reports:

Effective August 31, 2007, in determining whether a business has satisfied the threshold criteria for qualifying for the jobs creation credit or the business property investment credit against North Carolina corporate franchise or income taxes, personal income tax, or insurance gross premium tax, taxpayers may not aggregate the number of jobs created or business property placed in service in an urban progress zone or an agrarian growth zone with jobs created or business property placed in service at any other eligible establishments. Previously, such taxpayers could aggregate the jobs created or business property placed in service in business establishments located in the same county.
In addition, documentation supporting a taxpayer's eligibility for the oyster shell recycling credit against corporate income and personal income taxes need only be attached to a taxpayer's return if requested. Previously, certification by the North Carolina Department of Environment and Natural Resources was required to be attached to the return.
Ch. 527 (S.B. 540), Laws 2007, effective August 31, 2007.

CCH (cch.taxgroup.com) reports:

The Mississippi State Tax Commission (MSTC) was required to recalculate its assessment of corporate income tax attributable to the recapture of depreciation previously taken on sold corporate assets.
The taxpayer had divided the corporate assets sold into three groups and contested the recapture of any depreciation and amortization unrelated to IRC §1245 assets (e.g., furniture, fixtures, and signs). The taxpayers contended, further, that the MSTC was required to, but did not, calculate the recapture of depreciation and amortization in the same manner as provided for in IRC §1245.

CCH (cch.taxgroup.com) reports:

The Internal Revenue Service has certified two 2008 model year GM vehicles as meeting the requirements of the Alternative Motor Vehicle Credit for qualified hybrid motor vehicles. The credit amount for each vehicle is:
--Chevrolet Malibu hybrid --$1,300; and
--Saturn Aura hybrid --$1,300.
Original purchasers may claim the full amount of the allowable credit up to the end of the first calendar quarter after the quarter in which the manufacturer records the sale of its 60,000th vehicle. For the second and third calendar quarters after the quarter in which the 60,000th vehicle is sold, taxpayers may claim 50 percent of the credit. For the fourth and fifth calendar quarters, taxpayers may claim 25 percent of the credit. No credit is allowed after the fifth quarter.
IR-2007-156, 2007FED ¶46,623
Other References:
Code Sec. 30B
CCH Reference - 2007FED ¶4059E.0265
CCH Reference - 2007FED ¶4059E.10
Tax Research Consultant
CCH Reference - TRC INDIV: 57,708
CCH Reference - TRC INDIV: 57,708.20

CCH (cch.taxgroup.com) reports:

The IRS has corrected certain 2007 inflation adjustment amounts set forth in Rev. Proc. 2006-53, I.R.B. 2006-48, 996. The aggregate cost of any Code Sec. 179 property a taxpayer may elect to treat as an expense shall not exceed $125,000. The $125,000 limitation shall be reduced (but not below zero) by the amount by which the cost of property placed in service during the 2007 tax year exceeds $500,000. For tax years beginning after 2007 and before 2001, these amounts will be adjusted for inflation. Rev. Proc. 2006-53 is modified and superseded.
Rev. Proc. 2006-53 is modified and superseded.
Rev. Proc. 2007-60, 2007FED ¶46,622
Other References:
Code Sec. 179
CCH Reference - 2007FED ¶1090.11
CCH Reference - 2007FED ¶12,126.07
Tax Research Consultant
CCH Reference - TRC SALES: 6,364.20
CCH Reference - TRC CCORP: 42,060

CCH (cch.taxgroup.com) reports:

The IRS has published procedures allowing additional partnerships to use an aggregate method of allocating gains and losses under Reg. §704-3(e)(3) when the partnership revalues its property under Reg. §1.704-1(b)(2)(iv)(f) (a "reverse section 704(c)
allocation"). As of October 1, 2007, "qualified partnerships" may elect to aggregate built-in gains and losses from "qualified financial assets" for purposes of making "reverse Code Sec. 704(c) allocations." Taxpayers may, however, apply these rules to tax years beginning after December 31, 2005.
The terms "qualified partnership" and "qualified financial asset" are specifically defined for purposes of the new procedure. Once applied, the same aggregate approach must generally be used for all qualified financial assets for all tax years in which the partnership is a "qualified partnership."
If an electing partnership fails to qualify as a "qualified partnership" after making the election, the partnership then must make "reverse section 704(c)
allocations" on an asset-by-asset basis after the date of disqualification. The partnership, however, is not required to disaggregate the book gain or book loss from qualified asset revaluations before the date of disqualification when making "reverse section 704(c)
allocations" on or after the date of disqualification.
Rev. Proc. 2007-59, 2007FED ¶46,621
Other References:
Code Sec. 704
CCH Reference - 2007FED ¶25,135.40
Tax Research Consultant
CCH Reference - TRC PART: 9,152.05
 

CCH (cch.taxgroup.com) reports:

The House is scheduled to vote on September 7 on a bill to ban the controversial practice of patenting tax strategies, an aide to Rep. Howard L. Berman, D-Calif., told CCH on September 6. The measure is part of a comprehensive patent reform bill, the Patent Reform Bill of 2007 (HR 1908), sponsored by Rep. Berman.
In July, the House Judiciary Committee approved language curtailing the patenting of tax strategies (TAXDAY, 2007/07/19, C.3). Under HR 1908, an applicant would not be able to obtain a patent for a "tax-planning method." The bill defines a tax-planning method as "a plan, strategy, technique, or scheme that is designed to reduce, minimize or defer, or has, when implemented, the effect of reducing, minimizing or deferring a taxpayer's liability." However, the bill would not prohibit the patenting of return-preparation software.
The U.S. Patent and Trademark Office has approved patents for roughly 50 tax strategies, according to the AICPA. An additional 50 applications are reported to be pending. Many critics, including the AICPA, charge that patenting may mislead taxpayers into believing that a tax strategy has been approved by the IRS. In fact, the IRS does not review the applications for tax strategy patents.
Also on September 6, House Ways and Means Committee Chairman Charles B. Rangel, D-N.Y., and ranking member Jim McCrery, R-La., urged their colleagues to oppose any effort to remove the anti-tax strategy patent language from HR 1908. "The tax laws belong to all of us and we all have an obligation to comply with them. We shouldn't have to pay a royalty to do so," they wrote.
Legislation to prohibit the patenting of tax strategies is also pending in the Senate. The Stop Tax Haven Abuse Act (Sen 681) would prohibit the patenting of any strategy designed to minimize, avoid, defer, or otherwise affect the liability for federal, state, local or foreign tax. The bill has been referred to the Senate Finance Committee.
By George L. Yaksick, Jr., CCH News Staff
House Ways and Means Committee Letter

Tax Analysts report: