Tax News

CCH (cch.taxgroup.com) reports:

A sales finance company (taxpayer) was not entitled to a refund of Louisiana sales taxes advanced by the company for motor vehicle credit sales that were ultimately uncollectible and charged off the company's federal tax returns as bad debts. The taxpayer made no retail sales to the consumers whose credit accounts it purchased. Neither it nor the dealerships had a statutory obligation to collect the motor vehicle sales tax or to account for the tax to the Louisiana Department of Revenue, and as a consequence, the taxpayer was not entitled to a refund under the bad debt statute.

CCH (cch.taxgroup.com) reports:

The proceeds from a settlement of a lawsuit involving a claim to ownership of a life insurance policy were taxable as ordinary income. The lawsuit was filed by a taxpayer and his wife against his former employer for, among other things, breach of an employment contract provision requiring the employer to assign the life insurance policy on the taxpayer to his wife. In settlement thereof, the employer paid an amount to the taxpayer, however, the employer retained ownership of the policy. The taxpayer's argument that the proceeds were capital gain was rejected because there was no sale or exchange of the policy as contemplated by Code Sec. 1221; rather, the proceeds were specifically for settlement of the claim.
N.C. Eckersley, TC Memo. 2007-282, Dec. 57,107(M)
Other References:
Code Sec. 1221
CCH Reference - 2007FED ¶30,422.58
CCH Reference - 2007FED ¶30,422.6555
Tax Research Consultant
CCH Reference - TRC SALES: 3,266
 

CCH (cch.taxgroup.com) reports:

Various prescribed rates for federal income tax purposes for October 2007 have been provided by the IRS. The annual short-term, mid-term, and long-term applicable federal interest rates (AFRs) are 4.19 percent, 4.35 percent and 4.88 percent, respectively. The semiannual short-term, mid-term, and long-term AFRs are 4.15 percent, 4.30 percent and 4.82 percent, respectively. Quarterly short-term, mid-term and long-term AFRs are 4.13 percent, 4.28 percent and 4.79 percent, respectively. Finally, the monthly short-term, mid-term and long-term rates are 4.11 percent, 4.26 percent and 4.77 percent, respectively.
The short-term, mid-term, and long-term adjusted applicable federal rates (adjusted AFR) for October 2007 for purposes of Code Sec. 1288(b) are 3.60 percent, 3.79 percent, and 4.49 percent, respectively, when annual compounding is used.
Additionally, the Code Sec. 382 adjusted federal long-term rate is 4.49 percent, and the long-term tax-exempt rate is 4.50 percent. The Code Sec. 42(b)(2) appropriate percentage for the 70-percent present-value, low-income housing credit is 8.07 percent, and the appropriate percentage for the 30-percent present-value, low-income housing credit is 3.46 percent.
Finally, the Code Sec. 7520 AFR for determining the present value of an annuity, an interest for life or a term of years, or a remainder or reversionary interest is 5.20 percent.
Rev. Rul. 2007-63, 2007FED ¶46,636
Rev. Rul. 2007-63, FINH ¶P30,562
Other References:
Code Sec. 42
CCH Reference - 2007FED ¶173.02
CCH Reference - 2007FED ¶176.01
CCH Reference - 2007FED ¶4305.03
Code Sec. 382
CCH Reference - 2007FED ¶17,115.28
Code Sec. 642
CCH Reference - 2007FED ¶24,308.1885
Code Sec. 1274
CCH Reference - 2007FED ¶31,310.05
CCH Reference - 2007FED ¶31,310.11
Code Sec. 7520
CCH Reference - 2007FED ¶42,785.40
CCH Reference - FINH ¶18,950.05
Code Sec. 7872
CCH Reference - FINH ¶22,630.05
Tax Research Consultant
CCH Reference - TRC ACCTNG: 36,162.05
 

CCH (cch.taxgroup.com) reports:

Senate Finance Committee Chairman Max Baucus, D-Mont., announced on September 18 that the committee will mark up the "Habitat and Land Conservation Act of 2007," which would provide tax incentives for farmers, ranchers, and private landowners who voluntarily put easements on their property or who aid in the recovery of species classified as threatened or endangered. The markup is slated for September 20.
Provisions in the Habitat and Land Conservation Act of 2007 would: (1) permanently extend tax incentives for farmers, ranchers and other eligible taxpayers who establish conservation easements, (2) establish tax credits for taxpayers who take voluntary measures to help protect and restore the habitats of threatened or endangered species and (3) establish a tax deduction for the cost of specific actions taken by taxpayers that are recommended in habitat recovery plans approved under the Endangered Species Act.
In addition, the measure would allow taxpayers to exclude from taxable income any payments received from the federal government under certain cost-sharing conservation programs and extend a provision to allow taxpayers to fully deduct the costs of environmental cleanups in the year the costs are incurred.
"This bipartisan bill will go a long way towards preserving America's beauty and protecting our planet's most vulnerable species," said Baucus in a written statement. "This is a promise to our children and our grandchildren that we will guarantee access to the hunting and fishing areas that so many Americans treasure."
Baucus, with ranking member Charles E. Grassley, R-Iowa, and committee members Mike Crapo, R-Idaho, and Blanche Lincoln, D-Ark., co-sponsored the Endangered Species Recovery Act --which would establish tax credits for conservation easements --in February 2007. According to a release by Baucus' staff, conservation tax incentives have been strongly supported by lawmakers on both sides of the aisle, as well as advocacy organizations including the Congressional Sportsmen Foundation, National Wildlife Federation, Environmental Defense, the Defenders of Wildlife, the National Endangered Species Act Reform Coalition and the Farm Bureau.
By Jeff Carlson, CCH News Staff
 

Tax Analysts report: