Tax News

CCH (cch.taxgroup.com) reports:

  Four new credits for automobile alternative power may be claimed against the Michigan business tax. The credits are for (1) the manufacturing of plug-in traction battery packs, (2) expenses for vehicle engineering, (3) engineering activities for advanced automotive battery technologies, and (4) the construction of an integrative cell manufacturing facility.

CCH (cch.taxgroup.com) reports:

  The Tax Court correctly determined that Code Sec. 481 adjustments attributable to a corporation's change in accounting method were subject to the built-in gains tax following its S corporation election because the adjustments resulted from a deduction claimed before the S corporation election was made. The corporation's argument that the Code Sec. 481 adjustments were items of income under Reg. §1.1374-4(b) and that the corporation, as an accrual method taxpayer, could not have included the adjustments in gross income prior to its S corporation election was without merit. The deduction was the item to be considered in determining whether the built-in gain tax applied, not the Code Sec. 481 adjustments. The corporation had used the accrual method and included that item in its income before using the mark-to-market valuation method to deduct it. Since the adjustments related to the deductions taken prior to the 10-year S corporation recognition period, the adjustments were recognized as built-in gains.

  Affirming the Tax Court, 94 TCM 514; Dec. 57,188(M); TC Memo. 2007-354.

MMC Corp., CA-10, 2009-1 USTC ¶50,155

Other References:

 
Code Sec. 481

  CCH Reference - 2009FED ¶22,277.58

 
Code Sec. 1374

  CCH Reference - 2009FED ¶32,203.20

  Tax Research Consultant

  CCH Reference - TRC SCORP: 356.15
CCH Reference - TRC SCORP: 356.20
CCH Reference - TRC ACCTNG: 21,000
CCH Reference - TRC ACCTNG: 21,150

Tax Analysts report: