Legislative tax law source - path to becoming a law
1- House ways and means committee
2- House of representatives
3- Senate finance committee
4- Senate (may start here but goes back to step 1)
5- Compromise version
6- President (10 days)
IRS Revenue ruling
interpretations of the law
Procedural regulations
outline IRS conduct
Interpretive regulations
elaboration and clarification
Legislative regulations
complete details of issues
Letter rulings
taxpayer requests how the IRS will treat a proposed transaction
Determination Letter
how the IRS will treat a given transaction (usually completed or ongoing/recurring)
Technical advice memorandum
issued based on issued raised during an audit
due date for return for corp and partnership
march 15
due date for return for estates and trusts
april 15
due date for return for exempt orgs
may 15
due date for return of transfer taxes
9 mos. after death
due date for gift tax return
April 15
Statutory notice of deficiency
assessment from IRS - demand payment 90 days after notice
Notice and demand for payment
Follows the assessment (statutory notice of deficiency) and you have 30 days to pay once you receive the notice
Small cases division of the US tax court
cases < $50,000
no appeal
does not set precedent
Federal District Court
must pay before going to court
option to have a jury
US Court of Federal Claims
must pay before going to court
no jury option
Estimated tax payments: Individuals
Either:
90% of CY taxes
100% of PY taxes (110% if AGI > $150,000)
Estimated tax payments: Corporations
-annualized method
-seasonal method
Statute of limitations: underpayment of taxes
assess within three years of later of: date due or date paid;
increases to 6 years of 25%
no statute for fraud
Accounting period: C-Corp
calendar year or fiscal year
Accounting period: S-Corp
calendar year unless valid reason
Accounting Period: Personal service corp
calendar year unless valid reason
Accounting period: Partnership
same as majority partners
Accounting Period: Estates
choose fiscal or calendar year
Accounting period: Trusts
calendar year
Method for accounting for contracts that must be used
percentage-of-completion
Legislative reenactment doctrine
a long-standing finalized regulation presumably has congressional approval if Congress has not amended the relevant section of the IRC
Estimated tax payments: estates
not required to make any estimated payments during the estate's first 2 taxable years
Underpayment of taxes: amount that may be underpaid without penalty
$1,000
Bad debt accounting for corporations
must use direct charge-off method
Amortization of intangibles for tax purposes
15 years, straight line
Amortization of intangibles for tax purposes
15 years, straight line
Users of the uniform capitalization rules
applies to tangible personal property produced by the taxpayer or acquired for resale unless the average annual gross receipts for the last three years were < $10,000,000
When is interest expense deductible
in the period it accrues, regardless of taxpayer's basis of accounting
Entities that may use the cash method of accounting
not a tax shelter, but a personal service corporation or an entity under the $5million gross receipts test
Refundable security deposits
not part of income
