Tax Law Insights Blog | Burr & Forman LLP

IRS Announces New Procedures for U.S. Citizens Residing Overseas Who Have Not Filed Tax Returns and Reported Income

Erik P. Doerring — Wed, 12 Sep 2012 09:00:01 -0400

The IRS has long been aware of U.S. taxpayers living overseas who have not filed federal income tax returns or Reports of Foreign Bank and Financial Accounts ("FBARs"). Earlier this year, the IRS announced the reopening of its successful Offshore Voluntary Disclosure Program ("OVDP") allowing individuals with unreported foreign bank account income to come forward and report this income, and to pay the related tax, interest and certain reduced civil penalties, but without criminal prosecution. The IRS has now announced a new alternative compliance procedure designed to provide ...

First Circuit Ruling May Provide More Flexibility for Conservation Easement Donors in Dealing With Lenders

George E. Morrison — Fri, 24 Aug 2012 09:00:02 -0400

The Court of Appeals for the First Circuit, in Kaufman v. Shulman, Docket No. 11-2017P-01A (1st Cir., July 19, 2012), reversed a Tax Court decision siding with the IRS which had disallowed a couple's conservation easement deduction. The Tax Court had disallowed the deduction because a provision in a subordination agreement with the couple's lender violated the Treasury Regulations' "extinguishment provision". The Court of Appeals reversed the Tax Court, finding that the Tax Court and IRS interpretation of this regulation was unreasonably restrictive and inconsistent with ...

The Importance of a Qualified Appraisal for Conservation Easements

Jeffrey T. Allen — Wed, 01 Aug 2012 09:00:03 -0400

Landowners may be allowed a federal income tax deduction for the contribution of a conservation easement restricting donated property. A qualified conservation contribution is a donation of a qualified real property interest to a qualified organization which is exclusively used for conservation purposes. The conservation easement must also be protected and the restrictions on the use of the property must be granted in perpetuity. The contribution must be made to governmental units, churches, schools, hospitals, or Section 501(c)(3) public charities and supporting ...

Fourth Circuit Court of Appeals Rejects IRS Transferee Liability Theory

Jeffrey T. Allen — Fri, 08 Jun 2012 09:00:04 -0400

On May 31, 2012 the Fourth Circuit Court of Appeals issued its opinion in the case of Starnes v. Commissioner, upholding a decision of the United States Tax Court which determined that the former shareholders of a corporation were not liable as transferees for unpaid corporate income taxes. The opinion is the first appellate level decision addressing the proper legal standard to be applied in order to determine if a person is liable as a transferee under § 6901 of the Internal Revenue Code.

The Starnes case involved what the IRS characterizes as an "intermediary transaction tax ...

Eighth Circuit Ruling Highlights Risks in S-Corporation Compensation Planning

George E. Morrison — Thu, 05 Apr 2012 09:00:05 -0400

The Eighth Circuit Court of Appeals, in the recent case of Watson, P.C. v. US, 109 AFTR 2d 2012-1059, 668 F. 3d 1008 affirming the district court below, held that an S-corporation shareholder's 2002 and 2003 reported salaries were unreasonably low, and reclassified dividends paid by the corporation to the shareholder as additional salary, thus subjecting that income to additional employment taxation under the Federal Insurance Contribution Act (FICA).

Generally, earnings from self-employment and employee wages are subject to withholding for Social Security and Medicare ...

Reinstatement for Tax-Exempt Organizations whose Exemption Status was Automatically Revoked by the IRS

Jeffrey T. Allen — Wed, 07 Mar 2012 09:00:06 -0500

Many individuals and business entities create charitable organizations to serve the needs of a specific group of persons or a specific community with a need for a type of service. Most charitable organizations undertake the arduous task of applying for tax-exempt status with the Internal Revenue Service in order to be exempt from paying corporate income taxes and to solicit charitable donations from public and private patrons. In June of 2011, the IRS revoked the tax-exempt status of approximately 275,000 organizations because these organizations failed to file the required ...

South Carolina Conservation Easement Tax Credit Transfers

Jeffrey T. Allen — Thu, 09 Feb 2012 09:00:07 -0500

A landowner who donates a conservation easement to a qualifying organization can benefit from state tax incentives, in addition to the available federal income tax deduction. South Carolina provides an important transferable income tax credit for landowners who donate a conservation easement on property located in South Carolina. The income tax credit is equal to twenty-five percent of the amount of a charitable deduction resulting from the donation of a conservation easement.

The twenty-five percent credit is subject to several caps. First, the credit may not exceed $250 per ...