Tax Law Insights Blog | Burr & Forman LLP

The South Carolina Supreme Court Determines When an Alternative Allocation and Apportionment Formula Can be Used

Jeffrey T. Allen — Mon, 29 Dec 2014 09:00:01 -0500

The income of a multi-state business subject to tax in South Carolina is ordinarily determined by allocating certain income to South Carolina and apportioning the remainder of the business's income based on the ratio of South Carolina sales to gross sales everywhere. However, the law permits a taxpayer or the South Carolina Department of Revenue to use an alternative method when the ordinary allocation and apportionment rules do not fairly represent the extent of a taxpayer's business activities in South Carolina.

On December 23, 2014 the South Carolina Supreme Court issued an ...

South Carolina Department of Revenue Issues Guidance Regarding the Tax Treatment for Married Same-Sex Couples

Erik P. Doerring — Wed, 10 Dec 2014 09:00:02 -0500

On December 2, 2014, the South Carolina Department of Revenue issued S.C. Temporary Revenue Ruling No. 14-8 and No. 14-9 regarding the income and property tax treatment for married same-sex couples.Same-sex couples filing a federal income tax return with a married filing status must now file a South Carolina income tax return using the same married filing status.

In S.C. Temporary Revenue Ruling No. 14-8, the Department of Revenue instructs same-sex couples who are legally married under any state law to file their 2014 South Carolina income tax return as a married couple - either ...

Same Sex Couples May Now File Married Income Tax Returns in South Carolina

Erik P. Doerring — Mon, 24 Nov 2014 09:00:03 -0500

Robert is a veteran tax return preparer of 20 years, who walks into his office on February 2, 2015 to begin a busy income tax filing season. Julie and Michelle stop by Robert's office and give their wage and income statements to Robert for the calendar year 2014. They tell Robert they were legally married in Massachusetts on July 4, 2013, but they are South Carolina residents now and wish to file both a federal and South Carolina income tax return as a married couple. Shortly thereafter, another couple, Mark and Brad, walk into Robert's office and state they were married in South Carolina on ...

Same-Sex Marriages In South Carolina: Tax Implications of Condon V. Haley

Erik P. Doerring — Fri, 14 Nov 2014 09:00:04 -0500

In Colleen Therese Condon and Ann Nichols Bleckley v. Nimrata (Nikki) Randhawa Haley, et al., Civil Action No. 2:14-4010-RMG (November 12, 2014), the United States District Court for the District of South Carolina (Charleston Division) held that South Carolina's prohibition of marriage for same sex couples who otherwise meet all other legal requirements for marriage in the state is unconstitutional and violates the Due Process Clause and Equal Protection Clause of the Fourteenth Amendment of the U.S. Constitution. The District Court also invalidated as a matter of law ...

US Tax Court Rejects IRS Market Method Valuation and Utilizes Subdivision Development Method to Value Conservation Easement

Jeffrey T. Allen — Mon, 18 Aug 2014 09:00:05 -0400

The United States Tax Court recently determined the value of a conservation easement using a subdivision development method in the case of Schmidt v. Commissioner, TC Memo 2014-159. The case involved a taxpayer who purchased a 40-acre parcel of vacant land in May 2000 for $525,000, with the intention of subdividing and developing it. The taxpayer began the process of obtaining the required permits and approvals to develop the property. The facts indicated that the taxpayer would receive all required permits and approvals to develop the property, but the taxpayer ultimately granted ...

Supreme Court Finds Severance Payments Subject to FICA in Quality Stores

George E. Morrison — Thu, 27 Mar 2014 09:00:06 -0400

Writing for an 8-0 majority, with Justice Kagan abstaining, Justice Anthony Kennedy handed down the Supreme Court's ruling in the closely-watched United States v. Quality Stores, Inc., et al. case March 25, holding that severance payments to involuntarily terminated employees are taxable wages under the Federal Insurance Contributions Act (FICA), and thus subject to Social Security and Medicare withholding. The Court took issue with a Sixth Circuit opinion which had found such payments not subject to withholding, stating that "[t]o reach its holding, the [Sixth Circuit] Court ...

South Carolina Department of Revenue Will No Longer File Tax Lien Satisfactions

Jeffrey T. Allen — Fri, 07 Mar 2014 09:00:07 -0500

The South Carolina Department of Revenue ("DOR") is the state agency charged with collecting most South Carolina taxes, including income taxes, sales and use taxes, and withholding taxes. If a taxpayer fails to pay an assessed tax liability, DOR may file a tax lien against a taxpayer, with the lien notice being filed in one or more of the county register of deeds offices. The filing of the lien notice makes the delinquent tax liability a matter of public record.

Prior to March 1, 2014, when a taxpayer fully paid the amount secured by a filed tax lien, DOR would file a lien satisfaction with the ...

IRS Blesses Subchapter S Corporation Succession Plan

George E. Morrison — Mon, 24 Feb 2014 09:00:08 -0500

In a recent private letter ruling, PLR 201405005, the IRS validated a succession plan implemented by a Subchapter S corporation to transition share ownership from retiring co-owners to certain key employees. An S corporation is a small business corporation which has made an election to be taxed under Subchapter S of the Internal Revenue Code and which, among other things, may not have more than one class of stock.

Specifically, the IRS concluded that profit on a redemption of the owners' shares by the company for notes will:

1. be taxed to them as capital gain reportable on the ...

Internal Revenue Service Updates Procedures for Organizations Requesting Reinstatement as a Tax-Exempt Organization

Jeffrey T. Allen — Mon, 06 Jan 2014 09:00:09 -0500

On January 2, 2014, the Internal Revenue Service (the "IRS") issued an advance copy of Revenue Procedure 2014-11 which updates the procedures for an organization to request retroactive or non-retroactive reinstatement after having its tax-exempt status automatically revoked under Section 6033(j) of the Internal Revenue Code (the "Code") for failure to file required annual returns or notices for three consecutive years. Revenue Procedure 2014-11 will be published in the Internal Revenue Bulletin 2014-3, dated January 13, 2014.

Generally, Section 6033(a) of the Code requires ...