The Code Sec. 199 Domestic Production Activities deduction has been one of the hottest areas of tax planning since Congress passed the 2004 Jobs Act. When using Sec. 199 for S corps, partnerships and other passthrough entities, tax planners must combine Sec. 199 rules and planning with sound understanding of the rules and planning techniques for those specific entities. Dealing with distributive shares of profits and losses and other practical questions must become part of the Sec. 199 planning process, notes James M. Kehl, CPA. Mr. Kehl has prepared a thorough review of how to put Sec. 199 to work in CCH's just-released book-Practical Guide to the Sec. 199 Deduction. Chapter 9 of this book, available at the link below, explains how to use Sec. 199 with passthroughs and includes numerous examples and sample calculations to show you how to apply these new rules.

 

• Click here to read Chapter 9 from the Practical Guide to the Sec. 199 Deduction
• Click here to see this new book's detailed Table of Contents
• Click here to order the Practical Guide to the Sec. 199 Deduction

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When Congress set up the rules allowing S corporations to form employee stock ownership plans (ESOPs), it cut out one of the best tax planning opportunities available to C corps-the tax free roll over of the gain in the corporation's stock value when the stock is sold to an ESOP. In Chapter 15 of the new edition of CCH's Practical Guide to S Corporations, author Michael Schlesinger, J.D., LL.M., notes that there are still important considerations and instances where an S corp can potentially find tax advantages with ESOPs. Schlesinger outlines the use of ESOPs and shows practitioners through the opportunities and potential pitfalls in his chapter on ESOPs and S corps.

 

• Click here to access this chapter from the Practical Guide to S Corporations
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How do tax professionals deal with the mobile client in the new world of wireless access when the tax codes still refer to the telegraph as modern technology a taxpayer may use in his or her trade or business? That is the question that James A. Fellows and Michael A. Yuhas tackled in a recent issue of TAXES-The Tax Magazine. They take a close look at how the use of modern technology affects the ever-vexing question of the home office deduction, as well as the sometimes overlooked question of what is the "tax home" of a taxpayer. As you'd expect, facts and circumstances drive these taxation outcomes, but there remain many questions that are unanswered by the current tax law and guidance offered by the IRS. Documentation and careful calculations are critical in this area and Mr. Fellows and Mr. Yuhas walk practitioners through some of the areas they must consider in deciding how various situations should be handled.

 

• Click here to read this article from TAXES—The Tax Magazine
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For the 2005 tax year, mandatory e-filing of returns only applies to the largest corporations and non-profit organizations. But the number of businesses and non-profits that must file electronically will grown exponentially for the 2006 tax year, and many of those taxpayers are not equipped to make this switch, according to Michael P. Dolan, the national director of IRS policies and dispute resolutions at KPMG LLP-Washington Tax. In a recent issue of CCH's Journal of Tax Practice and Procedure, Mr. Dolan outlines the new requirements and what will be necessary to prepare to meet those requirements for businesses and non-profits that will be subject to the new e-filing rules. The thresholds are dropping pretty low, he notes. Business with assets of $10 million will be subject to the new requirements for the 2006 tax year-a big change from the threshold of $50 million. Practitioners and taxpayers need to prepare for this change and start the process of getting the necessary infrastructure in place.

 

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All of those Florida "snowbirds" have the right idea, according to attorney Bruce Steiner. With state taxes rising, planning to minimize states taxes has become a critical part of the retirement planning process, Mr. Steiner notes in a recent article in CCH's Journal of Retirement Planning. In 1996, Congress opened up the way for retirees to reduce their retirement tax burdens by moving to a state with a lower (or in some cases nonexistent) income tax. Steiner notes that research up front for clients' retirement years could reduce or eliminate the state tax bite on retirement savings. He also points that the planning should also extend to the estate planning side as beneficiaries of a qualified plan or IRA could see their taxes reduced through the use of a trust as the beneficiary of the qualified plan or IRA.

 

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