When an S corp is involved in a merger, acquisition or business sale-on either side of the transaction-careful attention must be paid to the tax issues specific to S corps as well as timing issues and how the transaction will affect the tax positions of the S corp shareholders. And when the transaction also involves a C corp, a thorough understanding of how tax code affects both types of entities is a must, according to Joseph B. Darby III, the author of CCH's brand-new Practical Guide to Mergers, Acquisitions and Business Sales. In chapter 8 of this book, Darby covers the specifics of transactions involving S corps with detailed examples, calculations and analysis that puts it all together in one place.

Covered topics include:

• Corporate level tax liabilities under Code Sections 1374 and 1375
• Gains and losses and how they are applied
• The "sting" tax and how it works
• Qualified Subchapter S Subsidiaries
• Code Sec. 338(h)(10) elections.

 

Many taxpayers have sought to use the lucrative and broad-based incentives under new Code Sec. 199 since the domestic production activities deduction (DPAD) was created in 2004. But partnerships and other passthroughs are finding their access to the deduction limited by the amount of W-2 wages that can be passed through to the owners. In some instances, those limitations could block a partnership from taking the deduction at all, notes James M. Kehl in a recent issue of TAXES—The Tax Magazine from CCH. In this article, Mr. Kehl examines in detail strategies practitioners can use to help passthrough owners optimize their ability to use the DPAD to reduce their tax burdens. He offers approaches that will help partnerships leverage these tax incentives that are being used by many companies to achieve significant tax savings.

 

---

It's a simple thing to do. All that is needed is a simple check in the box under cash or accrual on a new business's first tax return. But the choice of accounting method for a new business is a complex decision that can have tremendous tax consequences, as well as an impact on the success or failure of that business. In a recent issue of TAXES-The Tax Magazine, accounting professor James P. Angelini outlines the decision-making process that goes into choosing the accounting method for tax purposes. He describes the times when the IRS says there is no choice, as well as what considerations must be made when the choice is available between cash and accrual. He clearly presents the variables used to decide on accounting methods and what the tax consequences will be of those decisions. Using these tools can help practitioners avoid heat-of-the moment mistakes in the rush to file that first tax return for a new business.

 

Was this article useful?
Send us your comments: CCH-FocusOnTax@cch.com

---

Perhaps for practitioners dealing with clients in the IRS collections process the best advice it to "get your money up front," according to EA Patti Logan, herself a former IRS revenue officer. She notes that enforcement remains king at the IRS, making collections an area where taxpayers are always going to need help and representation. Setting up installment agreements and other negotiations with the IRS requires an understanding of how the collections process works and what IRS staff can and can't do in terms of settlements and agreements. But, Logan notes, that your success in relieving the pressure your client feels from the IRS could also be sufficient to make paying your bill a much lower priority as well. Ms. Logan's recent article in the Journal of Tax Practice and Procedure is filled with practical advice for practitioners offering help to taxpayers caught in the collections at the IRS.

 

---

More estate plans are now including an element of asset protection. This is what estate planning expert Barry S. Engel calls "integrated estate planning" because it includes elements that are intended to be put to work before the client's death. The use of foreign trusts and other asset protection strategies have generated some controversy and much discussion in recent years and the area is not one for practitioners to simply "dabble" in, Engel, an attorney, warns. CCH's editors interviewed Mr. Engel recently for an article in Estate Planning Review that goes over the major issues involved in asset protection strategies and how they fit into an overall estate plan. Mr. Engel is also the author of CCH's Asset Protection Planning Guide and has set up asset protection plans for many of his estate planning clients over the years.

 

Was this article useful?
Send us your comments: CCH-FocusOnTax@cch.com

---

With the deadline for Medicare Part D decisions looming in May 2006 and recent changes to how Part B works, it is a good time for practitioners to get up to speed on recent Medicare. Retirement planning expert Annika E. Ferris evaluated all of the recent Medicare changes in a recent issue of CCH's Journal of Retirement Planning. She notes that many of your clients will see sharp increases in what they pay for Medicare Part B under new rules, making Medicare issues a growing part of retirement planning over the coming years.