Tax & Accounting Blog

Medicare Surtax on Net Investment Income Goes into Effect on January 1, 2013

Medicare Surtax on Net Investment Income Goes into Effect on January 1, 2013

Under the 2010 Health Care reform legislation, a Medicare tax will, for the first time, be applied to investment income beginning in 2013. A new 3.8% tax will be imposed on net investment income of single taxpayers with AGI above $200,000 and joint filers over $250,000. Net investment income is interest, dividends, royalties, rents, gross … Read More

Open Transaction Doctrine does not apply in insurance company demutualization case.

Open Transaction Doctrine does not apply in insurance company demutualization case.

On July 9, 2012, a federal district court in Arizona ruled that the taxpayer could not apply the “open transaction” doctrine in a case involving stock received from an insurance company that demutualized. Background. A mutual insurance company has no shareholders.  Instead, the policyholders have an ownership interest in the company, in addition to having … Read More

Final Regs Clarify Economic Effect Requirement for Estate and Trust Donations

Final Regs Clarify Economic Effect Requirement for Estate and Trust Donations

On April 13, 2012, the IRS issued final regs providing guidance under Code Sec. 642(c) with regard to the federal tax consequences of an ordering provision in a trust, will or local law that attempts to determine the tax character of the amounts paid to a charitable beneficiary. Specifically, the regs confirm that a provision in a … Read More

Estates of Some 2011 Decedents Get More Time to Make Portability Election

Estates of Some 2011 Decedents Get More Time to Make Portability Election

The IRS has issued guidance giving certain estates of married individuals who died during the first six months of 2011 an extension of the deadline to make the portability election to pass the decedent’s unused estate and gift tax exclusion amount to the surviving spouse. Estates qualifying for and taking advantage of the extension will have … Read More

IRS Delays Effective Date for Reporting Basis on Sales of Debt Instruments and Options

IRS Delays Effective Date for Reporting Basis on Sales of Debt Instruments and Options

The IRS announced on May 2, 2012 that it intends to delay the effective date for reporting basis on sales of debt instruments and options. The Energy Improvement and Extension Act of 2008 requires brokers to report the basis on sales of certain securities. The Act applies to stock acquired on or after January 1, … Read More

IRS Releases Drafts of New Forms W-8BEN

IRS Releases Drafts of New Forms W-8BEN

On May 31, 2012, the IRS released drafts of new Forms W-8BEN. A foreign person uses Form W-8 to certify their withholding status and eligibility for treaty benefits. The IRS updated the form to reflect changes required by the Foreign Account Tax Compliance Act (FATCA). There are two separate draft forms. Form W-8BEN is for foreign individuals. Form … Read More