FEDERAL
President Obama's 2013 proposed budget includes numerous tax changes for individuals and businesses
The administration's fiscal year 2013 budget proposal includes numerous business and personal tax law changes aimed at increasing revenues and achieving policy objectives. The tax proposals include replacing the alternative minimum tax with the "Buffett Rule," eliminating certain tax deductions for the oil and gas industry and allowing the Bush era tax cuts to expire for families earning over $250,000 per year.
Anne Bushman, manager, Washington National Tax
Sean Fox, director, Washington National Tax
Theresa Urband, manager, Washington National Tax
Nick Gruidl, partner, Washington National Tax
Don Susswein, principal, Washington National Tax
S corporation state tax payment considerations
State tax payments made by S corporations may represent a tax on the S corporation or they may be payments of a shareholder's state tax liability. It is important to know the difference and to report them correctly on the S corporation's federal tax return. Incorrect reporting may lead to an adjustment upon examination, which might include interest and penalties, and may require the shareholders to file amended returns. In addition, the S corporation election may be inadvertently terminated in some instances.
Anne Bushman, manager, Washington National Tax
Tax Court denies deduction for unreimbursed partnership expenses
In December 2011, the Tax Court found that a partner in a law firm was not allowed to deduct, for income tax purposes, unreimbursed partnership expenses that were not specifically disallowed by the partnership. Many personal and professional service organizations operate in a limited liability company or professional limited liability company structure and are taxed as partnerships. Whether the partners are attorneys, doctors, engineers, consultants, etc., partners must be aware of the rules in order to determine whether unreimbursed partnership expenses may be deducted on their personal tax returns. That ability is linked to what the partnership agreement or operating agreement provides.
Rob Wagner, partner, Wilmington, N.C.
IRS announces two-month suspension of IRS Modernized e-File operations for 990 filers
The IRS announced to tax-exempt organizations that the IRS Modernized e-File system would not be available for electronic filing of Forms 990, 990-EZ, 990-PF and 1120-POL information returns from Jan. 1, 2012 through Feb. 29, 2012, the "suspension period." Exempt organizations with due dates or first extended due dates in these months have until March 30 to file. Organizations with a second filing extended due date that falls in January or February also have until March 30 to file their returns.
James Sweeney, partner, Vienna, Va.
