Podcasts about schedules k

It's tax season crunch time, so we are resharing a timely episode debunking the 1120-S tax return. In this episode, Brian will walk you through the S-Corporation income tax return to help you better understand what you're filing and hopefully catch mistakes before it's too late. He provides a section-by-section analysis of Form 1120-S and highlights key areas that business owners and tax professionals make mistakes. Episode Highlights Part 1: Heading, Income, Deductions, Tax and Payments Most of this information is drawn from your business's Profit and Loss Statement. Here's a breakdown of what's on the first page: Calendar year: The very top of the form asks for the calendar year. If the corporation has a calendar year-end, leave this blank. If a fiscal year or short year put in the appropriate dates. Address: Underneath the calendar year, the form asks for a name and address. Use the name set forth in the charter or other legal documents, such as your Employer Identification Number (EIN) letter. Item A: Located to the left of the address, Item A asks for your S election effective date. You should have a letter from the IRS (CP 261) with your S-Corp starting date. This date should stay the same every year. Item B: Your business activity code. This code shows the IRS exactly what you do. Item C: Item C only applies if you have assets of $10 million or more. Most of the time, Item C will not be checked. Item D: Put your EIN in Item D. Make sure to verify it's correct before you file your form. Item E: Your date of incorporation should match the articles of incorporation. This date may or may not be the same date as your S-election. Like the S-election date, the date of incorporation won't change. Item F: Total assets at the end of the year. Item G: If the corporation is electing to be an S-Corp beginning with the current filing tax year, check the appropriate box. If the S-Corp did not already file the S-Election, attach Form 2553 with the return. Item H: These boxes should be self-explanatory. Check the boxes that apply. Item I: Enter the number of shareholders in the firm (e.g. yourself and your partners). Item J: Most of the time, Item J will not be checked. If you believe that one of the Item J items applies, follow up with your tax accountant. Income: Report gross revenue your business has earned for the year and any additional income or interest income that you may have incurred. Only report trade or business income. Do not list rental income, portfolio income, or tax exempt income (those go on your Schedule K). Expenses: Report all deductions on your Profit and Loss statement. Pay special attention to the following lines: Line 7: Compensation of officers should have something on it. S-Corporations must pay shareholder/employee reasonable compensation for services rendered, and failing to put reasonable compensation could lead to an IRS audit. Also included on this line are fringe benefits, including employer contributions to health plans and group term life insurance, for shareholders/employees owning more than 2% of the corporation stock. If your S-Corp has total receipts of $500,000 or more, you'll need to attach Form 1125-E to explain what was paid to each officer. Line 8: Salary and wages paid to employees (other than officers) of the corporation. Line 17: An S-Corporation can deduct contributions made for its employees under a qualified pension, profit sharing, annuity, SEP plan, Simple plan, or any other retirement deferred compensation plan. This includes shareholders/employees owning more than 2% of the corporation stock. Line 18: Employee fringe benefits provided to officers and employees owning less than 2% go on this line, such as health insurance, disability insurance, and educational assistance. Line 19: Line 19 includes any other deductions. There should be an attached statement, and it should match your profit and loss. The numbers should be close to your Profit and Loss statement. Taxes and payments: In general, an S-Corporation does not pay taxes at the corporate level, so this section will be blank. Signature: It's important to sign the return only after verifying all of the information, including the following sections. Part 2: Schedule B This section is mostly self-explanatory questions. Make sure to read and understand each question. Below are two lines to pay special attention to: Box 1: This easy-to-miss box can change your entire return if you're not careful, since it's where you select whether you're a cash or accrual basis taxpayer. Once you choose an accounting method, you generally cannot change without approval from the IRS. Box 2: Here is where you explain what you do. Part B is an either/or question, so state whether you sell products or services. Also, if you hire contractors, say yes to question 14 -- and hopefully you got out your 1099 forms by January 31. Part 3: Schedules K and K-1 Schedule K reports the pro rata share items in total for the Corporation. Schedule K-1, which you receive in your personal name, reports the percentage of pro rata share items allocable to each shareholder.  Lines 1-17 on Schedule K correspond to Boxes 1-17 on Schedule K-1. Most items on Schedules K and K-1 are self-explanatory and come from other parts of the return. Part 4: Schedule L  This is where many taxpayers make a mistake. Schedule L matches your business' balance sheet and should agree with your books and records. If it doesn't, find out why before you file. The first two columns match what your accounts were at the beginning of the year and should match what the accounts were at the end of last year. If this is your first year filing an 1120-S return, these two columns should be blank. The second two columns are for what the accounts had on December 31 of the previous year and will carry over to next year's return. Some of the most common assets on Schedule L are: Line 1: Write the amount of cash in your bank account on the last day of the year. Line 7: Loans to shareholders are loans from the corporation to the shareholder. Keep in mind, these loans need to be documented and should have a repayment schedule and interest rate. Line 10a: Buildings and other depreciable assets are fixed assets that the business owns that have been depreciated, such as real estate, furniture, or machinery  Some of the most common liabilities on Schedule L are: Line 18: Other current liabilities are expenses incurred at the end of the year but not paid until January of the next year. Current expenses often include wages, state taxes, federal taxes, and payroll taxes payable at the end of the year.  Line 19: Loans from shareholders are loans from the shareholder to the corporation. As with the other loans, these loans should be documented and include a repayment schedule and interest rate. Line 22: The par value or stated value of the capital stock issued by the corporation. This amount stays the same each year unless the S-Corporation issues additional stock after incorporation. The corporate charter or minutes should identify the stock. Line 23: Enter the beginning and ending balances of additional paid-in capital. This includes the amount contributed to the S-Corp by shareholders for which the corporation did not issue stock or amounts contributed in excess of the stated or par value. Line 24: This section is especially tricky. You should base the retained earnings on the S-Corporation's books and records. Most of the time, retained earnings should match the Accumulated Adjustments Account (AAA), other adjustments account (OAA), and previously taxed income (PTI) balances on Schedule M-2. Line 27: This line represents the total liability and shareholders equity. This line must match line 15. If you answered “yes” to question 11 on Schedule B that your total receipts were less than $250,000 and total assets were less than $250,000, then you aren't required to file a Schedule L. However, it may be beneficial to file Schedule L anyway because it will be crucial for future balance sheets. Part 5: Schedules M-1 and M-2 Schedule M-1 helps explain discrepancies between the books and your tax return. This section should explain any differences you notice.  Some common items reported on Schedule M-2 include: Meal expenses (100% on books, 50% on taxes) Entertainment (100% on books, 0% on taxes) Life insurance premium expense (100% on books, 0% on taxes) Certain fines and penalties (100% on books, 0% on taxes) Political contributions (100% on books, 0% on taxes) Book depreciation expense (100% on books, 0% on taxes) Tax depreciation expense (%0 on books, 100% on taxes) Tax-exempt income (100% on books, %0 on taxes)  Schedule M-2 tracks the income and losses and separately states items that the shareholder should report on their tax return. Resources + Links  Bank Reconciliation 101 Lessons from the 1099-NEC deadline Follow Brian Thompson Online: Instagram, Facebook, LinkedIn, X, Forbes About Brian and the Mission Driven Business Podcast Brian Thompson, JD/CFP, is a tax attorney and certified financial planner who specializes in providing comprehensive financial planning to LGBTQ+ entrepreneurs who run mission-driven businesses. The Mission Driven Business podcast was born out of his passion for helping social entrepreneurs create businesses with purpose and profit. On the podcast, Brian talks with diverse entrepreneurs and the people who support them. Listeners hear stories of experiences, strength, and hope and get practical advice to help them build businesses that might just change the world, too.

It's tax season crunch time. In this episode, Brian will walk you through the S-Corporation income tax return to help you better understand what you're filing and hopefully catch mistakes before it's too late. He provides a section-by-section analysis of Form 1120-S and highlights key areas that business owners and tax professionals make mistakes. Episode Highlights Part 1: Heading, Income, Deductions, Tax and Payments Most of this information is drawn from your business's Profit and Loss Statement. Here's a breakdown of what's on the first page: Calendar year: The very top of the form asks for the calendar year. If the corporation has a calendar year-end, leave this blank. If a fiscal year or short year put in the appropriate dates. Address: Underneath the calendar year, the form asks for a name and address. Use the name set forth in the charter or other legal documents, such as your Employer Identification Number (EIN) letter. Item A: Located to the left of the address, Item A asks for your S election effective date. You should have a letter from the IRS (CP 261) with your S-Corp starting date. This date should stay the same every year. Item B: Your business activity code. This code shows the IRS exactly what you do. Item C: Item C only applies if you have assets of $10 million or more. Most of the time, Item C will not be checked. Item D: Put your EIN in Item D. Make sure to verify it's correct before you file your form. Item E: Your date of incorporation should match the articles of incorporation. This date may or may not be the same date as your S-election. Like the S-election date, the date of incorporation won't change. Item F: Total assets at the end of the year. Item G: If the corporation is electing to be an S-Corp beginning with the current filing tax year, check the appropriate box. If the S-Corp did not already file the S-Election, attach Form 2553 with the return. Item H: These boxes should be self-explanatory. Check the boxes that apply. Item I: Enter the number of shareholders in the firm (e.g. yourself and your partners). Item J: Most of the time, Item J will not be checked. If you believe that one of the Item J items applies, follow up with your tax accountant. Income: Report gross revenue your business has earned for the year and any additional income or interest income that you may have incurred. Only report trade or business income. Do not list rental income, portfolio income, or tax exempt income (those go on your Schedule K). Expenses: Report all deductions on your Profit and Loss statement. Pay special attention to the following lines: Line 7: Compensation of officers should have something on it. S-Corporations must pay shareholder/employee reasonable compensation for services rendered, and failing to put reasonable compensation could lead to an IRS audit. Also included on this line are fringe benefits, including employer contributions to health plans and group term life insurance, for shareholders/employees owning more than 2% of the corporation stock. If your S-Corp has total receipts of $500,000 or more, you'll need to attach Form 1125-E to explain what was paid to each officer. Line 8: Salary and wages paid to employees (other than officers) of the corporation. Line 17: An S-Corporation can deduct contributions made for its employees under a qualified pension, profit sharing, annuity, SEP plan, Simple plan, or any other retirement deferred compensation plan. This includes shareholders/employees owning more than 2% of the corporation stock. Line 18: Employee fringe benefits provided to officers and employees owning less than 2% go on this line, such as health insurance, disability insurance, and educational assistance. Line 19: Line 19 includes any other deductions. There should be an attached statement, and it should match your profit and loss. The numbers should be close to your Profit and Loss statement. Taxes and payments: In general, an S-Corporation does not pay taxes at the corporate level, so this section will be blank. Signature: It's important to sign the return only after verifying all of the information, including the following sections. Part 2: Schedule B This section is mostly self-explanatory questions. Make sure to read and understand each question. Below are two lines to pay special attention to: Box 1: This easy-to-miss box can change your entire return if you're not careful, since it's where you select whether you're a cash or accrual basis taxpayer. Once you choose an accounting method, you generally cannot change without approval from the IRS. Box 2: Here is where you explain what you do. Part B is an either/or question, so state whether you sell products or services. Also, if you hire contractors, say yes to question 14 -- and hopefully you got out your 1099 forms by January 31. Part 3: Schedules K and K-1 Schedule K reports the pro rata share items in total for the Corporation. Schedule K-1, which you receive in your personal name, reports the percentage of pro rata share items allocable to each shareholder.  Lines 1-17 on Schedule K correspond to Boxes 1-17 on Schedule K-1. Most items on Schedules K and K-1 are self-explanatory and come from other parts of the return. Part 4: Schedule L  This is where many taxpayers make a mistake. Schedule L matches your business' balance sheet and should agree with your books and records. If it doesn't, find out why before you file. The first two columns match what your accounts were at the beginning of the year and should match what the accounts were at the end of last year. If this is your first year filing an 1120-S return, these two columns should be blank. The second two columns are for what the accounts had on December 31 of the previous year and will carry over to next year's return. Some of the most common assets on Schedule L are: Line 1: Write the amount of cash in your bank account on the last day of the year. Line 7: Loans to shareholders are loans from the corporation to the shareholder. Keep in mind, these loans need to be documented and should have a repayment schedule and interest rate. Line 10a: Buildings and other depreciable assets are fixed assets that the business owns that have been depreciated, such as real estate, furniture, or machinery  Some of the most common liabilities on Schedule L are: Line 18: Other current liabilities are expenses incurred at the end of the year but not paid until January of the next year. Current expenses often include wages, state taxes, federal taxes, and payroll taxes payable at the end of the year.  Line 19: Loans from shareholders are loans from the shareholder to the corporation. As with the other loans, these loans should be documented and include a repayment schedule and interest rate. Line 22: The par value or stated value of the capital stock issued by the corporation. This amount stays the same each year unless the S-Corporation issues additional stock after incorporation. The corporate charter or minutes should identify the stock. Line 23: Enter the beginning and ending balances of additional paid-in capital. This includes the amount contributed to the S-Corp by shareholders for which the corporation did not issue stock or amounts contributed in excess of the stated or par value. Line 24: This section is especially tricky. You should base the retained earnings on the S-Corporation's books and records. Most of the time, retained earnings should match the Accumulated Adjustments Account (AAA), other adjustments account (OAA), and previously taxed income (PTI) balances on Schedule M-2. Line 27: This line represents the total liability and shareholders equity. This line must match line 15. If you answered “yes” to question 11 on Schedule B that your total receipts were less than $250,000 and total assets were less than $250,000, then you aren't required to file a Schedule L. However, it may be beneficial to file Schedule L anyway because it will be crucial for future balance sheets. Part 5: Schedules M-1 and M-2 Schedule M-1 helps explain discrepancies between the books and your tax return. This section should explain any differences you notice.  Some common items reported on Schedule M-2 include: Meal expenses (100% on books, 50% on taxes) Entertainment (100% on books, 0% on taxes) Life insurance premium expense (100% on books, 0% on taxes) Certain fines and penalties (100% on books, 0% on taxes) Political contributions (100% on books, 0% on taxes) Book depreciation expense (100% on books, 0% on taxes) Tax depreciation expense (%0 on books, 100% on taxes) Tax-exempt income (100% on books, %0 on taxes)  Schedule M-2 tracks the income and losses and separately states items that the shareholder should report on their tax return. Resources + Links  Bank Reconciliation 101 Lessons from the 1099-NEC deadline Brian's Social Media: Twitter, Instagram, Facebook About Brian and the Mission Driven Business Podcast Brian Thompson, JD/CFP, is a tax attorney and certified financial planner who specializes in providing comprehensive financial planning to LGBTQ+ entrepreneurs who run mission-driven businesses. The Mission Driven Business podcast was born out of his passion for helping social entrepreneurs create businesses with purpose and profit. On the podcast, Brian talks with diverse entrepreneurs and the people who support them. Listeners hear stories of experiences, strength, and hope and get practical advice to help them build businesses that might just change the world, too.

In July 2021, the Internal Revenue Service (IRS) formally introduced Schedules K-2 and K-3. These forms bring uniformity and consistency to reporting items of international tax relevance to partners and S corporation shareholders on the foreign activity of a partnership or S corporation. Unfortunately, Schedule K-3 can add up to 20 additional pages to a partner's or shareholder's Schedule K-1. Michael Elliot, Director with the Firm's national tax team, joins this edition of the Tax Beat podcast with Brooks Nelson, Partner and Strategic Tax Leader, and Sarah McGregor, Tax Director, to share his insights on filing Schedule K-2 and K-3 for 2022. More importantly, Mike discusses the exceptions to the required filing of these forms for partnerships and S corporations. The podcast covers: 2021 Pushback on ReliefImportance of Filing Correctly2021 Relief Notice No Longer Effective for 2022Qualifying for the Domestic Filing ExceptionTiered Partnerships and Limited Foreign ActivityOpting in vs. Pursing an Exception to FilingK-3 Filing Difficulties Additional Guidance:Domestic Filing Exception for 2022 Schedules K-2 and K-3

Consternation and chaos are two of the words used to describe some of the reactions to IRS updates related to Schedules K-2 and K-3. On this collaboration episode with the Tax Section Odyssey podcast, CPAs Tim Chan of KPMG and David Sites of Grant Thornton talk about the particulars with April Walker, CPA, CGMA, lead manager–Tax Practice & Ethics for AICPA & CIMA, together as the Association of International Certified Professional Accountants.

In December 2022, the IRS posted a revised draft version of the 2022 Partnership Instructions for Schedule K-2 and K-3 (Form 1065) and a similar revised version of the 2022 S Corporation Instructions for Schedules K-2 and K-3 (Form 1120-S). They were subsequently finalized. On this Tax Section Odyssey episode, April Walker, CPA, CGMA, Lead Manager — Tax Practice & Ethics, AICPA & CIMA along with Tim Chan, Managing Director, Washington National Tax — Passthroughs — KPMG LLP and David Sites, National Managing Partner, International Tax Services — Grant Thornton LLP, sift through the changes between the draft instructions and dive into the particulars taxpayers need to know. What you'll learn in this episode Who needs to file the Schedules K-2 and K-3 (2.41) Domestic filing exception in the December 2022 draft instructions (5.06) The two-prong test (5.47) What no or limited foreign activity means (6.46) How to report foreign-source income (8.33) Requirement that all direct partners are US citizens/resident aliens (9.26) Partner or shareholder notification (11.20) Requirements for the schedules and the 1-month date (13.14) Form 1116, Foreign Tax Credit (Individual, Estate, or Trust), exception (18.21) Risks and penalties associated with not completing or filing required schedules (22.55) Final thoughts (25.05)  Related resources IRS Schedules K-2 and K-3 guidance and resources — Access resources to advise clients on IRS Schedules K-2 and K-3, which are used to report items of international tax relevance from the operations of passthrough entities. Tax potpourri — Form 1099-K, Schedules K-2/K-3 and tax legislation | Tax Section Odyssey — Schedules K-2 and K-3 aim to standardize international tax information reporting to flow-through investors, yet challenges in practical implementation exist. K-2/K-3 — Making sense of new international passthrough reporting | Tax Section Odyssey — Listen to this podcast covering the new schedules and related past and future AICPA efforts. Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.

IRS release a lot of end of year automobile related guidance and the final version of the partnership Schedules K-2 and K-3 instructions released.

The end of the year is upon us. While the hustle and bustle of the holidays and winter hibernation sets in, April Walker, CPA, CGMA, Lead Manager — Tax Practice & Ethics, AICPA & CIMA, fills you in on some quick updates about a few trending tax topics to keep you in the know, including Schedules K-2 and K-3, Form 1099-K, Payment Card and Third-Party Network Transactions and tax legislation developments What you'll learn in this episode Second draft of Form 1065 Schedules K-2 and K-3 instructions revise domestic filing exception (0.34) Continued concerns regarding the revised reporting threshold for Form 1099-K (6.13) Year-end legislation, including the potential for tax extenders (8.31)  Related resources AICPA Comments on Form 1099-K Reporting Threshold — The AICPA has deep concerns regarding the Form 1099-K reporting threshold that was lowered to $600 for 2022 and will lead to significant confusion in the tax system in the next several months. Form 1099-K — New lowered threshold for 2022 — New reporting requirements for Form 1099-K are effective for tax years beginning in 2022. Access information and tools to help you with the changes. IRS Schedules K-2 and K-3 guidance and resources — Access resources to advise clients on IRS Schedules K-2 and K-3, which are used to report items of international tax relevance from the operations of passthrough entities. JCX-1-22 (January 13, 2022) — The staff of the Joint Committee on Taxation has prepared a list of Federal tax provisions that expired in 2021 or are scheduled to expire in the future. Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.

https://vimeo.com/780188865 https://www.currentfederaltaxdevelopments.com/podcasts/2022/12/11/2022-12-12-try-two-on-k-2-and-k-3-instructions   This week we look at: IRS releases second draft of instructions for preparing 2022 Schedules K-2 and K-3 for partnerships and S corporations IRS begins issuing proposed regulations to deal with court losses on method used to add listed transactions not following the Administrative Procedures Act

This week we're covering the Schedules K-2 and K-3 domestic partnership exemption, which has been expanded and revised.

IRS issues second draft instructions for Schedules K-2 and K-3 and deals with recent court losses

This week we look at: IRS releases second draft of instructions for preparing 2022 Schedules K-2 and K-3 for partnerships and S corporations IRS begins issuing proposed regulations to deal with court losses on method used to add listed transactions not following the Administrative Procedures Act Copyright 2022, Kaplan, Inc.

https://vimeo.com/765424882 https://www.currentfederaltaxdevelopments.com/podcasts/2022/10/30/2022-10-31-partnership-schedule-k-2-draft-instructions-issued   This week we look at: It's PTIN renewal time again and the IRS has released a news release announcing the fact IRS publishes draft 2022 Form 1065 Schedules K-2 and K-3 instructions with revised exceptions to filing Schedules K-2 and K-3

This week we're covering a filing exception for Schedules K-2 and K-3 for certain domestic partnerships.

This week we look at: It's PTIN renewal time again and the IRS has released a news release announcing the fact IRS publishes draft 2022 Form 1065 Schedules K-2 and K-3 instructions with revised exceptions to filing Schedules K-2 and K-3 Copyright Kaplan, Inc.

https://vimeo.com/746382204 https://www.currentfederaltaxdevelopments.com/podcasts/2022/9/5/2022-09-06-aicpa-action-week   This week we look at: AICPA issues proposed revisions to Statements on Standards for Tax Services AICPA requests additional guidance for filing of Schedules K-2 and K-3 AICPA and NAEA ask for additional time to file 2019 and 2020 tax returns to get penalty relief

This week we're talking about some things to keep in mind when filing Schedules K-2 and K-3.

This week we're covering the new Schedules K-2 and K-3 and which entities are required to file.

Issues with the special for military disability benefits and retirement pay, IRS pushes back date for electronic filing of S corporation Schedules K-2 and K-3 and more

https://vimeo.com/702388966 https://www.currentfederaltaxdevelopments.com/podcasts/2022/4/23/2022-04-25-taxing-times-for-retired-airline-pilot   This week we look at: Tax rules for no-additional cost services SCOTUS refuses to hear challenge to SALT cap IRS finally grants election/accounting method relief for retroactive 2019 changes Rules for a real estate professional IRS expands on Schedules K-2 and K-3 FAQs on April 11

This week we look at: Tax rules for no-additional cost services SCOTUS refuses to hear challenge to SALT cap IRS finally grants election/accounting method relief for retroactive 2019 changes Rules for a real estate professional IRS expands on Schedules K-2 and K-3 FAQs on April 11 Copyright 2022, Kaplan, Inc.

A review of the week's major US international tax-related news. In this edition: US Treasury Secretary says BEPS 2.0 will help global economies recover from COVID-19 pandemic, Ukraine crisis – IRS releases new Schedules K-2, K-3 FAQs – US Senate Foreign Relations Committee issues report on proposed US-Chile tax treaty.

The homestretch of the tax season is drawing near. On this episode of the Tax Section Odyssey April Walker, CPA, CGMA, Lead Manager — AICPA Tax Section, highlights three top-of-mind items lingering on as we near the end of busy season 2022. What you'll learn in this episode Status of relief around Schedules K-2/K-3 (0.50) Updates to the Gramm-Leach-Bliley Act Safeguards Rule (3.45) Where to hear more about the “billionaire tax” and other proposed tax reforms related to the 2023 fiscal year budget (6.36) AICPA resources Gramm-Leach-Bliley Information Security Plan Template — Tax preparers must implement security plans to protect client data. Failure to do so may result in a Federal Trade Commission (FTC) investigation. Download and customize this template to document your firm's policies. The 2023 tax revenue proposals released by the Biden Administration — In this March 29, 2022 episode of the PFP Section podcast, Bob Keebler, CPA/PFS, highlights the relevant proposals to CPA financial planners. Other resources General Explanations of the Administration's Fiscal Year 2023 Revenue Proposals — Commonly referred to as the “Greenbook,” the document summarizes the Administration's tax proposals contained in the fiscal year 2023 budget. FTC Strengthens Security Safeguards for Consumer Financial Information Following Widespread Data Breaches — The FTC announced on Oct. 27, 2021 updates to the Safeguards Rule to better protect the American public from breaches and cyberattacks that lead to identity theft and other financial losses. Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.

In this special series of Taxes in Ten – International Tax, Citrin Cooperman International Tax Partner Paul Dailey is joined by International Tax Director Lauren Weronick. Partnerships and S-Corporations have responsibilities to file new Schedules K-2 and K-3 for the first time this year. During this episode, we discuss the purpose of these schedules, the life cycle of how they came to be, and what taypayers need to know now to comply with the new filing requirements. Taxes in 10 brought to you by Citrin Cooperman. Learn more Citrin Cooperman at www.citrincooperman.com/ Learn more about our host Paul Dailey here: https://www.citrincooperman.com/professionals/paul-dailey

K-2 — isn't that a mountain? K2 is, but to tax professionals and with the hyphen, it's Partners' Distributive Share Items — International (and, for S corporations, a similar form), the new schedule filed with the returns of passthrough entities with “items of international tax relevance” and partners in foreign partnerships. Along with its “twin peak” of Schedule K-3, Partner's [or Shareholder's] Share of Income, Deductions, Credits, etc. — International, these formidable forms have been much discussed by CPAs and other tax practitioners lately. Here to help us better understand them is John Samtoy, CPA, who has written about Schedules K-2 and K-3 for the Tax Insider newsletter recently.

The Ernst & Young ITTS Washington Dispatch brings you a monthly review of US international tax-related developments. In this edition: US Senate Democrats backburner Build Back Better, look to address inflation's impact – G20 confirms BEPS 2.0 ambitious timeline; Republican Senators voice concerns – IRS releases FAQs on Schedules K-2 and K-3 transition relief – Treasury official briefs Senators on future cryptocurrency reporting regs – OECD releases BEPS 2.0 Pillar One public consultation on draft nexus and revenue sourcing rules – OECD releases Pillar One public consultation on draft rules for tax base determinations – OECD finalizing crypto reporting framework.

The new Schedules K-2 and K-3 aim to improve reporting by standardizing international tax information to partners and flow-through investors, making it easier for them to report these items on their individual tax returns. However, implementing the required changes continues to cause transitional challenges for the tax community. Although the IRS has released IR-2022-38 and a series of frequently asked questions (FAQs), more guidance is needed. On this episode of the Tax Section Odyssey, April Walker, CPA, CGMA, Lead Manager — AICPA Tax Section, talks with  guest Stephanie L. Chapman, CPA, Director, International Services — Belfint, Lyons, Shuman, CPAs, about where we are with Schedules K-2 and K-3 reporting and discusses procedural tips for preparation. What you'll learn in this episode Timeline of Schedules K-2 and K-3 information releases and AICPA resources and comment letters (0.47) The potential for a full delay in implementation (2.28) Who must file the new schedules (4.58) Filing requirement exceptions (8.12) What taxpayers can do in tax software if country codes are unknown (11.02) Woes with PDF attachments when forms aren't available in software (13.08) Client management guidance, billing practices and engagement letters (15.23) AICPA resources IRS Schedules K-2 and K-3 guidance and resources — Access resources to advise clients on IRS Schedules K-2 and K-3, such as a client information letter and an earlier podcast episode from November 2021, which are used to report items of international tax relevance from the operations of pass-through entities. AICPA additional comments regarding Schedules K-2 and K-3 reporting – The AICPA submitted comments on Feb. 18, 2022, requesting a delay in the implementation of Schedules K-2 and K-3 to 2023 and recommending the IRS provide additional guidance. AICPA comments on proposed international changes to Form 1065, Schedule K-2, and Schedule K-3 — The AICPA submitted comments in 2020 on the proposed international changes to Form 1065, Schedule K-2, and Schedule K-3, including the recommend transmittal of Schedule K-3 in portions and minimizing overreporting by allowing partnerships the ability to determine the reporting needs of its partners. Other resources Schedules K-2 and K-3 Frequently Asked Questions (Forms 1065, 1120S, and 8865) — A set of FAQs released by the IRS on the new schedules and their reporting requirements. News Release IR-2022-38 — The IRS announced further details on additional relief for certain partnerships preparing Schedules K-2 and K-3 for 2021 on Feb. 16, 2022. Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.

The IRS's special 2021 tax return relief for filing Schedules K-2 and K-3 are the big issue for this week. We look at the general rule that existed before, and the special 2021 rule that may allow more partnerships and S corporations to avoid preparing these Schedules.

A review of the week's major US international tax-related news. In this edition: US Senate mulls anti-inflation measures – IRS releases FAQs on transition relief for certain domestic partnerships and S corporations completing new Schedules K-2 and K-3 – Treasury official comments on future proposed regulations on cryptocurrency reporting requirements for brokers – OECD official concedes BEPS 2.0 Pillar One draft rules complexity – Republican Senate Finance Committee members concerned over BEPS 2.0 negotiations.

The Ernst & Young ITTS Washington Dispatch brings you a monthly review of US international tax-related developments. In this edition: Biden Administration looks to scaled-back Build Back Better legislation – House Ways and Means Committee Republicans warn congressional consent needed for BEPS 2.0 Pillars –  Final regulations released on treatment of domestic partnerships under Section 958, proposed PFIC regulations – IRS amends instructions for 2021 partnership Schedules K-2 and K-3, relevant to private equity, private capital funds – IRS announces fast-track pilot program to resolve corporate LTR requests in 12 weeks – US officials comment on cryptocurrency efforts – BEPS 2.0 model rules commentary expected to be released soon – OECD developing BEPS 2.0 Pillar Two corporate minimum tax implementation framework – OECD publishes 2022 Transfer Pricing Guidelines – OECD releases eighth batch of Stage 2 peer review reports on dispute resolution.

The IRS updates instructions for Schedules K-2 and K-3 and we look at IRS notices issues and actions.

The IRS is now accepting and processing 2021 tax returns — a signal that the official start of the busy tax filing season is here. While it's a new year, this tax season has similar vibes as the past two years but with some new obstacles as well. On this Tax Section Odyssey episode, April Walker, CPA, CGMA, Lead Manager – AICPA Tax Section sits down with Daniel Moore, CPA, Owner — D.T. Moore & Company, LLC, to discuss issues tax practitioners may encounter this season, as well as provide some real-world relatable examples and tips for a successful tax season. What you'll learn in this episode Reporting Paycheck Protection Program (PPP) loan forgiveness and S Corporations (4.15) Advance child tax credits and Letter 6419 (7.42) Economic impact payments and Letter 6475 (13.19) IRS service level issues and a real-life example (14.50) Unprocessed 2020 returns and overpayment application tips for 2021 filings (20.42) How to make cryptocurrency reporting as easy as possible (24.27) Schedules K-2 and K-3 for passthrough entities (28.05) Tax return extensions (30.37) Dan's tax firm traditions (33.54) A page from Dan's travel journey (35.19) AICPA resources 2021 Paid Preparer's Due Diligence Checklist – Form 8867 — A comprehensive tool to use when preparing Form 8867 that is associated with claiming the earned income tax credit, American opportunity tax credit, child tax credit (including the additional child tax credit), the credit for other dependents and head-of-household filing status. AICPA Relief for Taxpayers for the 2022 Filing Season — The AICPA led a coalition of stakeholders to urge action from the IRS to mitigate anticipated challenges in the upcoming tax season. The coalition also requested a meeting with IRS officials to discuss their concerns and recommendations and directly address any questions. Annual Tax Compliance Kit — This toolkit includes engagement letters, organizers, checklists and practice guides to help you manage your tax season workflow and excel as an adviser of tax and financial planning services. AICPA Town Hall Series— Bi-monthly, high-impact news broadcast series that delivers the latest news, analysis, insights and practical guidance to accounting and finance professionals and responds to pressing issues facing the profession. ENGAGE 22 Conference — Gain exclusive insights, develop practical skills, and network with your unique professional community online or in person over 4 energizing days June 6-9, 2022, in Las Vegas, Nevada. IRS E-Services Transcript Delivery System Quick Reference Chart — This handy, one-page, quick reference chart is geared to help practitioners obtain and effectively use transcript data via this e-Services tool. It offers practical tips for how to use TDS and answers questions such as “Who may use TDS?”. IRS third-party authorization guidance — This guidance provides a summary of the most common types of IRS authorizations and what each authorization permits the representative to do. Learn how to record authorizations with the Centralized Authorization File (CAF) unit, how to withdraw an authorization and other practice tips to help practitioners represent clients before the IRS. Tax season hub — With constant changes to the tax landscape, being prepared for tax season is critical for success. Set yourself up for a smoother filing season by tapping into the wealth of AICPA and Tax Section resources. The 2022 Winter Tax Rewind — In this Jan. 31, 2022, installment of the quarterly Tax Rewind series, Art Auerbach, CPA, CGMA provides an update on tax planning, legislative changes and the latest in IRS tax practice and procedures so you can proficiently advise your clients. Using IRS e-Services — An AICPA hub centered around IRS e-Services, a suite of web-based tools that allow eligible tax professionals to perform certain transactions online. Other resources 2021 Child Tax Credit and Advance Child Tax Credit Payments Frequently Asked Questions — IRS frequently asked questions about the advance child tax credit payments in 2021, separated by topic General FAQs on Payment Card and Third-Party Network Transactions — IRS general frequently asked questions on payment card and third-party network transactions Instructions for Form 1120-S, U.S. Income Tax Return for an S Corporation — Final instructions released on Jan. 20, 2022 Your Online Account — Encourage your clients to sign up for an IRS online account to access their individual account information including balance, payments, tax records and more. Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.

In June 2021, the IRS released final versions of two new international-related schedules that are being added to passthrough entity returns: Schedule K-2, Partners' Distributive Share Items — International Schedule K-3, Partner's Share of Income, Deductions, Credits, etc. — International The new international-related schedules will be required for 2021 partnership and S corporation returns and 2021 Schedules K-1, Partner's Share of Income, Deductions, Credits, etc. In this Tax Section Odyssey episode, April Walker, CPA, CGMA, from the AICPA Tax Section, welcomes Amy Miller, JD, CPA, from the AICPA Tax Policy and Advocacy team, David Sites, CPA, Managing Partner of International Tax Services — Grant Thornton, Kyle Dawley, JD, CPA, Principal — Clifton Larson Allen, and Tim Chan, CPA, Managing Director — KPMG, to discuss the new schedules and related past and future AICPA efforts.  What you'll learn in this episode Background of the AICPA Foreign Passthrough Reporting Task Force and its past activities (1.19) Summary of the September 2020 AICPA comment letter (2.08) AICPA recommendations that were adopted by the U.S. Treasury and IRS (3.24) What the IRS is trying to achieve with the new schedules (4.20) Timing of schedule furnishment to partners (6.29) Thoughts on potential postponement of the Schedules K-2 and K-3 (8.06) Status of form instructions and major issues that practitioners and clients need to be aware of (10.37) Parts II and III reporting for those with 100% U.S. source activity (14.37) Country-by-country reporting requirement (16.49) Interaction between international forms (e.g., Forms 8858 and 5471) and new reporting requirements (18.00) Filing requirements for entities that are not required to file Forms 1065 or 8865 (20.37) What an upper-tier partnership should do if a lower-tier partnership does not provide any or all of Schedule K-3 information (21.30) Next steps for the AICPA Foreign Passthrough Reporting Task Force (23.00) AICPA resources Comments on Proposed International Changes to Form 1065, Schedule K-2, and Schedule K-3 — The AICPA submitted comments on the proposed international changes to Form 1065, Schedule K-2 and Schedule K-3. The AICPA recommended transmittal of Schedule K-3 in portions and minimizing overreporting by allowing partnerships the ability to determine the reporting needs of its partners. Other resources Notice 2021-39 — The IRS announced draft 2021 instructions for Schedules K-2 and K-3 for partnership and S corporation Forms 1065, 1120-S and 8865 as well as transition relief from penalties for any incorrect or incomplete reporting on the schedules. About Form 1065 and About Form 1120-S — The recent developments section provides updates as Schedules K-2 and K-2 are finalized for the 2021 tax year.  Note: If your podcast app does not hyperlink to resources, visit https://taxodyssey.libsyn.com to access show notes with direct links. This episode is brought to you by the AICPA's Tax Section, your home base to maintain your professional edge. To learn more about the Tax Section, check out aicpa.org/tax or sign up for a free web tour.

A review of the week's major US international tax-related news. In this edition: OECD announces conceptual agreement in BEPS 2.0 project – IRS issues early draft instructions for amended Schedules K-2 and K-3 for 2021 Forms 1065, 1120-S, and 8865.

The Ernst & Young ITTS Washington Dispatch brings you a monthly review of US international tax-related developments. In this edition: US Treasury ‘Green Book' offers new details on international tax proposals – Senate hearing discusses Biden Administration's international tax proposals – House bill would require SEC regulations on CbC financial information disclosure, including taxes – US proposes 15% global corporate minimum tax to BEPS 2.0 Steering Group – President Biden proposes increased IRS budget to improve tax compliance – IRS modifies guidance on accounting method changes for certain foreign corporations – IRS official comments on treaty derivative benefits post-Brexit – US Government releases early drafts of 2021 Schedules K-2 and K-3 for Forms 1065, 1120-S and 8865 – Parties to OECD MLI release interpretative guidance. .

A review of the week's major US international tax-related news. In this edition: US Congress, Biden Administration focused on infrastructure plans, proposed tax increases – IRS releases updated early drafts of new Schedules K-2 and K-3, for Forms 1065, 1120-S, and 8865, for 2021 tax year – OECD considering framework for elimination of unilateral DSTs post-BEPS 2.0 agreement – OECD cryptoasset project delayed to 2022.

This episode is a re-release of the AICPA Tax Briefing for State Society Leaders conference call that took place January 12 - 13, 2009. Below, please find a summary of the major points covered in the call. FIN 48—There are two important FASB requirements for accounting for uncertain tax positions of non-public companies that your firm needs to do right now, and as the tax person in your firm or business, you’ll undoubtedly be involved. On October 15, 2008, FASB deferred the effective date of FIN 48 (Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes) for all non-public companies for one year, until 2009 for calendar-year companies. However, that means that in January of 2009, calendar-year private companies should complete a FIN 48 analysis of their year-beginning tax positions so that they can record the effect of the change in accounting method at the end of 2009. This analysis could be “backed into” later in the year, but as time passes it will be more difficult to recall all tax positions (not just those that are unlikely) for all types of taxes for all open years in all jurisdictions and what the level of certainty and values were under the law at the beginning of the year. So if a company has not already done this analysis and if it wants to report in accordance with GAAP, the earlier it starts now, the better. Another new FASB requirement relates to 2008 financials and any interim 2009 financial statements. A FASB Staff Position (FSP) was issued on December 30 that added reporting requirements for private companies that elect to defer the effective date for the adoption of FIN 48. Specifically, they must explicitly disclose that they are electing to defer the effective date and also disclose the company’s accounting policy for evaluating uncertain tax positions. This applies to 2008 financials and interim 2009 financials, until FIN 48 is adopted. The FSP doesn’t discuss specifics, but unless a company has something unusual, we hope that some standard language will suffice, such as “Management has elected to defer the application of FAS FIN 48, Accounting for Uncertain Tax Positions in accordance with FSP FIN 48-3. The Company will continue to follow FAS 5, Accounting for Contingencies, until it adopts FIN 48.” Additional information on FIN 48 for private companies is included in the February issue of The Tax Adviser magazine that most Tax Section members receive. Tax Practice Guides and Checklists—Tax section members receive an annual package of over 600 pages of engagement letters, organizers, checklists, and other practice guides, and they’re now posted online . These include return-specific checklists for preparing and reviewing tax returns. Some forms checklists come in simple and complex versions so that, for instance, you don’t have to use a complex individual return checklist for a child’s return. These practice guides are carefully prepared and reviewed by fellow practitioners for your use. They are up-to-date through the Emergency Economic Stabilization Act of 2008, and subsequent developments will be reported in your Tax Section E-Alerts. In prior years, we sent a CD-ROM version of the checklists, but to avoid delays in scribing and mailing the CDs and with most members now having broadband internet, this year we’re only distributing the checklists. You’ll have to log on and be recognized as a tax section member to access this premium web content, and if you’re not a member, you can join online at aicpa.org/tax or on the phone at 800/513-3037. Each document may be downloaded to your computer directly allowing you to use any or all of the Practice Guides and checklists at your convenience and without requiring you to be logged on to the AICPA web site. A “one click” option allows you to download the entire package in a few moments directly to your computer. Audio E-Alerts—Tax Section member receive bi-weekly emailed e-alerts that report current developments in tax law and practice. This emailed alert is necessarily brief and to the point, and we’re beginning expanded version in bi-weekly audio e-alerts that can be uploaded to your MP3 player or listened to online. Each alert will be approximately 15-20 minutes in length and can be accessed online. These audio alerts are available to AICPA members without charge, but they do not contain the links to the source documents that are included in the emailed version that goes to Tax Section members. These audio alerts may be of particular interest to younger staff and will help them become more knowledgeable about current tax developments. SSTS Exposure Draft—The AICPA Tax Division recently issued an Exposure Draft of revisions to the Statements on Standards for Tax Services (SSTSs). The draft addresses changes in federal and state tax laws affecting the provisions in SSTS No. 1, Tax Return Positions, and No. 8, Form and Content of Advice to Taxpayers, and also members’ requests for clarification. Corresponding revisions to the current SSTS Interpretations will be made at a later date. Revisions to SSTS No. 1 are proposed to clarify the need to satisfy both the AICPA standards and the standards of the applicable taxing authority. Revisions to SSTS No. 8 are proposed to address new requirements that apply when providing certain types of tax advice. In addition, the original SSTS Nos. 6 and 7 have been combined into the revised SSTS No. 6. The original SSTS No. 8 has been renumbered SSTS No. 7. Various revisions also have been made to the language of the original SSTSs. AICPA members are welcome to comment on the exposure draft, with comments due by May 15, 2009. Please send your comments to sstscomments@aicpa.org or to SSTS Comments, AICPA, 1455 Pennsylvania Avenue NW, Washington, DC 20004-1081. Section 6694 Penalties—The Emergency Economic Stabilization Act of 2008 lowered the reporting standard under section 6694 to “substantial authority” from “more likely than not” for undisclosed, non-tax shelter positions. This is the same standard that applies to taxpayers. The change is retroactive to the date when the higher standard was enacted, May 25, 2007. This is a great victory for CPAs that the AICPA had been fighting for since Congress raised the standard for preparers to a level higher than for taxpayers, creating potential conflicts of interest between CPAs and their clients. Section 7216 Final Regs—IRS regulations on the unauthorized disclosure of tax return information went into effect on January 1. Absent a specific, exception, Treas. Reg. section 301.7216 generally prohibits the disclosure or use of tax return information without the client’s explicit, written consent. Under section 7216, a tax return preparer is subject to a criminal penalty for “knowingly or recklessly” disclosing or using tax return information. Each violation of section 7216 could result in a fine of up to $1,000 or one year imprisonment, or both. AICPA members who are engaged in tax return preparation and tax planning services need to become familiar with Treas. Reg. section 301.7216 and Revenue Procedure 2008-35, the authoritative guidance with respect to a preparer’s disclosure or use of tax return information. In a practice guide for members, the Tax Section is providing several examples of consent forms which have been developed by CPA members for their discussions or consultations with individual clients. 1099B Forms Coming Two Weeks Later—The Emergency Economic Stabilization Act of 2008 extended the date by which brokers must furnish information forms to customers. This includes stock broker 1099-B forms and also other forms from brokers, including realtors. Beginning with statements furnished in 2009, brokers will avoid penalties if they furnish these forms on or before February 15 – as opposed to the old due date of January 31. This could further compress the return preparation season for practitioners. Form 1065 Extended Due Date—Last year, the Tax Division held discussions with IRS concerning the dilemma of the late receipt of Forms 1065, Schedule K-1 that has perplexed the clients of CPAs who prepare the Form 1040, 1065, 1120 and 1120S tax returns which include such K-1 information. On January 24, 2008, we recommended, as a short-term solution, that the Service open a regulation project to: (1) address the difficulties taxpayers face when receiving delayed Schedules K-1 and (2) move the extended due date for partnership returns from October 15 to September 15, thus providing a maximum extension of five months. On July 1, 2008, the IRS released proposed regulations which would, in fact, limit certain flow-through entities to a maximum 5-month extension. The Service has indicated that the proposed regulations won’t be finalized until they have had an opportunity to analyze any comments submitted. On September 24, 2008, the Tax Division submitted comments with regard to the impact on trusts. The AICPA generally supports limiting the extension of the due date for partnership returns to five months. However, our prior letter and comments did not consider the issue of the proper extended due date for fiduciary returns because we were primarily focusing on the filing problems created for individuals who are partners in partnerships. We believe that the extension period for fiduciary returns (i.e., Form 1041 for trusts and estates) should remain at six months, rather than being reduced to five months as set forth in the temporary regulations applicable to all returns which are due after January 1, 2009. The Division will be testifying at the IRS hearing on the proposed regulations on January 13, 2009. In addition, the Division is also considering suggesting possible legislative changes in this area taking into account our members’ attitudes as solicited in a survey earlier this year. Also, on October 29, 2008 representatives of the Partnership TRP met with the Joint Committee on Taxation a possible change to due dates and/or extended due dates of Forms 1065, 1040, 1120S and 1041 to relieve workload compression and to better manage the workflow of these returns. State Taxation of Nonresidents—The ACIPA has been closely monitoring a Congressional initiative that would affect the ability of states to tax nonresidents temporarily working within their jurisdiction. Currently the states that have an individual income tax have a wide variety of tipping points. Some do not impose taxes on nonresidents until they have worked as many as 30 days within the state; others seem to require only a day or two. This has resulted in much confusion and probably significant non compliance for businesses, such as many accounting firms that frequently have employees working in states where the employer does not have an office. A bi-partisan bill was introduced in the last congress that would have required all states to conform to a 60-day rule such that the non resident employee would not be subject to tax within the state until the employee completed more than 60 days of service within the state in a calendar year. Included in the bill was what we refer to as the “snap back” rule whereby, once the 60 days was exceed, the employer was responsible for withholding the non resident state taxes for all the days worked with the state, including the first 60 days. In response to pressure from state taxing authorities, in the final days of the 110th Congress the 60 day rule was lowered to 30 days while still preserving the Snap back” provision. We believe there is a strong possibility that the 111th Congress take up where they left off last session and pass the 30 day with snap back version. Although we would have preferred the 60 day rule or even the 30 day rule without the snap back, this measure would add a much needed level of certainty in the area of state taxation of non residents. Pension Legislation Changes—At the end of the year, Congress passed the “Worker, Retiree and Employer Recovery Act of 2008)” which liberalized the funding rules for single and multi-employer qualified retirement plans and the minimum required distribution rules (MRDs) for retirees who have reached age 70 ½. The bill also makes technical corrections to the “Pension Protection Act of 2006” (PPA ’06) Specifically, the bill would • Allow pension plans to smooth out unexpected asset losses over two years; • Provide a transition to the new funding rules; • Allow multiemployer plans to freeze their status based on the previous year’s funding level; • Allow pension plans that are less than 60 percent funded at the beginning of 2009 to look back to the previous plan year to ascertain their funding status; and • Suspend mandatory withdrawals from retirement plans or IRAs for individuals age 70 ½ or older during 2009. The Treasury Department and IRS plan to issue MRD relief for 2008 very soon. The changes were needed because of the confluence of PPA ’06 mandated minimum contribution increases with the current economic crisis. We are also considering advocating additional changes; we will survey members in business and industry to try to determine if they anticipate continuing funding difficulties. Obama Tax Agenda Although this is necessarily speculative, we tried to pull together some of the common denominators of what President Obama spoke about in his campaign and his economic advisors have been saying since the election. Following are our predications at this moment: • Estate tax – freeze 2009 – i.e. $3.5 mil exclusion and 45% marginal rate. AICPA is fighting for: o “portability” loosely defined as permitting a surviving spouse to “inherit” whatever portion of the exclusion was not consumed by the deceased spouse o “conformity” so that the same exclusion would apply for purposes of the gift tax and the generation skipping transfer tax • Marginal rates for individuals – no increase in 2009 and perhaps not for 2010 unless there is a significant recovery in the economy before then. o Some reduction in payroll taxes for lower and middle income individuals to be effective in 2009 as a stimulus to the economy o Once the economy has “sufficiently” recovered we are expecting the Administration to proposed increasing the rates on upper income individuals to those in place before the reductions of 2001 raising the top rate back to 39.6% • We expect a proposal to increase the rates for qualified dividends and long term capital gains to 20%. But this, too, may not be proposed until it appears we’re on the way to an economic recovery. • Individuals with IRAs may be able to avoid penalties if they withdraw, before age 59 ½ , some level of funds ($10,000 has been talked about) to tie them over the economic slump. • For businesses, the new president has supported a continuation of the bonus deprecation rules and the ability to currently expense as much as $250,000 of asset purchased and placed in service in 2009