Tax Bytes

 

For Use in Preparing 2011 Returns

• AMT Exemption
  • $74,450 (MFJ)
  • $48,450 (Single)
• Passenger Auto Depreciation: $3,060

• I.R.C. §179
  • $500,000 (federal)
  • Start of phase-out: $2,000,000

Special Use Valuation Interest Rates

**To view larger, click on the image below or click here to download a PDF image of the interest rates.

 

 

• I.R.C. §6166

• Interest on installment payments to determine a 2% portion is $1,340,000 ($1,360,000 for 2011 and $1,390,00 for 2012)
• Social Security:  
  • Wage base: $106,800
  • Earnings Limit: (Age 62-66): $14,160 ($14,640 for 2012)
    

2010 Standard Mileage Rates:

• Business: 50 cents/mile (55.5 cents/mile for last half of 2011)
• Medical/Moving: 16.5 cents/mile
• Charitable: 14 cents/mile

For Use in Preparing 2011 Returns - See Also:

• Summary of Rates, Tables and Often Used Items (PDF)

2010 - 2011 HSA Limits

Contribution: $3,050 (single); $6,150 (family)

Annual Deductible: $1,200 (single); $2,400 (family)

Out-of-Pocket Expenses (besides premiums): $5,950 (single); $11,900 (family)

2012 HSA Limits

Contribution:  $3,100 (single); $6,250 (family)

Annual Deductible:  $1,200 (single); $2,400 (family)

Out-of-Pocket Expenses (besides premiums):  $6,500 (single); $12,100 (family)

2013 HSA Limits

Contribution:  $3,250 (single); $6,450 (family)

Annual Deductible:  $1,250 (single); $2,500 (family)

Out-of-Pocket Expenses (besides premiums):  $6,250 (single); $12,500 (family)

 

2012 Numbers (Misc.)

Standard Deduction

• $11,900 (MFJ)
• $8,700 (HOH)
• $5,950 (single)
• $5,950 (MFS)

2012 Personal Exemption

• $3,800

2012 §179 Amount

• $139,000 (reduction begins at $560,000 of qualified property placed in service)

 

Preparer Regulations

IRS Announcement IR-2010-86 (Jul. 22, 2010)(IRS announcement of proposed regulations implementing a  $50 fee for individuals who apply for preparer tax identification number; additional fee to be charged by third-party vendor to operate new online application system for PTIN program). 

 

Other Tax Information

IRS Modifies Filing Rules for Certain Charities

January 17, 2011 - In recently issued guidance, the IRS has given additional filing guidance for certain non-profit organizations

IRS Releases 2009 Special Use Valuation Interest Rates

July 27, 2009 - The IRS has released the 2009 interest rates for special use valuation elections made on federal estate tax returns for decedent's dying in 2009.

Maximum Allowances for Autos and Trucks

2012 - Rev. Proc. 2012-23

 

Passenger Vehicles	Bonus Depreciation Claimed	Bonus Not Claimed
1st Tax Year	$11,060	$3,160
2nd Tax Year	$5,100	$5,100
3rd Tax Year	$3,050	$3,050
Each Succeeding Tax Year:	$1,875	$1,875

 

Trucks and Vans	Bonus Depreciation Claimed	Bonus Not Claimed
1st Tax Year	$11,360	$3,360
2nd Tax Year	$5,300	$5,300
3rd Tax Year	$3,150	$3,150
Each Succeeding Tax Year:	$1,875	$1,875

 

 

(Sec. 280A rules applicable to cars costing over $15,300)

2011 - (Rev. Proc. 2011-21)

Passenger Vehicles

• 1st Tax Year:  $3,060 ($11,060 if bonus depreciation applies)
• 2nd Tax Year: $4,900
• 3rd Tax Year:  $2,950
• Each Succeeding Tax Year:  $1,775

Trucks and Vans

	Bonus Claimed	Bonus Not Claimed
1st Tax Year	$11,260	$3,260
2nd Tax Year	$5,200	$5,200
3rd Tax Year	$3,150	$3,150
Each Succeeding Tax Year:	$1,875	$1,875

 

2010 - (Rev. Proc. 2010-18)

Passenger Vehicles

• 1st Tax Year:  $3,060 ($11,060 if bonus depreciation applies)
• 2nd Tax Year: $4,900
• 3rd Tax Year:  $2,950
• Each Succeeding Tax Year:  $1,775

 

Note:  As indicated above, the first-year depreciation limit for cars placed in service in either 2010 or 2011 is $11,060 if bonus depreciation applies.  However, it is important to note that for these "luxury autos" placed in service after September 8, 2010, IRS may elminate any depreciation in years 2 through 6.  That could result from IRS taking the position that bonus depreciation only applies in year 1 unless the taxpayer elects out of bonus depreciation for all assets in the class (i.e., all five-year property). In year 7, depreciation would be allowed under the I.R.C. Sec. 280F "catch-up" rule.  And, it is not clear whether a taxpayer can elect I.R.C. Sec. 179 (expense method depreciation) up to the $11,060 limit and elect out of bonus for the balance.  In Rev. Proc. 2011-21, IRS left the question open and said that they intend to issue guidance that addresses how bonus depreciation interacts with I.R.C. Sec. 280F for years 2-6.

2009 Maximum Depreciation Allowances for Autos and Trucks

(§280A rules - applicable to cars costing over $14,800)

Rev. Proc. 2009-24

» Bonus Depreciation Not Taken

• 1st Tax Year: $2,960
• 2nd Tax Year: $4,800
• 3rd Tax Year: $2,850
• Each succeeding tax year: $1,775

» Bonus Depreciation Taken (New Car)

• 1st Tax Year: $10,960
• 2nd Tax Year: $4,800
• 3rd Tax Year: $2,850
• Each succeeding tax year: $1,775

» Trucks & Vans (No Bonus Taken)

• 1st Tax Year: $3,060
• 2nd Tax Year: $4,900
• 3rd Tax Year: $2,950
• Each succeeding tax year: $1,775

» Trucks & Vans (Bonus Taken)

• 1st Tax Year: $11,060
• 2nd Tax Year: $4,900
• 3rd Tax Year: $2,950
• Each succeeding tax year: $1,775
  
  

May 2012 AFRs:
• 0.28 % (short-term)
• 1.30 % (mid-term)
• 2.89 % (long-term)

April 2012 AFRs
• 0.25 % (short-term)
• 1.25 % (mid-term)
• 2.72 % (long-term)

 

2012 Interest Rates for Underpayments and Refunds

2nd Quarter 2012 (Rev. Rul. 2012-8)

Non-Corporate taxpayers: 3%

Corporate Taxpayers:
-2% for overpayment
-3% for underpayment

Large Corporate Underpayments (amount exceeding $10,000): 5%

Large Corporate Overpayments (amount exceeding $10,000): 0.5%

 

1st Quarter 2012 (Rev. Rul. 2011-32, 2011-52 I.R.B. 1)

Non-Corporate taxpayers: 3%

Corporate Taxpayers:
-2% for overpayment
-3% for underpayment

Large Corporate Underpayments (amount exceeding $10,000): 5%

Large Corporate Overpayments (amount exceeding $10,000): 0.5%

 

 

2011 Interest Rates for Underpayments and Refunds

4th Quarter 2011 (Rev. Rul. 2011-18, 2011-39 IRB 1)

Non-Corporate taxpayers: 3%

Corporate Taxpayers:
-2% for overpayment
-3% for underpayment

Large Corporate Underpayments (amount exceeding $10,000): 5%

Large Corporate Overpayments (amount exceeding $10,000): 0.5%

3rd Quarter 2011 (Rev. Rul. 2011-12)

Non-Corporate taxpayers:  4%

Corporate Taxpayers:
-3% for overpayment
-4% for underpayment

Large Corporate Underpayments (amount exceeding $10,000): 6%

Large Corporate Overpayments (amount exceeding $10,000): 1.5%

 

2nd Quarter 2011 (Rev. Rul. 2011-5, 2011-13 I.R.B. 1)

Non-Corporate taxpayers:  4%

Corporate Taxpayers:
-3% for overpayment
-4% for underpayment

Large Corporate Underpayments (amount exceeding $10,000): 6%

Large Corporate Overpayments (amount exceeding $10,000): 1.5%

 

1st Quarter 2011 (Rev. Rul. 2010-31)

Non-Corporate taxpayers: 3%

Corporate Taxpayers:
- 2% for overpayment
- 3% for underpayment

Large Corporate Underpayments (amount exceeding $10,000): 5%

Large Corporate Overpayments (amount exceeding $10,000): 0.5%

 

2010 Interest Rates for Underpayments and Refunds

 

4th Quarter 2010 (Rev. Rul. 2010-21)

Non-Corporate taxpayers: 4%

Corporate Taxpayers:
- 3% for overpayment
- 4% for underpayment

Large Corporate Underpayments (amount exceeding $10,000): 6%

Large Corporate Overpayments: 1.5%

 

3rd Quarter 2010 (Rev. Rul. 2010-15)

Non-Corporate taxpayers: 4%

Corporate Taxpayers:
- 3% for overpayment
- 4% for underpayment

Large Corporate Underpayments (amount exceeding $10,000): 6%

Large Corporate Overpayments: 1.5%

2nd Quarter 2010 (Rev. Rul. 2010-9)

Non-Corporate taxpayers: 4%

Corporate Taxpayers:
- 3% for overpayment
- 4% for underpayment

Large Corporate Underpayments (amount exceeding $10,000): 6%

Large Corporate Overpayments: 1.5%

 

1st Quarter 2010 (Rev. Rul. 2009-37)

Non-Corporate taxpayers: 4%

Corporate Taxpayers:
- 3% for overpayment
- 4% for underpayment

Large Corporate Underpayments (amount exceeding $10,000): 6%

Large Corporate Overpayments: 1.5%

 

2009 Interest Rates for Underpayments and Refunds

1st quarter 2009 (Rev. Rul 2008-54)

 Non-Corporate taxpayers: 5%

Corporate Taxpayers:
- 4% for overpayment
- 5% for underpayment

Large Corporate Underpayments (amount exceeding $10,000): 7%

Large Corporate Overpayments: 2.5%

 

2nd quarter 2009 (Rev. Rul 2009-7)

 Non-Corporate taxpayers: 4%

Corporate Taxpayers:
- 3% for overpayment
- 4% for underpayment

Large Corporate Underpayments (amount exceeding $10,000): 6%

Large Corporate Overpayments: 1.5%

 

3rd Quarter 2009 (Rev. Rul. 2009-17)

Non-Corporate taxpayers: 4%

Corporate Taxpayers:
- 3% for overpayment
- 4% for underpayment

Large Corporate Underpayments (amount exceeding $10,000): 6%

Large Corporate Overpayments: 1.5%

4th Quarter 2009 (Rev. Rul. 2009-27)

Non-Corporate taxpayers: 4%

Corporate Taxpayers:
- 3% for overpayment
- 4% for underpayment

Large Corporate Underpayments (amount exceeding $10,000): 6%

Large Corporate Overpayments: 1.5%

 

IRS Developments

 

• For 2011 Deaths, Form 706 Instructions Finalized; For 2010 Deaths, Form 8939 Finalized - September 29, 2011

• The Due Date Form Form 8939 Slides to 2012 - September 13, 2011 - IRS Shifts Due Date For Form 8939.  As we have been noting at our seminars, the IRS has actually been targeting sometime in early 2012 for the filing deadline for Form 8939 - the election out of estate tax for a 2010 decedent's estate.  Now it's official.  The due date has been moved to January 17, 2012.  Read about the recent development here.
  

• IRS Issues Draft of Form 706 for Estates of Decedents Dying in 2011 - September 12, 2011 -The IRS has released a draft of Form 706 for 2011 deaths. Click here to view the Form.  Of particular interest is that lines 9-11 of Part 2 refer to the "applicable exclusion amount" rather than "applicable credit amount."  Surely, IRS will change those lines before finalizing the form.  One does not deduct the "applicable exclusion amount" from the "gross estate tax" of line 8 (which is what lines 9-11 purport to do).

  The instructions for the Form specify that the mere filing of the Form 706 constitutes the election required by I.R.C. Sec. 2010(c)(5)(A) to allow the surviving spouse to take into account for estate tax purposes, the deceased spouse's unused exclusion amount. Click here to view the instructions.  If portability is not desired, then an attachment must be made to Form 706 in the first spouse's estate, indicating that the surviving spouse is not making the election or "No Election Under Section 2010(c)(5)" can be written at the top of the first page of Form 706. Remember, however, that portability only applies to estates of decedents dying in 2011 and 2012. So, both spouses must die before 2013 for portability to even apply. The Joint Committee on Taxation's explanation is clear on this point when they state, in reference to the portability provision of the 2010 law, "...neither the EGTRRA rules nor the new rules of the provision will apply to estates of decedents dying, gifts made, or generation skipping transfers made after December 31, 2012." [emphasis added]

• Form 706 For 2010 Released - September 7, 2011 -The IRS has released the final version of Form 706 for 2010 United States Estate  (and Generation-Skipping Transfer) Tax Returns.   Click here to view the form. For estates of decedents dying from January 1, 2010, through December 16, 2010, the form is due on September 19, 2011. For decedents dying December 17, 2010, through December 31, 2010, the form is due nine months after the date of death.

• IRS Issues Instructions for Form 706 for 2010 Estates - August 19, 2011 - The IRS has now issued the instructions for those filing Form 706 for a 2010 decedent's estate. To see the instructions, click here. The filing deadline is September 19, 2011.

• For Deaths in 2010, Form 8939 Due November 15, 2011 - August 6, 2011 – The IRS has announced in Notice 2011-66 that Form 8939 will be due November 15, 2011. That’s the form that can be utilized by executors for 2010 deaths to “elect to have the estate tax not apply and to have the carryover basis rules in section 1022 apply to property transferred as a result of a decedent’s death.”

• IRS Provides Guidance on Grouping Passive Activities - May 27, 2011 - The IRS has provided guidance on procedures that must be followed if a taxpayer fails to timely elect to group passive activities.

• IRS Gives Some "Guidance" on Estate Tax Election for 2010 Estates - February 17, 2011 - The IRS has provided some guidance on when the election must be filed to choose the estate tax rules for 2010 estates.

• IRS Draft Form Produced For 2010 Decedent's Estates - October 27, 2010 - Here's the first look at the draft IRS Form that some 2010 decedent's estates will have to file in 2010. 

• IRS Makes Errors Involving the Homebuyer Credit; More Fraud Also Found - September 11, 2010 - A new report indicates that IRS has made some errors concerning the first time homebuyer credit and that there's even more fraud associated with the credit.

• IRS Announces Tax Relief for Select Iowa Counties - August 18, 2010 - Several Iowa counties have been designated as disaster areas by the President.  The result is that returns due as early as June 1 may be filed as late as August 2 without penalty.

• IRS Provides More Guidance on the Homebuyer Credits - July 9, 2010 - The IRS has issued numerous Information Letters concerning the homebuyer credits.  The Letters address many common questions concerning both the first-time homebuyer credit and the long-term homeowner credit. 

• IRS Issues Regulations on "Tanning Tax" - June 13, 2010 - The IRS has said how tanning salons are to administer the new "tanning tax" that goes into effect on July 1.

• IRS Official Provides Insight - May 24, 2010 - An IRS official has recently provided some public comments of importance to tax practitioners.  We've got the details.

• IRS Provides Guidance on 2009 Required Minimum Distribution Waiver Rule - September 25, 2009

• Additional Clarification Of Tax Questions Provided - Updated Sept. 4, 2009 – The IRS has provided some additional answers to questions concerning the first-time homebuyer credit and disaster assistance.  Hat tip to Kristy Maitre.

• IRS Provides Guidance On How To Depreciate Ethanol Plant Assets - August 25, 2009 – IRS has issued a Notice of Proposed Revenue Ruling concerning the depreciation treatment of tangible assets at ethanol plants.  Comments are due by November 23, 2009.

• Deduction For Purchase of New Car Available in States Without Sales Tax - June 11, 2009 - The IRS says that the deduction for the purchase of a new car contained in recent legislation is available in states not having a sales tax.

• IRS Announces HSA Contribution Limits for 2010 - May 18, 2009 – The IRS has announced that the contribution limits for health savings accounts have increased for 2010.

• IRS Ruling and Announcement of Importance - April 17, 2009 - The IRS has issued a Revenue Ruling on differential wage payments for military personnel and an announcement on Ford hybrid vehicles.

• Potpourri of Recent IRS Information Letters – April 13, 2009 - The IRS Chief Counsel's Office has issued several information letters of application to practitioners with agricultural clients.
  

• IRS Says Credit and Debit Card Fees For Tax Payments Are Deductible - April 8, 2009 - In a recent news release, IRS now says that credit and debit card fees associated with payment of federal tax are deductible.

• IRS Says that Trademarks and Trade Names Can Qualify As Like-Kind Property - March 24, 2009 – In a recent Technical Advice Memorandum, the IRS has said that trademarks and trade names can be like-kind with other trademarks and trade names.

• IRS Says Interest Deduction Limitation on Acquisition Indebtedness Applies on a Per-Mortgage Basis - March 23, 2009 - The IRS has recently noted that the $1 million limitation on acquisition indebtedness applies on a per-mortgage basis and is used to determine the portion of an individual's interest payments that may be deducted.

• IRS Elaborates on First-Time Homebuyer Credit - January 21, 2009 – The IRS has issued guidance on how to allocate the first-time homebuyer credit between unmarried persons that buy homes.

• IRS Clarifies Employee Retention Credit For Disaster Areas - January 21, 2009 – The IRS has clarified the extent of the usefulness of the Employee Retention Credit for businesses impacted by the Midwestern floods in 2008

• IRS Elaborates on First-Time Homebuyer Credit - January 21, 2009 – The IRS has issued guidance on how to allocate the first-time homebuyer credit between unmarried persons that buy homes.

• Stimulus Payment Calculators - December 23, 2008 - The IRS is preparing two types of online calculators for use in computing the 2008 Economic Stimulus Payments and the Rebate Recovery Credit.

• IRS Proposed Regulations Modifying Circular 230 Practice Standards - Updated November 2008

• IRS Issues New Rules on Preparer Penalties - Updated November 2008 - The IRS has issued Proposed Regulations concerning preparer penalties.

• Special Use Valuation and Recapture Tax - October 6, 2008 - The IRS has ruled that a proposed sale of special use elected land for a purpose that would ensure the land be permanently used for agricultural purposes triggers recapture tax.    

• IRS Announces Areas Eligible For Extended Period for Livestock Sold Because of Drought - September 30, 2008 - The IRS has issued a Notice listing the counties where the replacement period for livestock sold because of drought is extended.

• IRS Says Farmers Can Automatically Convert From Accrual Method To Cash Method - September 11, 2008 - The IRS has issued a Revenue Procedure that allows farmers to automatically change from accrual to cash accounting.

• IRS Announces Special Use Valuation Interest Rates For Deaths In 2008 - August 11, 2008 - The IRS has officially released the interest rates by Farm Credit Bank District for Deaths in 2008 for use when making a special use valuation election for federal estate tax purposes.

• IRS Releases Data on Burden of Income Tax - September 3, 2008 - IRS data shows that burden of income tax on wealthy has increased

• IRS Confirms That Non-Deductible Life Insurance Premiums Do Not Increase Amount That S Corporations That Were Once C Corporations Can Distribute Tax-Free - September 26, 2008

• IRS Proposes To Change Filing Extensions for Some Types of Returns - July 1, 2008

• Iowa Storm, Tornado Victims Eligible for Disaster Relief - July 15, 2008 - The Federal Government has declared several Iowa counties a presidential disaster area.  That means that special tax rules apply.

• IRS Releases Publication on Charitable Contributions - (PDF) - The IRS has released Publication 1771 which explains the general rules and specifications for documenting charitable deductions.  The Publication also explains new guidelines that allow charities to send documentation to donors electronically and outlines when an acknowledgement from a charitable organization is required for the donor to claim a tax deduction. 

• IRS Releases Publication Containing Guidance for Charitable Donations of Vehicles - (PDF) - The IRS has released Publication 4303 which provides general guidelines for taxpayers who donate their vehicles to charity.

• IRS Issues Final Regulations That Clarify Rules For Stock and Asset Transfers After a Reorganization - May 8, 2008 - The IRS has amended regulations issued last fall concerning stock and asset transfers following a corporate reorganization.

• IRS Issues Notice 2008-46 - Guidance on Preparer Penalties - (PDF)

• IRS Issues Coordinated Issue Paper on Tax Treatment of Bioenergy Program Payments - The IRS has issued a Coordinated Issue Paper that says that Bioenergy Program payments are includible in gross income.

• IRS Fact Sheet on Like-Kind Exchanges - The IRS has published a summary of the rules for I.R.C. §1031 exchanges (tax-deferred exchanges).

• Treasury Releases Tax and Economic Data - On January 4, 2008, the Treasury Department released its most recent data concerning tax revenue and the economy.
  

• IRS Fiscal 2007 Audit Data - The IRS has released its fiscal year 2007 data on audit and enforcement.

• IRS Whistleblower Office Exempt From Privacy Act - An interim regulation specifies that the IRS Whistleblower Office will be Exempt from the Privacy Act.  That has implications for subjects of investigation.

• IRS Says that Insurance Companies Must Develop Anti-Money Laundering Programs
  An IRS Final Rule effective January 11, 2008, subjects insurance companies and dealers in precious metals to anti-money laundering requirements.

• IRS 2007 Data Book Released - On March 14, 2008, the IRS released the 2007 IRS Data Book (IRS Pub. 55B), which provides an annual snapshot of IRS activities for Oct. 1, 2006 - Sept. 30, 2007.  The publication includes information about returns filed, tax collections, enforcement, taxpayer assistance, as well as the IRS budget and workforce.