Tax Bytes

For Use in Preparing 2008 Returns

 

• AMT Exemption
  • $69,950 (MFJ)
  • $46,200 (Single)
• Passenger Auto Depreciation: $3,060

• I.R.C. §179
  • $250,000
  • Start of phase-out: $800,000
• Special Use Valuation:
  • Max. reduction: $960,000
  • Max. tax savings (45% rate): $432,000
  • Formula interest rate (Agribank District): 6.38% (for deaths in 2008)
• I.R.C. §6166
  • First $1,280,000 of taxable estate
  • 2% portion - $636,000
• Social Security:  
  • Wage base: $102,000
  • Earnings Limit: (Age 62-65): $13,560
    

Standard Mileage Rates:

• Business: 58.5 cents/mile (7/1/08-12/31/08)
• Medical/Moving: 27 cents/mile (7/1/08-12/31/08)
• Charitable: 14 cents/mile  (2008)

 

Other Tax Information

September 2008 AFRs:
• 2.38 % (short-term)
• 3.46 % (mid-term)
• 4.58 % (long-term)

October 2008 AFRs:
• 2.19 % (short-term)
• 3.16 % (mid-term)
• 4.32 % (long-term)

Interest Rates for Underpayments and Refunds

3rd quarter 2008 (Rev. Rul 2008-27)

 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%

4th quarter 2008 (Rev. Rul 2008-47)

 Non-Corporate taxpayers: 6%

Corporate Taxpayers:
- 5% for overpayment
- 6% for underpayment

Large Corporate Underpayments (amount exceeding $10,000): 8%

Large Corporate Overpayments: 3.5%

IRS Developments

Special Use Valuation and Recapture Tax

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

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

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

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

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

IRS Proposes To Change Filing Extensions for Some Types of Returns

IRS Issues New Rules on Preparer Penalties
The IRS has issued Proposed Regulations concerning preparer penalties.

Iowa Storm, Tornado Victims Eligible for Disaster Relief
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
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
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
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

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 Proposed Regulations Modifying Circular 230 Practice Standards

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.