Guidance Issued on Information Reporting by Domestic Entities Under Code Sec. 6038D with Respect to Specified Foreign Financial Assets (Notice 2013-10)

Guidance has been issued concerning the first tax year certain domestic entities will be required to report interests in specified foreign financial assets under Code Sec. 6038D . Proposed Reg. §1.6038D-6 , which applies to tax years beginning after December 31, 2011, sets out the conditions under which a domestic entity will be considered a specified domestic entity and, therefore, required to report specified foreign financial assets in which the entity holds an interest.

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Senate Democratic Leaders Mull Tax Reform Via Budget Reconciliation

Senate Budget Committee Chairman Patty Murray, D-Wash., announced on January 23 that she plans to move a fiscal year (FY) 2014 budget through her committee despite the Senate’s failure to approve one over the past four years. Murray and her fellow Democrats are also planning to include revenue raisers as opposed to just spending cuts in order to reduce the federal deficit, and some members of leadership are contemplating including tax reform as part of the budget process.

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Virginia ~ Personal Income Tax: Request for Refund Based on Age Deduction Denied

The Virginia Department of Taxation has determined that the age deduction, which allows taxpayers born after January 1, 1939, who have attained the age of 65 to subtract up to $12,000 from their federal adjusted gross income, does not impose a tax on tax-exempt income derived from obligations of the United States. Under the facts presented, the taxpayer, a married citizen of Virginia, cashed United States savings bonds that had reached maturity. After noticing that the income resulting from his savings bonds had not been subtracted from his adjusted federal adjusted gross income (AFAGI) in computing the age deduction, the taxpayer felt that he was entitled to refunds for the tax years during which he had cashed in his savings bonds. Rejecting the taxpayer’s argument that Virginia was taxing tax-exempt income derived from obligations of the United States by failing to remove such income from the calculation of the age deduction, the department noted that a taxpayer does not have a right to any tax deduction. Additionally, according to the department, the Virginia General Assembly clearly excluded Social Security benefits and other benefits subject to taxation under IRC §86 from AFAGI. The department deferred to the statutory computation created by the Legislature and held that the taxpayer was not entitled to his requested refunds.

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Texas ~ Corporate Income Tax: Store Selling Flooring and Flooring Plus Installation Was Retailer for Tax Purposes

A corporation (taxpayer) that described itself as a retail floor covering store was entitled to calculate its Texas taxable margin at the 0.5% rate because it was primarily engaged in retail trade activities. The Texas Comptroller’s audit examiner had determined that the taxpayer was a contractor, not a retailer, and should pay the tax at the 1% rate.

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