Tax Headlines

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IRS Provides Guidance on Stock Transfers to Foreign Corporations in Exchange for Stock (Notice 2012-15)

The IRS has issued guidance, to be incorporated into regulations under Code Sec. 367 applicable to certain transfers of stock to foreign corporations in exchange for property under Code Sec. 304. Code Sec. 367 applies to transfers involving foreign corporations. Code Sec. 367(a) governs exchanges involving transfers of property from the U.S. to foreign corporations, while Code Sec. 367(b) governs other exchanges not involving transfers of property.

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IRS Reminds Preparers and Providers of Continuing Education Requirements (IR-2012-18)

Tax return preparers who are required to pass the registered tax return preparer competency exam must complete 15 hours of continuing education (CE) annually beginning in 2012 and the classes must be taken from an IRS-approved provider. Preparers can find a list of IRS-approved providers at http://www.IRS.gov/taxpros/ce. The 15 hours of continuing education must include 10 hours of federal tax law, three hours of federal tax law updates and two hours of ethics each calendar year.

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New Mexico ~ Corporate Income Tax: Combined Reporting, Rate Reduction Bill Passed by Senate

The New Mexico Senate has passed a bill that would reduce the highest corporate income tax rate and require combined reporting for certain unitary businesses. If the bill is enacted, the corporate income tax rate for taxpayers with net income over $1 million would decrease from 7.6% to 7.5%. In addition, unitary corporations that provide retail sales of goods in a facility of more than 30,000 square feet under one roof in New Mexico (i.e., “big box” retailers) would be required to file a combined return (combined reporting is currently optional for all unitary corporations). If enacted, the changes would apply to taxable years beginning in 2013 and thereafter.

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Missouri ~ Personal Income Tax: Credit Allowed for Texas Margin Tax, Not Allowed for Washington B&O Tax

The individual partners of a Missouri limited liability partnership that derives substantially all of its income through its ownership interest in a Missouri limited partnership will be allowed to claim a credit on their Missouri individual income tax returns for their proportionate shares of the Texas margin tax paid directly by the limited partnership. However, they will not be allowed to claim a credit on their returns for their proportionate shares of the Washington business and occupation (B&O) tax paid directly by the limited partnership. Missouri law allows individuals to take a credit for the amount of income taxes paid to other states. The Missouri Supreme Court has applied two tests, the “based on” test and the “object” test, to determine whether another state’s tax is an income tax for which Missouri residents can take a credit.

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