Tax Headlines


Co-Owners of Two Residences Limited on Deducting Interest on Acquisition Indebtedness and Home Equity Indebtedness; Limitation Applied on Per-Residence Basis (Sophy, TC)

Individual co-owners of two residences were limited in deducting interest on $1 million of acquisition indebtedness and on $100,000 of home equity indebtedness. The indebtedness limitations were properly applied on a per-residence basis, regardless of the number of residence owners and whether the co-owners were married to one another. The statutory language of Code Sec. 163(h)(3)(B)(i) defined the word taxpayer with respect to acquisition indebtedness only in relation to the qualified residence, not the indebtedness.

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Kansas ~ Personal Income, Sales and Use Taxes: Late Filing Fees Waived for Businesses Impacted by Tornado

The Kansas Department of Revenue has announced that in light of the recent tornado in the city of Harveyville, the department will waive late filing fees associated with withholding tax and state sales tax liabilities for businesses in Harveyville and Wabaunsee County that were affected by the weather and that file these taxes late. Businesses not affected by the storms are required to file monthly state sales and withholding taxes on time. Businesses needing replacement copies of their tax returns can call the department at (785) 368-8222 for free replacements.

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California ~ Personal Income Tax: Update Provided on Nonconformity to Self-Employment Tax Deduction

The California Franchise Tax Board (FTB) has announced that self-employed taxpayers who have already filed a California personal income tax return for 2011 using the higher federal self-employment tax deduction rate do not need to file an amended California return. This is a change from the FTB’s original guidance, which stated that previously filed returns had to be amended. As previously reported, California does not conform to the increased federal deduction percentage for 2011 and 2012. (TAXDAY, 2012/03/01, S.4)

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CCH Weekly Report from Washington, D.C.

The Treasury Inspector General for Tax Administration (TIGTA) issued the following reports finding that:

The Business Master File Case Creation Nonfiler Identification Process (BMF CCNIP) for targeting business nonfilers has increased the number of returns secured, but possibly only as a result of an increase in the total closed inventory (TAXDAY, 2012/03/02, T.1). TIGTA made four recommendations for the Enterprise Collection Strategy, Small Business/ Self-Employed Division (ECS), including that ECS determine the causes of increases or decreases in closure types and make selection code adjustments.

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Guidance Issued on Vehicle Depreciation Deduction Limitations (Rev. Proc. 2012-23)

The IRS has issued the tables indicating the depreciation deductions for owners of passenger automobiles, trucks and vans first placed in service during calendar year 2012. For passenger automobiles, the deduction limitations for the first three tax years are: $3,160 ($11,160 if bonus depreciation applies), $5,100, and $3,050, respectively, and $1,875 for each succeeding year.

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Virginia ~ Sales and Use Tax: Senate Agrees to Substitute Bill to Require Tax Collection for Online Retailers With In-State Distribution Facilities

The Virginia Senate has agreed to a substitute bill passed by the House of Delegates that would create a presumption that a dealer has sufficient activity within Virginia to require it to register for the collection of retail sales and use taxes if any commonly controlled person maintains a distribution center, warehouse, fulfillment center, office, or similar location within Virginia that facilitates the delivery of tangible personal property sold by the dealer to its customers.

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