Tax Headlines

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IRS Offers Guidance to Issuers of Qualified Mortgage Bonds and Mortgage Credit Certificates (Rev. Proc. 2012-16)

The IRS has released guidance with respect to the computation of the housing cost/income ratio by issuers of qualified mortgage bonds (QMBs) and mortgage credit certificates (MCCs). Under Code Sec. 25(c)(1), state and local governments can issue MCCs to qualified homebuyers to acquire, rehabilitate, or improve a primary residence. Under Code Sec. 143(a), state and local governments can issue QMBs, all proceeds of which must be used to finance owner-occupied residences. Recipients of QMBs and MCCs must meet the income requirements of Code Sec. 143(f).

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Lawmakers Close to Payroll Tax Deal

Negotiators for a payroll tax extension (HR 3630) were reportedly closing in on a final agreement late on February 15, with the expectation that votes in both chambers would occur by the end of the week. House Speaker John Boehner, R-Ohio, told reporters following a meeting with rank-and-file House Republicans that there is a tentative agreement that still needs a “few details” worked out.

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Texas ~ Corporate Income Tax: Constitutional Challenge Dismissed for Lack of Jurisdiction

The Texas Supreme Court dismissed, for lack of jurisdiction, an original proceeding brought by a group of corporations (taxpayers) which claimed that the Texas franchise tax is unconstitutional. The taxpayers had argued that the tax violates the Equal and Uniform Clause of the Texas Constitution and the Equal Protection, Due Process, and Commerce Clauses of the United States Constitution.

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Pennsylvania ~ Corporate Income Tax: Bill Would Create Intangible Expense Addback, Implement Single Sales Factor

Legislation introduced in the Pennsylvania House of Representatives would create a corporate income tax addback for intangible expenses and would implement a single sales factor beginning in 2013. If enacted, the bill would also increase the net loss deduction, while decreasing the corporate net income tax rate, yearly beginning in 2014.

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President’s FY 2013 Budget Is Mix of Old and New Tax Proposals

President Obama unveiled his fiscal year (FY) 2013 federal budget proposals on February 13. At a Treasury Department press briefing on the same day, a senior Treasury official commented on the tax provisions within the president’s budget in conjunction with the release of the Treasury Department’s “Green Book,” General Explanation of the Administration’s Fiscal Year 2013 Revenue Proposals.

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Tax Court Had Jurisdiction to Determine Penalties in Partnership Case (Tigers Eye Trading, LLC, TC)

The Tax Court had jurisdiction to determine all items in a partnership case that would have been partnership items if the entity had, in fact, been a partnership, and had jurisdiction to determine penalties in the case of underpayments of tax. The case arose out of Son of BOSS tax shelter transactions that were popular at the time, and a decision had been stipulated between the parties.

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IRS Updates Amount of Excludable or Deductible Foreign Housing Expenses for 2012 (Notice 2012-19)

The IRS has published adjustments to the limitation on the amount of housing expenses that can be excluded or deducted from gross income under the foreign earned income provisions. A taxpayer whose entire tax year is within the period the taxpayer meets the tax home test and either the bona fide resident or physical presence test is limited to maximum housing expenses of $28,530 for 2012.

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House GOP Leaders to Introduce Payroll Tax Bill Without Jobless Benefits, Doctor Payments

With no progress made in reaching an agreement with Senate lawmakers over the extension of a soon-to-expire payroll tax cut, House Speaker John Boehner, R-Ohio, announced on February 13 plans to introduce legislation that would simply extend the payroll tax holiday for the remainder of the year while the conference negotiations continue regarding offsets, unemployment insurance, and the “doc fix” (Medicare physician payment rate).

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