CPAs and Advisors with Your Growth in Mind

Private Universities to Receive Tax Relief

Private colleges and universities subject to the Tax Cuts and Jobs Act’s 1.4% excise tax on their net investment income may get a break from the Internal Revenue Service. Through the issuance of Notice 2018-55, the IRS has announced its intention to issue proposed regulations providing a stepped-up basis rule to potentially lower the amount of capital gain subject to the new tax. Specifically, the notice states that the basis of property held on December 31, 2017, later sold at a gain will not be less than the property’s fair market value on that date, plus or minus any adjustments. Read More.

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Tax Debt Growing Among Tax-Exempt Groups

Based on an audit by the U.S. Department of Treasury’s inspector general for tax administration, debt among 64,000 tax-exempt groups was estimated at $875 million for 2012. While the organizations do not pay income taxes, many are in the hole over payroll tax liabilities. Additionally, despite most groups reporting a small amount that they owe, 25 groups with the biggest tax liabilities received $148 million over a three-year period from the government. For the full story on tax-exempt groups’ debt, visit The Hill’s website. Also check out our Education and Nonprofit pages to learn more about the Firm’s industry services.

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U.S. and Canada to Exchange Cross-Border Information

Announced on June 30th, the Canada Border Services Agency and the U.S. Department of Homeland Security have created an initiative to exchange select information on individuals crossing the countries’ borders. The information, which includes the amount of days an individual spends in either country, could be used to determine tax, immigration and health care compliance. In addition, the Canada Revenue Agency (“CRA”) may use the information exchange for confirming compliance with the following regulations under the country’s Income Tax Act: Regulation 105: Anyone paying U.S. individuals or companies for providing services in Canada is required to withhold 15 percent of. Read More.

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IRS Updates Form 5472 Regulations to Eliminate Anachronistic “Duplicate Filing” Requirement

Back in 2011, the Internal Revenue Service (“IRS”) proposed regulations to eliminate the need for duplicate filing of Form 5472 regardless if the filer submits a paper or an electronic income tax return. As a result, the regulations’ only remaining provision for filing Form 5472 separately from the filer’s income tax return applies to cases in which the filer’s return is not timely filed. The 2011 regulations are now finalized without substantive change. The IRS and U.S. Department of Treasury are also proposing the removal of §1.6038A-2(e), which provides for a filer to timely file Form 5472 separately from the. Read More.

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German Treaty Favors S Corporations

In its decision on June 26, 2013, the German Federal Fiscal Court (“the Court”), cited I R 48/12, IStR 2013, p.880, overruled a lower court case and found in favor of the taxpayer. Using logic similar to Canada Revenue Agency’s established position that an S corporation is a U.S. resident corporation that has elected not to be subject to tax, the Court concluded that an S corporation holding at least 10 percent interest in a German GmbH suffers withholding on dividends from the GmbH at a rate not to exceed 5 percent. Were the treaty not to apply, the rate. Read More.

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