New Legislation
This chapter covers tax legislation that was enacted since the 2006 National Income Tax Workbook went to press in September 2006. Included also is a table of the effective and sunset dates for selected provisions in new and prior legislation.
Rulings and Cases
This chapter summarizes selected rulings and cases that were issued from September 2006-August 2007 to give participants an update on issues that are being addressed by the IRS and the courts. The rulings and cases are organized under topic headings that match the other chapter titles.
Individual Taxpayer Issues
This chapter covers a variety of income tax issues that affect individual tax payers. Topics include:
- Sales of decedent's principal residence after death
- Sale of multiple homes
- Resident alien selling a home
- Buying living space in a retirement complex
- Selected charitable contribution issues
- Selected clergy issues
- Reporting gambling winnings and losses
- Home health care providers
Business Issues
- Fringe benefits
- Hiring children of the business owner
- Accounting methods and changes (changes to Form 3115)
- Telephone tax refund as taxable income
- I.R.C. §125 plans
Depreciation
This chapter covers income tax issues that practitioners face when preparing returns for taxpayers with investment income and expenses. Topics include like-kind exchanges, incentive stock options and interest income and expenses for related party transactions.
Agricultural Issues
Topics of current interest to practitioners who prepare farm income tax returns are discussed in this chapter. Topics include:
- Rent paid to an entity
- Flexible cash rents
- Energy credits
- Amended returns for CRP payments
- Definition of gross income from farming for purposes of donation of conservation easements and other purposes
- When does a Form 1099 need to be issued -- by a farmer and to a farmer?
- Farm audit issues
- Weather-related sales and replacement schedule
- Tax consequences of 4-H projects
- Table of safe harbors for farmers
Business Entities
This chapter is the third in a series of three. The first chapter (2005) covered formation of an entity, using an LLC as an example. The second chapter (2006) covered the operation of an entity using an LLC as the example. This year's chapter covers termination of an entity, using an LLC as the example.
IRS Issues
This chapter covers issues the IRS has targeted as key issues for practitioners. Topics include: working effectively with the IRS on issues such as responding to documents received from IRS and requesting a transfer to the local IRS office; prompt determination of estate tax returns; Form 2848 (Power of Attorney) processing; and where to send offers in compromise.
Retirement
This chapter focuses on the tax consequences of distributions and the options for those distributions. It includes topics such as:
- Estate subdividing IRA/plan
- Trust as beneficiary of IRA/plan
- Limits set by plan that are more restrictive than the tax law
- Charitable rollovers
Estate and Gift Taxes
This chapter covers a few selected estate and gift issues that income tax preparers encounter, such as: valuation issues; donation of conservation easement from land subject to I.R.C. §2032A election; and gifting shares in a family limited partnership. It includes a brief summary of estate, inheritance and gift tax rules of all 50 states.
Construction Contractors
This chapter covers income tax issues practitioners encounter when they prepare returns for construction contractors. It discusses accounting requirements, character of income and when it is reported, when expenses can be deducted, and self-employment tax issues.
Ethics
This chapter discusses some ethical principles for deciding how to respond to issues that arise in a tax practice. Numerous examples illustrate how the principles can be applied.
Tax Rates and Useful Tables
This chapter reports the updated income tax rates and other income tax rates and thresholds that adjust each year. The table of information about elections that was in the Elections chapter of the 2006 National Income Tax Workbook will be updated and included in this chapter this year.
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