2012-2013 Federal Tax Update
Vern Hoven
Copyright^© 2012

Course: 8120266   Version 1211

• Recent and potential tax changes: Dangerous foreign asset and bank account reporting; corporate tax rate reductions; estate tax changes; expiration of lower tax rates; expiration of 100 tax provisions; AMT relief.
• Individual changes: Impact of the Supreme Court decision on the Health Bill, including what it means to health coverage of older children, W-2 reporting of employer-sponsored health coverage, and the 3.8% Medicare tax; filing same-sex couple returns; new stock basis reporting; mortgage interest limits tested by the IRS auditors and the Tax Court in Sophy, and…a nasty surprise.
• Real estate changes: More on cancellation of debt relief for acquisition debt on principal residences and short sales of business property; using Form 982 to exclude real estate COD income.
• Passive loss update: New! IRS changes rules for grouping of passive activities—this new election must be attached to returns; failure to make “single activity” election is ruinous to entrepreneurs; meeting the real estate professional eligibility requirements; some rental properties are not qualified for the real estate professional deduction.
• Individual retirement plans: Update of IRAs and pension provisions; tax-free IRA distributions for charitable purposes expires, but hope remains for an extension; when to use the Roth IRA conversion rules; inflation adjustments for 401(k) plans.
• Estate/gift taxation: $5/$10 million exclusion from estate tax; new portability benefit for surviving spouse; using family limited partnerships to save estate tax; deductibility of trust funds limited.
• Business changes: New! $139,000 §179 expensing election and 50% bonus depreciation deduction; Form 1099-K reporting causes problems; Form 1099 filing compliance gets IRS attention; health insurance credit for small businesses often unclaimed; new capitalization versus repair regulations.
• Federal payroll changes: Voluntary Reclassification program gives relief to havoc recreated by employment audit; how to eliminate IRS’s employee vs. independent contractor audits; amazing pro-employer win—use §530 relief to eliminate payroll taxes.
• Business retirement plans: When to use the Roth IRA conversion rules; inflation adjustments for 401(k) plans.
• Corporate changes: New! Exclusion for qualified small business stock sales changes again; 0% rate on dividends for certain investors (how low is low?); self-employed health insurance deduction for S corporation owners; S corporation basis case scares a lot of preparers; strategies to win C and S corporation reasonable compensation cases after Watson loses appeal.
• Partnership changes: New! Form 1065 analyzed; properly making §754 election to avoid huge malpractice lawsuit; single-person LLCs may not have limited liability on back payroll taxes—beware; LLCs can easily make S election; do LLC members owe SE tax? Maybe! Can it be limited? Learn how!
• IRS audit issues: New! All tax preparers must register with the IRS, but CPAs/EAs exempt from testing and CE standards; beware of the IRS’s “Knock and Talk” visit to the preparer’s office during tax season; economic substance doctrine kills tax shelters; use of client’s tax return information must be tightly restricted; IRS subordinates tax liens at refinance or sale; audit rates increase again, but not for all taxpayers; 10 most litigated tax issues released by the IRS.
• Weekly update: Closing with a general tax update discussion.

• Chapter 1
• Advise clients regarding expiring and new provisions, as well as changes to the 2012 Form 1040.
• Explain how community property rules impact registered domestic partners returns.
• Properly apply the changes resulting from the new health bill.
• Apply tax rules related to dependent children.
• List applicable tax rates for 2012.

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