Electing out of Bonus Depreciation per the 2008 Housing Act
The Housing and Economic Recovery Act of 2008 allows corporations to forgo the bonus depreciation deduction and instead increase the credit limitations on both the Section 38 (c) General Business Credit for research expenditures and the Section 53(c) Alternative Minimum Tax credit.
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Emergency Economic Stabilization Act of 2008: Effect on Business Returns
The legislation, signed into law on October 3, 2008, actually contains three separate bills: the Emergency Economic Stabilization Act of 2008; the Energy Improvement and Extension Act of 2008; and the Tax Extenders and Alternative Minimum Tax Relief Act of 2008. While the main focus of this Act was to address the recent financial crisis, it ended up including $150 billion in tax incentives for both individuals and businesses.
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Environmental Cleanup Costs
There is a special election that allows you to expense qualifying environmental cleanup costs if they are paid or incurred before January 1, 2010. The election is made under Code Section 198, as initially provided for by the 1997 Taxpayer Relief Act. It covers expenses that would otherwise be required to be capitalized. In order to qualify for the election both the cleanup costs and the contaminated site must meet certain requirements.
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Executive Compensation
Executive compensation seems to be in the news a lot lately. In particular, Congress (and the public at large, for that matter) has expressed outrage at those companies receiving federal bailout money but which continue to pay exorbitant salaries. This is an issue that came to the forefront after the passage of the Troubled Assets Relief Program, a.k.a., TARP, late last year.
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FAS 109: Accounting for Income Taxes
The Statement of Financial Accounting Standards (FAS) No. 109, Accounting for Income Taxes, establishes the basic principles when accounting for income taxes for the purpose of preparing a companys financial statements. FAS 109 requires that the effects of income taxes resulting from transactions occurring in the current and preceding years be reported on an entitys financial statements for current and future years. It is effective for tax years beginning after December 15, 1992 (although earlier application was encouraged). FAS 109 superseded FAS 96, which was issued in 1987.
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FASB Guidance: Accounting for Uncertainty in Income Taxes
In June 2006, FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109. It is intended to clarify the guidelines for when to recognize income taxes in financial statements that are issued in accordance with FASB Statement No. 109, Accounting for Income Taxes.
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Foreign Tax Credit: Recapture of Overall Domestic Losses
In December 2007, the IRS issued final and temporary regulations (T.D.9371) for the new IRS Code Section 904(g), Recharacterization of Overall Domestic Loss, which was enacted due to the American Jobs Creation Act of 2004 (AJCA). These latest regulations give guidance for the new rules, as well as updating the guidance for handling overall foreign losses and separate limitation losses by both individuals and corporations when claiming the foreign tax credit (FTC).
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How to Calculate Estimated Tax Payments for C Corporations
A C corporation cannot simply wait until the end of its tax year, complete its income tax return, and pay the amount of tax due. A C corporation is required to make quarterly estimated tax payments throughout the year based on its income earned. Estimated tax payments are to be paid in four installments. This article discusses the guidelines to use when estimating the amount of tax due for each installment in order to avoid having a penalty assessed.
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IRS Interest and C Corporations
When a corporation underpays its tax liability, the IRS can assess both penalties and interest. Interest can be assessed on the tax that is owed but it can also be assessed on the penalty itself. The underlying principle for the assessment of interest is that the taxpayer had use of the money for a period of time during which it should have been in the possession of the government.
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IRS Penalties and C Corporations
There are more than 150 civil penalties in the IRS Code. They include everything from penalties on the underpayment of tax to accuracy-related penalties to tax shelter activity penalties. While the underlying purpose of any tax penalty is to encourage voluntary compliance, the assessment of penalties also produces revenue and reimburses the IRS for the cost of enforcement. This article provides an overview of the most common tax penalties as they apply to C corporations.
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