TaxOps

Lack of historic base information does not preclude taxpayers from claiming R&D credit

Mark Dunning — Fri, 18 May 2012 15:44:39 +0000

Prior to the alternative simplified credit (ASC), many companies could not claim the R&D credit because they didn’t have the records establishing their qualified research expenses and gross receipts during the 1984 – 1988 tax years (now over 25 years ago). Therefore they couldn’t compute an appropriate base amount as required with the regular R&D credit computation. The ASC — established in 2007, enhanced in 2009, and now even rumored to increase again with the next extension – only looks back at the three previous years’ of qualified research expenses for this computational method. The ASC must, however, be claimed on a timely, originally filed return. Or in other words, if the ASC was not claimed on the prior tax year return, a taxpayer cannot amend those returns to claim the ASC.

Download our white paper, The R&D Credit: Qualifying Your Activities. Questions about the R&D credit? Contact Mark Dunning at 720-227-0420 or mdunning@taxops.com.

Wanted-Strong Tax Seniors to join our All-Star Team.

TaxOps — Wed, 16 May 2012 19:29:30 +0000

TaxOps is focusing on assisting companies with all aspects of their tax operations. We maintain a tax-only practice. This focus allows us to provide maximum value to our middle-market business clients. With 10 years of success, our team of tax professionals brings a wealth of Big Four experience and leadership capability to our senior level client solutions. While our depth of services and technical ability is what you’d expect from one of the Big 4 or second tier firms, our approach is anything but. The firm’s goal is to offer the best results for our clients and the best working environment for our people. That goal is facilitated by our firm’s unique business model and service delivery methodology. TaxOps offers a culture of development, high performance, advancement and flexibility that is unique and attractive to high performing professionals.

POSITION SUMMARY
The Tax Senior is a key member of the team, providing quality income tax services support for clients with a value added attitude. You will work within teams in the organization on multiple projects where you will leverage your time management skills, ability to conduct tax planning and applicable research in a timely manner for Partner review. You are responsible for the preparation of 1120, 1120S, 1065 and other relevant returns for business clients as well as the preparation of income tax provisions. At TaxOps you will have the opportunity to work with multiple managers and projects where you will grow and develop as a tax professional through their mentorship practices.

PRINCIPAL DUTIES AND RESPONSIBILITIES:
• Prepare tax returns
• Provided tax planning and research
• Prepare and review income tax provisions
• Provide Tax Manager with regular updates on project status
• Work positively and collaboratively in a team environment
• Meet required and scheduled deadlines
• Work in the best interest of the company, clients and professional requirements

QUALIFICATIONS:
• 2-5 years public accounting experience
• Big 4 or second tier firm experience highly desirable
• Bachelor’s Degree in Accounting
• CPA or working on completion of CPA (earning within 1 year of date of hire)
• Experience with preparation and review of corporate, partnership and S Corp tax returns
• Experience in preparation and review of income tax provision in accordance with ASC-740
• Proficiency and demonstrated experience with Excel

Information on the position is available on our website at www.taxops.com/careers or on our job posting on LinkedIn.

Williams shareholders take a $500M hit from a tax provision misstatement

Daniel DeLau — Wed, 16 May 2012 16:06:15 +0000

Williams Cos., an interstate gas-pipeline asset-holder, has become the latest poster child for what can go wrong if a company is not focused on its tax provision. Failure to properly account for deferred tax liabilities from its investment in a limited partnership due to material weakness in internal controls resulted in the public company restating its 2011 financial results. The misstatement slashed off nearly $500 million of its shareholder value overnight– all because of a misstatement in accounting for income taxes.

Find out the importance of and potential pitfalls related to accounting for income taxes by downloading our white paper on ASC 740, “A Closer Look at Accounting for Income Taxes”. By downloading our white paper, you will also receive our ASC 740 Fundamentals Series, a 10-part series offering a practical approach to meeting standard requirements. Download TaxOps ASC 740 white paper. Contact Dan DeLau at 720.227.0065 or delau@taxops.com with questions regarding ASC 740. See the CFO Report about the Williams Cos. at Provision Misstatement.

Proposed regulations clarify corporate transfers that qualify for allocation of E&P

Mike Abramovitz — Tue, 15 May 2012 16:20:10 +0000

IRS proposed regulations (Reg-141268-11) under Code Sec. 312 clarify that if property is transferred from one corporation to another and no gain or loss is recognized, no allocation of the transferor’s earnings and profits (E&P) is made to the transferee unless the transfer is dealing with the carryover of tax attributes in certain corporate acquisitions. The proposed regulation would be effective when finalized. If the proposal is accepted, the final rule would put into the regulations a long-standing IRS administrative position.

Questions regarding overstated basis can be directed to Mike Abramovitz at 720-227-0423 or mabramovitz@taxops.com. Please direct general questions about tax issues for businesses to info@taxops.com.

Interest Is Not Preliminary Activity For Bonus Depreciation Safe Harbor

TaxOps — Fri, 11 May 2012 20:23:40 +0000

In a recently-released private letter ruling, the IRS has determined that capitalized interest is not a preliminary activity for purposes of a safe harbor under bonus depreciation. However, the IRS further determined that the taxpayer was eligible for 100-percent additional first-year depreciation under Rev. Proc. 2011-26 on self-constructed components.

Final controlled group regulations clarify deferred loss recognition

TaxOps — Thu, 10 May 2012 20:33:36 +0000

The Treasury Department and IRS have issued final regulations providing guidance on the deferral of losses on the sale or exchange of property between members of a controlled group. The final regulations retain the rules set out in the proposed regulations issued in April of last year, with some with small clarifying changes. T.D. 9583 was published April 16, 2012 in the Federal Register.
Contact us at info@taxops.com for questions about tax issues affecting your business.

BroadHop Sales Through Start-up Phase to Take Up Global Presence

Brian Amann — Tue, 08 May 2012 18:25:49 +0000

BroadHop Inc. is a leading manufacturer of communications software products. Since its inception in 2003, the technology innovator has championed a singular focus – to simplify complex delivery systems in a way that allows service providers to control their networks in real time and personalize their service to end-users. “BroadHop’s world class technology has created strong market growth in the Internet Protocol and data services fields, especially within the mobile market,” Kishen Mangat, Vice President, Solutions, says.

BroadHop commands a significant presence in Europe and Asia today. The company’s technology platform is deployed by more than 80 telecom service providers that serve 300 million subscribers in over 30 countries. Along the way, the company has brought home an impressive number of product performance awards, including the 2010 Communications Solutions Product of the Year and a 2010 Emerging Technology Company AlwaysOn Global 250 Award.

BroadHop teamed up with TaxOps to develop a tax function capable of supporting ambitious growth plans. A complex ownership structure, and subsequent corporate restructuring, demanded high-level attention to keep the tax function in line. “TaxOps principals have been willing to roll up their sleeves, which is highly valuable for a company in the startup and rapid expansion phase.” Mangat says. “The level of commitment to customers and trust at the most senior levels has been extremely valuable to BroadHop.”

Brian Amann, director at TaxOps, says that TaxOps has worked with BroadHop since the inception and has had a front row seat to their amazing growth and progress. “We have been able to scale our tax solutions along the way to fit their needs, which have developed from basic formation issues to the complex international needs that they have today,” Amann says.

BroadHop’s industry leading technology and proven management team recently attracted venture capital funding. Mangat says the funding has allowed the company to maintain technology leadership. In addition, Mangat says BroadHop has benefited from “invaluable” guidance from the venture capital investors as the company continues to navigate growth challenges. With a secure tax and financial foundation now in place, Mangat says the company is in a position to keep pace with market growth, and further solidify the company’s leading position in the international technology field.

For more information on BroadHop and its products, visit www.broadhop.com or follow the company on http://twitter.com/broadhop. For more information about TaxOps, contact Brian Amann at 720-227-0062 or bamann@taxops.com.

Supreme Court affirms 6-year limitation period does not apply to overstated basis

Mike Abramovitz — Mon, 07 May 2012 22:24:52 +0000

On Wednesday, the U.S. Supreme Court affirmed the Fourth Circuit’s decision in Home Concrete & Supply, LLC, which had ruled that the extended six-year statute of limitation under Sec. 6501(e)(1)(A), which applies when a taxpayer “omits from gross income an amount properly includible” in excess of 25% of gross income does not apply when a taxpayer overstates its basis in property it has sold (Home Concrete & Supply, LLC). For details on the ruling, see the Journal of Accountancy.

Questions regarding overstated basis can be directed to Mike Abramovitz at 720-227-0423 or mabramovitz@taxops.com.

Colorado’s “Amazon” law requiring out-of-state retailers to report sales deemed unconstitutional

Meredith Theiss — Wed, 25 Apr 2012 15:43:15 +0000

The U.S. District Court of Colorado has found the Colorado “Amazon” law requiring out-of state retailers to report information about customers’ purchases to each customer and to the Colorado Department of Revenue (CDOR) to be in violation of the Commerce Clause of the United States Constitution (Direct Marketing Association vs. Huber). The State of Colorado requires retailers who sell $100,000 or more of products to customers in Colorado, and that do not collect and remit sales taxes on those products, to:

Notify the purchaser of obligation to self-report and pay use tax.
Provide customers who purchase more than $500 annually from the retailer with an annual report of purchases and inform customer the retailer is required to file an annual purchase summary reporting the customer’s name and total purchases to the CDOR.
Provide the CDOR with an annual customer information report stating the name, billing and shipping address, and total purchases for each of its Colorado customers.

The Court found the law violates the “dormant Commerce Clause”, which prohibits state actions that interfere with interstate commerce, because it discriminates against out-of-state retailers. The court further found the CDOR failed to prove the law advances a legitimate local purpose unable to be served by “reasonable nondiscriminatory alternatives,” and places impermissible undue burdens on interstate commerce. The Court issued a permanent injunction to prevent the law from being enforced.
For questions about sales tax or other SALT issues, please contact Meredith Theiss at 720-227-0064 or mtheiss@taxops.com.

IRS eyes small and mid-size businesses for audits

TaxOps — Fri, 20 Apr 2012 15:50:00 +0000

IRS is focusing greater resources on small- and mid-size businesses ($10 million to $250 million in assets). Pre-filing agreements with large business taxpayers account for some of the shift. According to Forbes Contributor Dean Zerbe:

Audit coverage for corporations with asset size $10 – $50 million has gone up from 11.7% to 13.3%;

Audit coverage for corporations with asset size $50 – $100 million has gone up from 11.7% to 18.9%;

Audit coverage for corporations with asset size $100 – $250 million has gone up from 12.8% to 16.6%; and

Audit coverage for corporations with assets over $250 million has gone up nominally from 27.4% to 27.6%.

At the same time, audits of S Corps and Partnerships have gone up in raw numbers. Mr. Zerbe notes that the IRS audit workforce is fat with young blood ready to cut their eyeteeth auditing smaller companies in an effort to collect billions of dollars in uncollected taxes. Small- to mid-size business should be on notice that the taxman cometh. Read Mr. Zerbe’s article at Forbes.