Financial and Tax Reporting
Current federal and state tax law requires that Businesses and Individuals report their taxable income annually, including tax deferred transactions. In addition, recent tax statutes and regulations require that businesses and individuals, and their advisors, disclose tax reporting positions which may be subject to interpretation by tax authorities.
FASB FIN 48. The Financial Accounting Standards Board issued FASB Financial Interpretation 48, which requires public and private businesses to disclose any tax positions that have a 50% or less chance being sustained if contested for all open years.
- Expanded 1099B reporting for all services provided and sales of property in excess of $600.00 effective January 1, 2012. This provision is designed to encourage greater tax disclosure of hidden gains on the sale of property, such as precious metals and equipment. The IRS believes whatever is disclosed will be reported. This represents the single largest revenue raiser in the 2012 federal budget. While this has attracted a lot of attention for repeal, additional revenue raisers must be substituted in order to repeal it.
- Require Form 8824 for all like kind exchanges to enhance the scope and number of reported exchanges.
- Schedule M-3 for businesses is designed to reveal any difference between accounting income and taxable income.
- Form UTP for businesses to reveal specifically all tax positions which are potentially uncertain or aggressive.
- Expanded civil tax penalties for failure to report taxable income
- Expanded civil tax penalties against tax preparers for not disclosing or reporting taxable income.
- Expanded criminal tax penalties for willful failure to report taxable income.
- Expanded whistle blowing rewards for turning in businesses and individuals who are shirking their tax obligations. Section 7623(b)( (1) provides an award at least 15 percent but not more than 30 percent of the collected proceeds.
Section 1031 exchanges may involve substantial analysis and interpretation in determining whether an asset maybe exchanged or whether the exchange is fully tax deferred.
We advise clients as to the proper tax structure and types of 1031 Exchange to fully comply with federal and state tax law.
At the completion of the exchange, we prepare, for attachment to the client’s tax return, tax forms 8824 and 4797 and compute the depreciation expense for exchanged assets for inclusion into the client’s tax return.
We provide a tax opinion that satisfies the requirement that the exchange comply with federal tax law as well as for FASB FIN 48 reporting requirements.