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BHBM Tax Alert 10/30/2009

Friday, October 30, 2009

FEDERAL

New IRS Enforcement Unit and Other Taxes on the Wealthy

A new IRS enforcement unit, called the Global High Wealth Industry Group, was formed to help the IRS examine various techniques that are used by the wealthy to hide income.  This new unit will target the sometimes complex tax structure used to lower tax bills.  The new IRS group will consist of experts in partnership, corporate taxation and cross-border transactions.

The new health care bill, which will be available for a 72-hour viewing period in the near future, will include a public insurance option with negotiated provider rates.  The main funding for this bill will come from a 5.4% surtax on households with a modified adjusted gross income in excess of $1 million for married taxpayers filing jointly ($500,000 for single filers).
 

Extension of NOL Carryback and Bonus Depreciation

Congress is currently considering an extension of some from the American Recovery and Reinvestment Act of 2009 including the bonus depreciation and NOL carryback provisions.  Bonus depreciation provision currently allows businesses to deduct 50% of eligible investments at the time they are incurred; this provision is set to expire at the end of this year.  The net operating loss carryback provision allows businesses that incurred losses during 2008 to carryback those losses for up to five years.

 
Additional Interest Deduction for Residence

In CCA 200940030, the IRS approved an interest deduction for an additional $100,000 of a loan exceeding $1 million that was used to purchase a residence.  This $100,000 is characterized as home equity debt rather than acquisition debt subject to a $1 million limit under IRC §163(h)(3).

 
Senate Reaches an Agreement Expanding the home Buyer Credit

The Senate has reached an agreement that would extend the First Time Home Buyer Credit.  Furthermore, the agreement proposes to expand the program beyond first-time home buyers to provide a $6,500 tax credit (lower than the $8,000 credit authorized for first-time home buyers created through the American Recovery and Reinvestment Act) to those homeowners living in the same residence for five consecutive years out of eight years prior to the date of settlement.  The proposed expansion is set to be a part of the unemployment insurance bill currently pending in the Senate.

 

STATE

Tax Amnesty Deadline

The Tax Amnesty filing deadline is October 31, 2009.  All walk-in amnesty applications in New Orleans should be filed today because the office will not be open tomorrow.  The Amnesty hotline number is 1-866-292-8080 or you can visit www.ldramnesty.org for the online application.


If you would like to receive BHBM Email Tax Alerts to stay informed on the latest changes in tax law on the Federal and State level, please email Stacey Lala at slala@bhbmlaw.com.