From The Boston Tax Institute

Originally published on Passive Activities and Other Oxymorons on June 7th, 2011.
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Boston Tax Alert 2011-27,2011-28, 2011-29

Lu Gauthier of The Boston Tax Institute has given me permission to republish his newsletter. The BTI newsletter is a regular feature of this blog now going up every Tuesday. Be sure to check out the BTI catalog for great CPE value.

Our thanks to Philip R. Dardeno, CPA, MST for the following email!

Working Draft TIR 11-XX: Employer-Provided Health Care Benefits Update

There has been a recent change in MA income tax law regarding the inclusion of certain income that has arisen out of the federal health care bill. The Affordable Care Act amended IRC § 105 to exclude from an employee's gross income any employer-paid expenses incurred for the medical care of an employee's adult child who has not attained age 27 as of the end of the taxable year. Massachusetts generally follows the provisions of the Internal Revenue Code as amended and in effect on January 1, 2005; however, specified Code sections are adopted "as amended and in effect for the taxable year." Recently, the Legislature amended the personal income tax law to adopt the current Code for IRC §§ 105 and 106 - the exclusions from gross income for employer-provided health care benefits.

Effective for tax years beginning on or after January 1, 2010, Massachusetts follows the federal treatment of IRC §§ 105 and 106 for exclusions from gross income for employer-provided health care benefits. This and other topics will be discussed by Phil in his seminars that begin this week in Marlboro and W. Springfield.

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Our thanks to Peter Birkholz, MST for the following email!

Currently the Fresno, CA Service Center is challenging dependency exemptions and filing status claims on returns filed in 2009 and prior years. This appears to be a nationwide program. If you receive one of the notices proposing disallowance of these benefits, be sure to timely and properly respond with documentation. Note that the Services explanation of disallowance of dependency exemption for a noncustodial parent does not take into account the effective date of Regulations under 1.152-4. Under this regulation, prior to 7/2/2008 a signed Separation Agreement exhibit awarding a dependency exemption to a noncustodial spouse was deemed "a written declaration" in lieu of Form 8332. Yet to be seen is whether this documentation can be submitted after the fact to support claiming an exemption. Three cases on point highlight the issue: Cheryl J. Miller v Comm. 114 TC 184 (3/24/00), Sherbo v Comm. 88 AFTR 2d 2001-5009, and Onesimo R. Espinoza v. Comm. TC Memo 2011-108.

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Our seminar entitled Tax and Financial Implications in Divorce will explore the many subtleties that affect the divorcing community. Attendees have evaluated this course highly and noted they received more than expected. Since divorce visits over 50% of the married population, attendance also will assist those preparing returns prior to, during, and after a client divorces. There are many opportunities for malpractice - protect yourself from that potential liability with knowledge.
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PAOO Comment - The income tax aspects of divorce are commonly misunderstood.  The number of posts I have on Tax Court decisions in that area are some indication. 

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Our thanks to Frank Monti, CPA for the following email!

In April 2009, the FASB issued SFAS No. 164, Not-for-Profit Entities: Mergers and Acquisitions, which sets accounting, reporting, and disclosure standards for transactions or other events that meet the definition of either (a) a merger of nonprofit organizations, or (b) an acquisition by a nonprofit organization. The FASB subsequently issued ASU No. 2010-07 in January 2010 to codify SFAS No. 164, primarily in FASB ASC 958-805, Not-for-Profit Entities-Business Combinations. The accounting standard builds upon the guidance on for-profit business combinations contained in FASB ASC 805, Business Combinations [formerly SFAS 141(R)], and addresses the unique considerations applicable to nonprofit organizations. The guidance also makes the requirements in FASB ASC 350, Intangibles-Goodwill and Other (formerly SFAS 142), fully applicable for nonprofit organizations. Certain other requirements in GAAP for which implementation by nonprofit organizations had been delayed are made effective, as are requirements for significant new disclosures.

In this economy, we are likely to see more and more consolidation in the Not-for-Profit industry and familiarity with these accounting and reporting requirements will be essential. Join us on June 7, 2011 in Waltham to explore this and other issues. Frank's GAAP for NFPs seminar qualifies toward the 24 hour requirement for Yellow Book!