Key Tax Developments That Could Affect You and Your Business

Written on March 4, 2015

In the past few weeks, there have been key developments in the tax arena that could affect you and your business. Repair Regulations Relief for Small Business Taxpayers The IRS has announced that some taxpayers are granted elective relief from filing Form 3115 as a result of the Repair Regulations. The regulations became mandatory for all tax years beginning on or after January 1, 2014. These regulations put a heavy compliance burden on the taxpayer, especially in the first year. The IRS recently issued Revenue Procedure 2015-20, which provides relief for small taxpayers. If your assets are under $10 million or average gross revenues are under $10 million, you do not have to file Form 3115 with your 2014 tax return. The IRS will allow you to comply with the repair regulations on a “cut-off” basis allowing you to start complying in 2014. However, it may be advantageous for some taxpayers to file Form 3115 in spite of the new relief. View full article. Alabama Supreme Court Upholds the Alabama Accountability Act The Alabama Supreme Court announced on March 2, 2015 that it has upheld the constitutionality of the Alabama Accountability Act (AAA). This ruling overturns the Montgomery Circuit Court decision from May 2014. The AAA provides scholarships for private schooling, via tax credits, to students zoned to attend failing schools in Alabama.  The AAA also allows tax credits to individuals who contribute to qualified scholarship programs. Important Ruling for Abandonments The Court of Appeals has recently ruled that under certain circumstances the abandonment of securities is an ordinary loss. In Pilgrim’s Pride Corporation v. Commissioner (CCA 5 2/25/2015), the taxpayer’s assertion that the abandonment of corporate security by the taxpayer was an abandonment subject to ordinary loss instead of capital loss treatment was upheld. This ruling is key when considering the taxation of abandoned securities. While the specific years to which this case applies is limited, it does provide taxpayers with added reliance on the law in the area of other abandonments, such as the abandonment of a worthless partnership interest. Extension for Meeting WOTC Certification Requirement The WOTC was among those provisions extended through Dec. 31, 2014, by the Tax Increase Prevention Act of 2014, which was passed last December. The credit is for employers that hire individuals who are members of targeted groups, including certain qualified veterans. View full article. Please contact your Warren Averett advisor with questions.

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