New 'check-the-box' regulations enable foreign and domestic taxpayers to opt more simply to classify certain business entities as corporations or partnerships

Article Abstract:

New IRS rules for the tax classification of business entities called colloquially the 'check the box' regulations became effective on Jan 1, 1997. The rules determine whether business entities should be taxed as corporations or as partnerships passing through their income to their owners. The new rules stipulate that this election is to be made by checking a box with the IRS. The rules will make it easier for taxpayers to avoid anti-deferral regimes for passive income and to use hybrid entities. The IRS will carefully watch the use of these rules abroad so that they are not used to circumvent policy objectives.

United States, Foreign corporations, Corporate taxes, Corporations

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Proposed regulations may alter passive-loss rules: real estate professionals may find hoped-for exceptions are eviscerated by new IRS proposal

Article Abstract:

The passive loss rule change under IRC section 469(c)(7), enacted in the 1993 Tax Act, was supposed to help real estate professionals who materially participated in passive activities by reclassifying the activities. However, the IRS proposed regulations, intended as a clarification of the new rules, would limit eligibility to only a few taxpayers by prohibiting the aggregation of time spent on rental and non-rental activities for material participation determinations. Professionals are required to spend at least 750 hours annually on the activities.

Real estate agents and managers, Real Estate Agents & Brokers, Offices of Real Estate Agents and Brokers, Real estate agents, Real estate industry

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IRS adjusts to computerized records

Article Abstract:

IRS Revenue Procedure 91-59, issued in Oct 1991, states the requirements for machine-readable records retention. It applies to tax years beginning after Dec 31, 1991. The requirements pertain to taxpayers with assets of $10 million or more. They pertain to tax records for income, excise, employment, estate and gift taxes. Taxpayers must keep all machine-readable records that may prove relevant in computing any tax at least until expiration of the statute of limitations pertaining to the tax.

Tax returns

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