Consider making taxable gifts before end of 2010
To give or not to give – that is the question. Due to inaction in Congress, estate planning has been frustrating for many in the last year. There is no federal estate tax in 2010, and the odds of any transfer tax reform are rapidly diminishing. In 2010, there is a flat gift tax rate of 35 percent for taxable gifts in excess of $1 million. It is rarely wise to prepay a tax, but this may be one of those unique times when the family may benefit from doing so. (Sept./Oct. 2010)

Married couples may avoid filing partnership return
Married couples who own an unincorporated business are usually classified as partnerships for federal tax purposes. But a special election allows eligible married co-owners not to file a partnership return and still receive credit for Social Security and Medicare coverage. The election is available if the trade or business joint venture is not incorporated, is owned only by a husband and wife, both spouses materially participate in the business and both spouses elect this treatment. (Sept./Oct. 2010)

Severance payments and FICA … The saga continues
The FICA tax treatment of severance pay has been a controversial issue over the past several years and is likely to continue as litigation ensues in the appeal of a recent federal district court case, Quality Stores. A federal district court viewed the severance payments as wage-replacement social benefits, not remuneration subject to taxation for FICA purposes. The decision concluded that the benefits are supplemental unemployment compensation resulting from a reduction in force. (Sept./Oct. 2010)

Court issues decision on reasonable compensation
The IRS has gained another victory in its attempt to subject S corp income of stockholders to employment taxes. It says that not all S corporation earnings should be subject to employment taxes, but when owners working in the business are not paid reasonable compensation for those efforts, some of the additional earnings should be taxable as wages. (Sept./Oct. 2010)

Health insurance credit helps small employers
During the past couple of months, you may have received a postcard from the IRS alerting you to the existence of a new credit for businesses or tax-exempt organizations that provide health insurance to employees. This credit was created by the Patient Protection and Affordable Care Act, which the president signed into law on March 23, 2010. Under the new law, eligible small employers may claim a tax credit for payments made to provide health coverage for employees for tax years 2010-2015. (July/Aug. 2010)

New law taxes indoor tanning services
The Jersey Shores guys may be without the "T" in their GTL (Gym Tan Laundry) status if new taxes on tanning make a visit to indoor salons too costly. Congress has imposed a new law that imposes a 10 percent excise tax on indoor tanning services. (July/Aug. 2010)

Tax Court to IRS: LLC members are not limited partners
The IRS has continued to litigate – and lose – cases in which it argues that members of a limited liability company should be treated in the same manner as a limited partner when applying the passive activity loss rules. (May/June 2010)

Tax Court answers age-old gambling question
Recreational gamblers are generally aware of the rule that limits their tax deduction for gambling losses to the amount of their gambling winnings. However, questions have arisen as to the timing of that determination. Do you calculate your winning/losing after every bet, at the end of each gambling session, daily, weekly or even less often? (May/June 2010)

Severance payments may be excluded from FICA tax
A federal district court has concluded that, in certain situations, FICA taxes are not required to be paid on severance payments resulting from employee layoffs. (May/June 2010)

IRS offers like-kind exchange relief
Many real estate investors use like-kind exchanges, also called Section 1031 exchanges, to defer gain by swapping one investment property for another. The tax law even allows you to use a third party, a qualified intermediary, to execute the exchange for you. During the current economic downturn, some QIs have run into financial difficulties, however. (May/June 2010)