recent updates

[michaelmars]

1. The IRS issued their temporary and proposed regulations ( you might want to get them and read them) that will reduce the extension of time to file tax returns from six months to five months for certain entity returns that generate a K-1 form.

The change is effective for extension requests for returns due on or after January 1 2009 and apply to form 1065, form 1041 and form 8804 for any entities that have a tax year ending on or after September 30, 2008.

2. For as long as anyone can remember- start up costs and organizational expenditures were permanently capitalized and non amortizable unless you made the proper elections on your tax return. This week the IRS issued temporary regulations that make the start up costs and organization cost elections automatic when the taxpayers have those costs. The regs were issued this week but they can be applied to all expenses paidor incurred after October 22 2004. You still need to make sure you pay attention to these costs. You still have to comply with the rules on when and how they are deducted but the separate election no longer has to be made. The "deemed" election under the new regs should be a plus to those clients who were affected by having a dedcution permanently disallowed because a preparer failed to make the election.

3. The IRS over the years has softened on allowing late filing of S elections. Now the IRS just allowed an S corp that inadvertently terminated by having an LLC as a shareholder to "redo" their forms and treat the individual members of the LLC as the shareholders thus preserving the election. A kinder, gentler IRS perhaps??