Tax Break

Essential reading: REIT status questioned by IRS, and more

June 10, 2013

Welcome to the top tax and accounting headlines.

* IRS puts brakes on corporate push to capture real-estate tax break. A.D. Pruitt and Amol Sharma – The Wall Street Journal. The Internal Revenue Service is stepping up its scrutiny of companies that are looking to avoid some corporate taxes by converting their operations into real-estate investment trusts. Link  

* Obama urged to back plan to list owners of shell firms. Ravi Somaiya – The New York Times. Anticorruption activists have urged President Obama to back a plan to publicly register the owners of shell companies in the United States and around the world, a move they say is essential to thwart corrupt government officials, tax evaders and money launderers who rely on an opaque financial system. Link 

* Groups propose to simplify accounting for small firms. Floyd Norris – The New York Times. Making accounting easier for small companies — and saving them the need to report some losses that big companies can face — has become a new preoccupation of the accounting profession. Link  

* How to avoid 3.8 percent tax on S-Corporation income. Arden Dale – The Wall Street Journal. For those who own S corporations, the Internal Revenue Service imposes the tax when it thinks the owners are playing more passive roles, a determination based partly on how much time they spend on the job. Active owners don’t have to pay the tax. Link

* The best place to hold REITs and MLPs: An IRS or a taxable account? Gregory Zuckerman – The Wall Street Journal. Advisers say there’s no prohibition against holding MLPs or traded REITs in a rollover individual retirement account or other tax-advantaged account, nor is there a penalty or tax on proceeds when these equities are sold. Link  

* Ted Cruz launches effort to abolish IRS, but tax experts call him confused. Todd Gillman – The Dallas Morning News. Republican Senator Ted Cruz pledged to end the IRS, drawing cheers from a well-heeled Manhattan crowd. But as policy from a U.S. senator, it strikes liberal critics as demagoguery, and tax experts as half-baked. Link  

* Tracks fear new tax on winning bets will sap business. Alyssa Botelho – The Boston Globe. As horseplayers returned to Suffolk Downs for the opening of racing season last weekend, grumbling about a new state gaming tax had some gamblers thinking of taking their business elsewhere. Link  

* Taxes help shape multinational companies. Robert Samuelson – The Washington Post. I suspect that many Americans take pride in Apple’s success as confirming our national economic “genius.” We cut Apple some slack because it reflects well on us and because jobs may matter more than taxes. Link  

* An IRS scandal with few answers but much hyperbole. The Washington Post editorial. Capitol Hill saw three more days of hearings last week about the Internal Revenue Service, none of which offered much more insight into the genesis of the agency’s troubling actions over the past three years. Link  

* Buy online? Pay the tax. The Chicago Tribune editorial. Online sellers enjoy an unfair advantage now because they’re not required to charge for state and local taxes. Their customers are supposed to pay the tax to their states, but rarely do so. Link

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