Tax planning

The California Society of CPAs and the California CPA Education Foundation launched a Financial Leadership Forum to provide education, training and other resources for CPAs and business and finance executives.

Despite a number of last-minute tax law changes — highlighted by the Alternative Minimum Tax “patch” that will inevitably delay the processing of some returns — most observers expect a smooth filing season ahead.“The late passing of the Alternative Minimum Tax legislation had a tremendous impact on the start of tax season,” said Jo Ann Cummings, product manager of CCH’s ProSystem fx. “It caused the IRS to delay the filing of returns with certain forms until February 11.”

For those who live and breathe cost segregation work, there’s an element of surprise surrounding how little most people — CPAs included — know about the tax-savings strategy.“On a recent proposal opportunity, a tax principal and I met with a potential client who owns 15 properties,” said Lawrence Knutson, CPA/ABV and consulting senior manager at Ehrhardt Keefe Steiner & Hottman PC in Denver. “The potential client had developed the properties over the last 20 years. He had a sole proprietor doing his tax return who is retiring. We came in and the first thing we mentioned was cost segregation. He had never heard of it. We see that more and more. I don’t think we’ve fully realized the size of the cost segregation market.”

There may be 2-D bar codes in the future of paper-filed returns, if recommendations from the Government Accountability Office are followed.In its end-of-year report on last year’s tax season, the GAO said that the Internal Revenue Service exceeded the previous year’s performance by most measures. However, it noted a number of opportunities to realize additional savings and increase tax compliance, with the barcoding of paper returns among them.

In the last few days before Congress adjourned for 2007, a number of tax law changes finally made it through the two chambers and on to President Bush. The president has either already signed or indicated his willingness to sign each piece of legislation. Several of the provisions enacted will have an impact on 2007 tax returns.Even with this flurry of activity, a number of pieces of legislation, including most of the energy-related tax proposals, an agriculture bill with tax provisions, military tax relief, and the extension of expiring provisions, as well as a fairly extensive list of offsetting revenue raisers, got left off the table and will be addressed again in 2008. The following is a summary of each of the tax laws enacted, the principal provisions, and the impact, if any, on 2007 tax returns.

Congressional leaders have struck a $150 billion deal on an economic stimulus plan that would give most taxpayers rebate checks of $600 to $1,200.

New York Governor Eliot Spitzer's proposed budget contains a provision that would tax marijuana at a rate of $3.50 per gram and controlled substances like cocaine at $200 per gram.

The Internal Revenue Service is running out of storage space for the copies of documents it stores on cases closed by its Office of Appeals, according to a report by the Treasury Department's Inspector General.

President Bush encouraged Congress to pass the economic stimulus package he agreed to with House leaders without adding extra provisions.

The Senate Finance Committee held hearings to discuss an economic stimulus package and hear testimony from the Congressional Budget Office about the available options.

The Justice Department has sued two Connecticut tax preparers, Deowraj Buddhu and his daughter Sunita Buddhu, to prevent them from preparing tax returns for others.

S corporations are the nation's most common corporate tax designations.

The stimulus package that President Bush and Congress are hammering out could be enough to jumpstart the economy, but don't count on it.

Section 7803(c)(2)(B)(ii)(III) requires the National Taxpayer Advocate to identify at least 20 of the most serious problems encountered by taxpayers. This year’s report to Congress describes 26 problem areas and provides status updates on three other issues.

President Bush called for an economic stimulus plan that includes tax breaks for individuals and businesses.

Presidential hopeful Sen. John McCain, R-Ariz., proposed cutting the corporate tax rate to 25 percent from 35 percent, matching Rudolph Giuliani's plan.

A watchdog group, Americans United for Church and State, has asked the Internal Revenue Service to investigate a Nevada church whose pastor called for the election of Democratic presidential hopeful Sen. Barack Obama, D-Ill.

S corporations are the nation's most common corporate tax designations.

The Internal Revenue Service said it has increased its enforcement efforts, auditing 84 percent more returns in fiscal year 2007 of individuals with incomes of $1 million or more compared to fiscal year 2006.

Gilman Ciocia has acquired Edward W. Halleran Accounting & Tax Service.