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Archive for April, 2016

President signs bill increasing failure-to-file penalty

President Obama signed in February the Trade Facilitation and Trade Enforcement Act of 2015 (H.R. 644). The comprehensive trade and customs bill includes an increase in the penalty for failure to file a return. (more…)

IRS releases 2016 adjusted foreign housing allowances

IRS releases 2016 adjusted foreign housing allowances; many locations remain high-cost areas

London, the UK. Red bus in motion and Big BenThe IRS has issued the 2016 inflation adjustments to the foreign housing expenses limitation used for calculating the exclusion under Code Sec. 911(c) for tax years beginning on or after January 1, 2016. The maximum inflation-adjusted limitation on housing expenses for 2016 is $30,390, and the minimum is $16,208. (more…)

IRS removes Cuba from list of countries with foreign tax restrictions

Houses in the old town, Trinidad, CubaThe IRS has removed Cuba from the so-called “Code Sec. 901 blacklist” of foreign countries from which U.S. taxpayers may not be entitled to a foreign tax credit. Removal of Cuba from this list also means that U.S. taxpayers are now entitled to the benefit of a foreign tax credit to any income attributable to Cuba. In addition, income earned in Cuba through a controlled foreign corporation will no longer be Subpart F income barred from deferral treatment under Code Sec. 952(a)(5). (more…)

FAQ: What is the Roth IRA contribution limit for 2016?

senior couple hugging on sail boat or yacht in seaIndividuals may contribute up to $5,500 to a traditional and a Roth IRA for 2016. This is the same limit as 2015. An individual age 50 and older can make a catch-up contribution of an additional $1,000 for the year. The contribution is limited to the taxpayer’s taxable compensation for the year, minus contributions to all non-Roth IRAs. (more…)

How do I set up a like-kind exchange

Property SwapUnder Code Sec. 1031, a taxpayer can make a tax-free exchange of property held for productive use in a trade or business or for investment. The exchange must be made for other property that the taxpayer will continue to use in a trade or business or for investment. Ordinarily, the exchange is made directly with another taxpayer who holds like-kind property. For example, an investor in real estate may exchange a building with another person who also owns real estate for use in a trade or business or for investment. (more…)

IRS focuses on new partnership audit rules

IRS Tax AuditorLegislation enacted in 2015 provides new rules for IRS partnership audits. The new rules are a drastic departure from current rules and the IRS is hopeful that the rules will simplify the audit process and allow the IRS to conduct more partnership audits.

The provisions do not take effect until partnership tax years beginning on or after January 1, 2018, until an existing partnership may elect to apply the new rules to tax years after November 2, 2015. The IRS is working on guidance for the new audit regime and has requested comments by April 15, although agency officials said that comments after that date will be accepted. (more…)

FBAR Form 8938 filings increase

FBAR, Form 8938 filings increase as taxpayers become more aware of reporting requirements

Six years ago, Congress passed the Foreign Account Tax Compliance Act (FATCA), which set in motion a wave of new reporting and disclosure requirements by individuals, foreign financial institutions, and others. In response, the IRS created a host of new rules and regulations; and new forms for these reporting requirements. One key FATCA form – Form 8938, Statement of Specified Foreign Financial Assets – has seen usage steadily increase since passage of FATCA, the IRS recently reported. At the same time, more individuals are filing a related form – FinCEN Form 114, Report of Foreign Bank and Financial Accounts (known as the FBAR), which reached a record high in 2015. (more…)