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Recent Case: IBM v. Michigan Department of Treasury (Michigan Supreme Court)

On Monday July 14th, the Michigan Supreme Court held in a split decision that IBM had the right to elect to use the evenly weighted three-factor formula from the Multistate Tax Compact (“MTC”) to apportion its income in calculating its 2008 Michigan taxes. The Michigan Department of Treasury argued that the Michigan legislature’s enactment of the Michigan Business Tax Act (“BTA”)(2008) had repealed, by implication, Michigan’s enactment of the MTC (1970). At the lower level, the Michigan Court of Appeals agreed with the Michigan Depart of Treasury. However, the Michigan Supreme Court did not. In 2011, the Michigan legislature expressly repealed Michigan’s enacting statutory provision for the MTC. In overturning the Michigan Court of Appeals decision, the Michigan Supreme Court reasoned that the 2011 repeal [...]

July 15th, 2014|
  • IRS Website

End of Circular 230 Disclaimers & Move Towards Reasonableness

[box title="Summary" color="#0d2457"] Everyone is happy that Circular 230 disclaimers have been nixed in conjunction with the end of the Covered Opinion rules. The new Circular 230 rules covering written advice install a number of reasonableness inquiries, which utilize a new “reasonable practitioner” standard. The new principle based standards are “more straightforward, simpler, and can be applied to all written tax advice in a less burdensome manner [than the covered opinion rules].” However, since views on what is “reasonable” can vary significantly, it seems to be only a matter of time before practitioners’ views of reasonableness are challenged by the Service. The “reasonable practitioner” standard’s application will remain unclear until additional examples are provided by the Service or until we have published outcomes of disputes [...]

July 9th, 2014|
  • Step-up drawing

Basic Considerations: Electing to Treat a Stock Purchase as an Asset Purchase

  Can you help your client obtain a “step-up” in a stock purchase? As a tax adviser, you may have been confronted with the following scenario: your client (P) is buying 100% of the stock of a corporation (T) from seller (S), but the purchase price far exceeds T’s basis in its assets. Since P is buying the stock of T, T will generally only be able to continue to depreciate or amortize T’s historical costs basis in assets by utilizing the same method, convention, and asset life as it had prior to the closing of the transaction. Depending on P’s level of sophistication and previous exposure to the federal tax consequences of a stock purchase, P may be shocked and disappointed to learn from [...]

June 27th, 2014|