Search

The article surveys key points of the U.S. American Recovery and Reinvestment Act (ARRA) of 2009. Topics discussed include how ARRA addresses net operating losses, exemption from taxation of unemployment compensation, itemized deductions and deductions for automobile taxes, exemptions to and adjustment to calculating the alternative minimum tax, and a variety of tax credits including the child tax credit, the first-time homebuyer credit, the earned income credit, the Hope credit, and the "making work pay" credit.

Numerous changes to the tax law that affect individual taxpayers were made by the health care legislation that was enacted in March 2010, including the provision of a refundable credit that eligible taxpayers can use to help purchase health insurance and new taxes on the wage or self-employment income and the net investment income of high-income taxpayers. The IRS reduced the business mileage allowance amounts for 2010 from 55¢ to 50¢ per mile and the medical mileage allowance from 24¢ to 16.5¢ per mile. A new safe-harbor method of reporting provides relief from gain recognition for certain taxpayers who are unable to complete a deferred like-kind exchange due to a default by a qualified intermediary. The Tax Court held that regulations imposing a two-year time limit for filing a claim for equitable innocent spouse relief were invalid in the Lantz case, but the decision was reversed on appeal by the Seventh Circuit, However, the Tax Court again held the regulations were invalid in the Hall case. [ABSTRACT FROM PUBLISHER]

• TIGTA made recommendations regarding the use of individual tax identification numbers (ITINs) with respect to refundable tax credits such as the child tax credit. TIGTA also recommended that the IRS develop a new process to prevent erroneous claims for the earned income credit. • The IRS issued guidance providing the procedure for electing under Sec. 108(i) to include income from indebtedness discharged in a reacquisition of a debt instrument in gross income ratably over a five-year period. • The IRS issued advice to its employees regarding the determination of whether a taxpayer can claim a dependency exemption for a noncustodial child, and several courts ruled on this issue in specific situations. • The IRS rejected a Tax Court position and advised that indebtedness incurred to acquire, construct, or substantially improve a residence that exceeds $1 million is not acquisition indebtedness. However, the IRS states that up to $100,000 of such debt can be treated as home equity indebtedness (assuming no separate home equity debt exists), thereby allowing interest on $1,100,000 of the debt to acquire the home to be deductible. [ABSTRACT FROM AUTHOR]

• The American Recovery and Reinvestment Act of 2009 contained a number of changes to individual income tax provisions. The act changed the rules for many credits (such as the child tax credit) and introduced the new making work pay credit in Sec. 36A. It also increased the AMT exemption amounts, increased the NOL carryback period for eligible small businesses, and added a standard deduction for taxes on qualified motor vehicles. • In response to current events, the IRS issued a revenue procedure and a revenue ruling dealing with the treatment of losses from Ponzi schemes; however, the guidance leaves many questions unanswered. • The Tax Court rebuffed the IRS in two innocent spouse cases, holding in one that the regulatory two-year limitation for seeking equitable innocent spouse relief was invalid and in the other that the standard of review in a case where the taxpayer is challenging a denial of innocent spouse relief is the de novo standard instead of the abuse of discretion standard. [ABSTRACT FROM PUBLISHER]

• A number of credits and other items that were scheduled to expire (or had already expired) were extended by the Tax Extenders Act. The act also increased the alternative minimum tax (AMT) exemption amount and made changes to the rules regarding the AMT minimum tax credit. • The Housing Assistance Tax Act provided various credits and deductions for homeowners, including a refundable credit for first-time homebuyers. The Heroes Earnings Assistance and Relief Act provided benefits for members of the military and the intelligence community. • Numerous changes affecting individuals were made in regulations and other guidance issued by the IRS, as well as in decisions by the Tax Court and other federal courts. [ABSTRACT FROM PUBLISHER]

Focuses on the Model Tax Curriculum (MTC) developed by the American Institute of Certified Public Accountants (AICPA) which focused on business taxes and tax planning. Objectives of MTC; Tax course at the University of Texas; Ways the basic concepts of business taxation can be included within the curriculum.