More Info On IRS Free E-File Online

IRS e-file: It’s Safe; It’s Easy; It’s Time

Videos:
E-File Director’s Message: English | Spanish
Free File and Fillable Forms: English | Spanish |ASL
Ask Your Tax Preparer to e-File: English
First Time Filing a Tax Return?: English
E-File and Direct Deposit: English | Spanish |ASL
For these and other videos: YouTube/IRSVideos

Audio:
Audio File for Podcast:English |Spanish

WASHINGTON — IRS e-file, the popular electronic tax return delivery service used by two-thirds of the nation’s taxpayers, opens for business January 15 and marks 20 years of safely and securely transmitting nearly 800 million individual federal tax returns.

The Internal Revenue Service debuted e-file nationally in 1990, delivering 4.2 million tax returns. Last year, IRS e-file delivered 95 million tax returns, 66 percent of all returns filed.

“Electronic filing is more and more popular every year, and most taxpayers now e-file. IRS e-file means faster refunds. It means the option to file now and pay later if you owe additional tax. It means peace of mind knowing the IRS received the return because we send an acknowledgement. Those are the reasons this has been a popular service,” said Doug Shulman, IRS Commissioner. “IRS e-file is safe, it’s easy and everyone should try it.”

Last year, more than 49 million taxpayers missed out on the e-file benefits. The IRS urges taxpayers, especially those people already using tax software, to take the next step and e-file their return or ask their preparer to e-file their return. The IRS urges tax preparers who electronically file some of their clients’ tax returns to consider filing all tax returns through e-file.

The IRS is working on faster acknowledgements of accepted or rejected returns. Last year, taxpayers received an acknowledgement within 48 hours that the IRS had accepted or rejected their return. Paper filers do not receive any acknowledgement. Also, if the IRS rejects an e-filed return, it will provide more specific explanations of the errors that caused the rejection. This will enable taxpayers to make corrections and quickly resubmit their returns.

IRS e-file offers the fastest, safest way for people to receive their tax refunds. By using e-file and direct deposit, taxpayers can get their refunds in as few as 10 days. Taxpayers even can opt to have their refund deposited into two or three financial accounts or purchase a U.S. Savings Bond.

For those who owe additional tax, e-file is still the best option. People can file now and pay later, as long as the payment is received by April 15. Taxpayers can set the date for an automatic withdrawal from their financial accounts or they can pay by credit card. People also can e-file and pay by check by simply attaching the payment to a voucher that is mailed to the IRS.

Other e-file benefits include a reduced error rate (1 percent compared to nearly 20 percent on a paper return), which means a decreased likelihood of hearing from the IRS. Also, federal tax returns are delivered to the IRS through a highly secure, encrypted transmission system. Just like paper returns, e-filed returns remain confidential.

There are three ways to use e-file: through tax preparers, through most tax preparation software or through IRS Free File. The IRS does not charge for e-file. Many tax preparers and software products also offer free e-filing with their services.

As people become more comfortable using computers and the Internet for financial transactions, the IRS has seen a huge growth in the number of people who are preparing their own tax returns with the help of software. For people seeking free electronic options, IRS Free File offers something for almost everyone through two formats.

Traditional Free File provides free tax preparation software and free electronic filing to individuals or families who earn less than $57,000. Traditional Free File is a public-private partnership in which approximately 20 tax software manufacturers make their tax preparation software and e-filing available for free.

Everyone can use Free File Fillable Forms. This service, now in its second year, provides free online tax forms that can be completed and filed electronically. These are electronic versions of IRS paper forms. This program is ideal for people who are comfortable preparing their own returns with little assistance.

People must access Free File through the IRS Web site at www.IRS.gov and click on Free File or www.IRS.gov/freefile. People can read more about Free File at www.freefile.IRS.gov.

People looking for a tax preparer who files electronically and for more information on e-file can review IRS e-file for Individuals. Taxpayers also can locate an e-file authorized tax professional nearest to them by doing a zip code search.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Free Income Tax Filing Software With E-File Available Through IRS

Free File Now Available to Almost All Taxpayers; Software Can Help Find New Economic Recovery Tax Breaks that Could Be Overlooked

Videos:

E-File Director’s Message: English | Spanish
Free File and Fillable Forms: English | Spanish | ASL
First Time Filing a Tax Return?: English
For these and other videos: YouTube/IRSVideos

Audio:
Audio File for Podcast:English |Spanish

WASHINGTON — The Internal Revenue Service and its private-sector partners are making Free File available starting today. Most taxpayers can have free use of helpful tax preparation software and free electronic filing of the federal tax returns.
There are many new tax breaks this filing season and Free File software can make it easier for people to find all the credits and deductions they are due. Taxpayers must go through www.IRS.gov homepage or www.IRS.gov/freefile to access the free options.

“If cost is a barrier or if you’re wondering about free options, check out IRS.gov for Free File options. There’s something there for almost everybody,” said David R. Williams, director, Electronic Tax Administration and Refundable Credits. “Free File is a great choice for either the novice taxpayers who need some assistance or the experienced taxpayers who prefer to do the work themselves. It’s fast; it’s safe; it’s free.”

The Free File program provides free federal income tax preparation and electronic filing for eligible taxpayers through a partnership between the Internal Revenue Service (IRS) and the Free File Alliance LLC, a group of approximately 20 private sector tax software companies.

Free File comes in two formats: Traditional Free File, which is available to taxpayers who meet specific criteria and Free File Fillable Forms, which is available to almost all taxpayers.

Approximately 70 percent of the nation’s taxpayers, some 98 million people who meet the $57,000 income limit, are eligible for the user-friendly Traditional Free File. Traditional Free File provides step-by-step software help that asks simple questions and puts the answers on the correct tax forms.

Traditional Free File can help taxpayers identify new tax credits or deductions under the American Recovery and Reinvestment Act for which they may be eligible. There are many new and expanded benefits for energy conservation, new car purchases, college tuition and first-time homebuyers.

Taxpayers must go through IRS.gov to access Free File. Each company sets its own eligibility criteria. For example, generally, eligibility criteria are based on state residency, age, income or military service. However, an individual or family with income of $57,000 will find tax preparation software they can use.

Taxpayers either can read over the company offers by clicking “I Will Choose a Company” or get a little help in making the selection by clicking “Help Me Find a Company.” With a little information, the tool will display those company offers for which taxpayers may be eligible.

Several companies offer their software in Spanish. Several also offer state tax preparation, although fees may apply. Taxpayers are under no obligation to make any purchases from the software companies.

For taxpayers who are comfortable preparing their own tax returns, there’s Free File Fillable Forms. Almost everyone is eligible for this service. There are no income limits and almost all tax forms are available.

This service provides electronic versions of IRS paper forms. Taxpayers can complete the tax forms online and file electronically. The fillable forms perform simple math functions, but do not use the question-and-answer software format. Free File Fillable Forms does not support state forms or state electronic filing.

Both Free File versions are highly popular among users. According to a recent survey, 98 percent of Traditional Free File users and 96 percent of Free File Fillable Forms users polled said they would recommend the Free File products to family and friends.

Taxpayers who use Traditional Free File or Free File Fillable Forms can enjoy all the benefits of IRS e-file – also for free.

By using the free e-file option, taxpayers also get the benefits of a fast refund, reduced error rate and a quick acknowledgment. By using e-file and direct deposit, taxpayers can get a refund in as few as 10 days. If people owe taxes, they also can control their payments and set a date such as April 15 for electronic payment. The error rate for an e-filed return is 1 percent, compared to 20 percent for a paper return. Unlike paper filers, e-filing taxpayers also will receive an acknowledgment that the IRS has received and accepted or rejected their returns.

Taxpayers who are eligible for the $8,000 or the $6,500 first-time home buyer credit will not be able to e-file because they must attach proof of purchase to their tax return. However, these taxpayers still can use Free File to prepare their tax forms and then print and mail the returns to the IRS.

Free File is available 24-hours a day through April 15. For taxpayers who request an extension to file their federal returns, Free File will be available through October 15.

People who are interested in reviewing more information about Free File can visit www.freefile.IRS.gov. Videos on these topics also are available at www.youtube.com/irsvideos.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Tax Credit Helps Pay for Higher Education Expenses

The American Recovery and Reinvestment Act was passed in early 2009 and created the American Opportunity Credit. This educational tax credit – which expanded the existing Hope credit – helps parents and students pay for college and college-related expenses.

Here are the top nine things the Internal Revenue Service wants you to know about this valuable credit and how you can benefit from it when you file your 2009 taxes.

1. The credit can be claimed for tuition and certain fees paid for higher education in 2009 and 2010.
2. The American Opportunity Credit can be claimed for expenses paid for any of the first four years of post-secondary education.
3. The credit is worth up to $2,500 and is based on a percentage of the cost of qualified tuition and related expenses paid during the taxable year for each eligible student. This is a $700 increase from the Hope Credit.
4. The term "qualified tuition and related expenses" has been expanded to include expenditures for required course materials. For this purpose, the term "course materials" means books, supplies and equipment required for a course of study.
5. Taxpayers will receive a tax credit based on 100 percent of the first $2,000 of tuition, fees and course materials paid during the taxable year, plus 25 percent of the next $2,000 of tuition, fees and course materials paid during the taxable year.
6. Forty percent of the credit is refundable, so even those who owe no tax can get up to $1,000 of the credit for each eligible student as cash back.
7. To be eligible for the full credit, your modified adjusted gross income must be $80,000 or less -- $160,000 or less for joint filers.
8. The credit begins to decrease for individuals with incomes above $80,000 or $160,000 for joint filers and is not available for individuals who make more than $90,000 or $180,000 for joint filers.
9. The credit is claimed using Form 8863, Education Credits, (American Opportunity, Hope, and Lifetime Learning Credits), and is attached to Form 1040 or 1040A.

For more information about the American Opportunity Tax Credit visit the IRS Web site at IRS.gov/recovery.

Links

• The American Recovery and Reinvestment Act of 2009: Information Center
• American Opportunity Credit
• Form 8863, Education Credits

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Claiming The First-Time Home Buyer Credit

IR-2010-6, Jan. 15, 2010

WASHINGTON — The Internal Revenue Service today released the new form that eligible home buyers need to claim the first-time home buyer credit this tax season and announced processing of those tax returns will begin in mid-February. The IRS also announced new documentation requirements to deter fraud related to the first-time home buyer credit.

The new form and instructions follow major changes in November to the home buyer credit by the Worker, Homeownership, and Business Assistance Act of 2009. The new law extended the credit to a broader range of home purchasers and added new documentation requirements to deter fraud and ensure taxpayers properly claim the credit.

With the release of Form 5405, First-Time Home buyer Credit and Repayment of the Credit, and the related instructions, eligible home buyers can now start to file their 2009 tax returns. Taxpayers claiming the home buyer credit must file a paper tax return because of the added documentation requirements.

The IRS expects to start processing 2009 tax returns claiming the home buyer credit in mid-February after it completes the updating and testing of systems to meet the law’s new requirements. The updates allow the IRS to put in place critical systemic checks to deter fraud related to the home buyer credit.

Some of these early taxpayers claiming the home buyer credit may see tax refunds take an additional two to three weeks.

In addition to filling out a Form 5405, all eligible home buyers must include with their 2009 tax returns one of the following documents in order to receive the credit:

• A copy of the settlement statement showing all parties' names and signatures, property address, sales price, and date of purchase. Normally, this is the properly executed Form HUD-1, Settlement Statement.
• For mobile home purchasers who are unable to get a settlement statement, a copy of the executed retail sales contract showing all parties' names and signatures, property address, purchase price and date of purchase.
• For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.

In addition, the new law allows a long-time resident of the same main home to claim the home buyer credit if they purchase a new principal residence. To qualify, eligible taxpayers must show that they lived in their old homes for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. The IRS has stepped up compliance checks involving the home buyer credit, and it encouraged home buyers claiming this part of the credit to avoid refund delays by attaching documentation covering the five-consecutive-year period:

• Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements,
• Property tax records or
• Homeowner’s insurance records.

The IRS also reminded home buyers that the new documentation requirements mean that taxpayers claiming the credit cannot file electronically and must file paper returns. Taxpayers can still use IRS Free File to prepare their returns, but the returns must be printed out and sent to the IRS, along with all required documentation.

Normally, it takes about four to eight weeks to get a refund claimed on a complete and accurate paper return where all required documents are attached. For those home buyers filing early, the IRS expects the first refunds based on the home buyer credit will be issued toward the end of March.

The IRS encourages taxpayers to use direct deposit to speed their refund. In addition, taxpayers can use Where's My Refund? on IRS.gov to track the status of their refund.

More details on claiming the credit can be found in the instructions to Form 5405, as well as on the First-Time Homebuyer Credit page on IRS.gov.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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The Health Coverage Tax Credit and the COBRA Subsidy

The Health Coverage Tax Credit and the COBRA Subsidy

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Some people who are eligible for the COBRA subsidy, which has been extended through Feburary also qualify for the health coverage tax credit (HCTC) and may want to choose this more generous benefit, instead. The HCTC pays 80 percent of health insurance premiums for those who qualify. Eligible individuals must be receiving Trade Adjustment Assistance benefits or be over the age of 55 and receiving pension payments from the Pension Benefit Guaranty Corporation. Individuals must also be enrolled in a qualified health plan.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Interim Guidance, Pending The Issuance Of Regulations, Relating To The Credit For Nonbusiness Energy Property Under § 25c Of The IRC

Notice 2009-53 provides procedures that manufacturers may follow to certify property as qualified nonbusiness energy property under § 25C of the Internal Revenue Code, as well as guidance regarding the conditions under which taxpayers seeking to claim the § 25C credit may rely on a manufacturer’s certification. This notice also includes transition rules to provide taxpayers with guidance concerning the interaction of the effective date and timing provisions of the Energy Policy Act, the Energy Improvement and Extension Act, and the American Recovery and Reinvestment Act.

SECTION 1. PURPOSE

This notice updates interim guidance, pending the issuance of regulations,
relating to the credit for nonbusiness energy property under § 25C of the Internal
Revenue Code. Specifically, this notice provides procedures that manufacturers may
follow to certify property as either eligible building envelope components or qualified
energy property, as well as guidance regarding the conditions under which taxpayers
seeking to claim the § 25C credit may rely on a manufacturer's certification.
Additionally, this notice provides guidance about changes made to the § 25C credit by
the Energy Improvement and Extension Act of 2008 (EIEA), Division B of Pub. L. No.
110-343, 122 Stat. 3765 (2008), and the American Recovery and Reinvestment Tax Act
of 2009 (ARRTA), Division B of Pub. L. No. 111-5, 123 Stat. 115 (2009). This notice
also provides transition rules for certain nonbusiness energy property acquired before
June 1, 2009, and for certain nonbusiness energy property placed in service after
December 31, 2008. The Internal Revenue Service (Service) and the Treasury
Department expect that the regulations will incorporate the rules set forth in this notice.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Expanded Recovery Act Tax Credits Help Homeowners Winterize their Homes, Save Energy; Check Tax Credit Certification Before You Buy, IRS Advises

Home Energy Video: English | Spanish | ASL

Audio File for Podcast: English | Spanish

Video: Money in Your Pocket

WASHINGTON — People can now weatherize their homes and be rewarded for their efforts. According to the Internal Revenue Service, homeowners making energy-saving improvements this fall can cut their winter heating bills and lower their 2009 tax bill as well.

The American Recovery and Reinvestment Act (Recovery Act), enacted earlier this year, expanded two home energy tax credits: the nonbusiness energy property credit and the residential energy efficient property credit.

Nonbusiness Energy Property Credit

This credit equals 30 percent of what a homeowner spends on eligible energy-saving improvements, up to a maximum tax credit of $1,500 for the combined 2009 and 2010 tax years. The cost of certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass all qualify, along with labor costs for installing these items. In addition, the cost of energy-efficient windows and skylights, energy-efficient doors, qualifying insulation and certain roofs also qualify for the credit, though the cost of installing these items does not count.

By spending as little as $5,000 before the end of the year on eligible energy-saving improvements, a homeowner can save as much as $1,500 on his or her 2009 federal income tax return. Due to limits based on tax liability, other credits claimed by a particular taxpayer and other factors, actual tax savings will vary. These tax savings are on top of any energy savings that may result.

Residential Energy Efficient Property Credit

Homeowners going green should also check out a second tax credit designed to spur investment in alternative energy equipment. The residential energy efficient property credit, equals 30 percent of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. Generally, labor costs are included when calculating this credit. Also, no cap exists on the amount of credit available except in the case of fuel cell property.

Not all energy-efficient improvements qualify for these tax credits. For that reason, homeowners should check the manufacturer’s tax credit certification statement before purchasing or installing any of these improvements. The certification statement can usually be found on the manufacturer’s website or with the product packaging. Normally, a homeowner can rely on this certification. The IRS cautions that the manufacturer’s certification is different from the Department of Energy’s Energy Star label, and not all Energy Star labeled products qualify for the tax credits.

Eligible homeowners can claim both of these credits when they file their 2009 federal income tax return. Because these are credits, not deductions, they increase a taxpayer’s refund or reduce the tax he or she owes. An eligible taxpayer can claim these credits, regardless of whether he or she itemizes deductions on Schedule A. Use Form 5695, Residential Energy Credits, to figure and claim these credits. A draft version of this form is available now on IRS.gov.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Final Regulations On Reduction In Tax Attributes By S Corporations With Discharge Of Indebtedness Income Issued

TD 9469 contains final regulations that provide guidance on the manner in which an S corporation reduces its tax attributes under section 108(b) for taxable years in which the S corporation has discharge of indebtedness income that is excluded from gross income under section 108(a). In particular, the regulations address situations in which the aggregate amount of the shareholders’ disallowed section 1366(d) losses and deductions that are treated as a net operating loss tax attribute of the S corporation exceeds the amount of the S corporation’s excluded discharge of indebtedness income. The regulations affect S corporations and their shareholders.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Technical Guidance:- Various IRS Notices Issued

Notice 2009-83 provides guidance on determining eligibility for the carbon dioxide sequestration credit under section 45Q and the amount of the credit, as well as rules regarding adequate security measures for secure geological storage of CO2. The notice also sets forth a separate reporting requirement for taxpayers claiming the section 45Q credit.

Notice 2009-84 provides a limited administrative exception to the ability of the Internal Revenue Service to examine a Form 706 (United States Estate (and Generation-Skipping Transfer) Tax Return) in connection with certain protective claims for refund based on a deduction under section 2053 of the Internal Revenue Code (Code) and filed within the time prescribed in section 6511(a) of the Code.

Notice 2009-85 provides guidance under section 877A, which was enacted by section 301 of the Heroes Earnings Assistance and Relief Tax Act of 2008 (the "Act") and applies to individuals who expatriate on or after June 17, 2008. Section 877A generally provides that all property of a “covered expatriate” is treated as sold on the day before the individual’s expatriation date. Gain and loss from the deemed sale must be taken into account at that time (subject to a $600,000 exclusion amount, which will be indexed for inflation – Exclusion amount for 2009 is $626,000) unless the individual elects to defer payment of the tax by providing security and waiving treaty rights that would prevent assessment or collection of the deferred tax. There are special rules for deferred compensation items, specified tax deferred accounts, and interests in nongrantor trusts.

Revenue Procedure 2009-50 sets forth the cost-of-living adjustments to certain items for 2010 as required under various provisions of the Code.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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New IRS Form Aids Processing of Mortgage Applications, Makes Ordering Tax Transcripts Simpler

WASHINGTON — The Internal Revenue Service has issued a new form to aid the processing of mortgage applications under the Home Affordable Modification Program (HAMP) as part of the Making Home Affordable Program. The new form will make it simpler for people, especially homeowners trying to modify or refinance their mortgages, to order copies of their tax return transcripts.

Taxpayers often need copies of their tax return information, especially when they are obtaining a new mortgage or when they are refinancing or modifying an existing mortgage. Taxpayers can use Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript, to order a Form 1040 series tax return transcript free of charge.

A transcript is a computer print-out that includes most lines on the original return. A transcript often is an acceptable substitute for a copy of the original tax return for purposes of verifying income.

Form 4506T-EZ is a streamlined version of the Form 4506T, Request for Transcript of Tax Return. The Form 4506T-EZ is only for individuals who filed a Form 1040 series. Businesses, partnerships and individuals who need transcript information from other forms must still use the Form 4506T.

Transcripts ordered through the Form 4506T-EZ can be mailed to a third party, such as a financial institution. The IRS cautions taxpayers that they should complete all required fields, especially the requested years, before signing and dating the form.
Taxpayers can obtain Form 4506T-EZ at IRS.gov. It is a fillable form so people can complete the form online and print a copy. They can mail it or fax it to the addresses and numbers listed in the instructions. It generally takes 10 days to process the request.

The IRS also recommends that people retain copies of their original tax returns in a safe, secure place. Exact copies of tax returns are available by filing Form 4506, Request for Copy of Tax Return, but each copy costs $57 and can take 60 days to process.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Low Inflation Eases Tax Bracket Changes For 2010

Tax rate brackets and various tax benefits will remain unchanged or change only slightly in 2010 due to low inflation, and many pension plan limitations will remain unchanged, according to the IRS.

By law, the dollar amounts for a variety of tax provisions must be revised each year to keep pace with inflation. As a result, more than three dozen tax benefits are subject to inflation adjustments each year, but because recent inflation factors have been minimal, many of these benefits will remain unchanged or change only slightly for 2010.

Key provisions affecting 2010 returns, filed by most taxpayers in early 2011, include the following:

• The value of each personal and dependency exemption available to most taxpayers is $3,650, unchanged from 2009.

• The new standard deduction for heads of household is $8,400, up from $8,350 in 2009. For other taxpayers, the standard deduction remains unchanged at $11,400 for married couples filing a joint return and $5,700 for singles and married individuals filing separately. Nearly two out of three taxpayers take the standard deduction rather than itemizing deductions, such as mortgage interest, charitable contributions, and state and local taxes.

• Various tax bracket thresholds will see minor adjustments. For example, for a married couple filing a joint return the taxable income threshold separating the 15 percent bracket from the 25 percent bracket is $68,000, up from $67,900 in 2009.

• The annual gift tax exclusion remains unchanged at $13,000.

The Internal Revenue Service also announced cost-of-living adjustments applicable to dollar limitations for pension plans and other items for tax year 2010.

Section 415 of the Tax Code provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the IRS commissioner annually adjust these limits for cost of living increases. Other limitations applicable to deferred compensation plans are also affected by these adjustments under Section 415.

The limitations that are adjusted by reference to Section 415(d) will remain unchanged for 2010. This is because the cost-of-living index for the quarter ended Sept. 30, 2009, is less than the cost-of-living index for the quarter ended Sept. 30, 2008, and, following the procedures under the Social Security Act for adjusting benefit amounts, any decline in the applicable index cannot result in a reduced limitation.

Effective Jan. 1, 2010, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) remains unchanged at $195,000. For participants who separated from service before January 1, 2010, the limitation for defined benefit plans under Section 415(b)(1)(B) is computed by multiplying the participant's compensation limitation, as adjusted through 2009, by 1.0000.

The limitation for defined contribution plans under Section 415(c)(1)(A) remains unchanged for 2010 at $49,000.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Law Offers Special Tax Breaks for Small Business; Act Now and Save, IRS Says

Small Business Week is May 17 to 23, and the Internal Revenue Service urges small businesses to act now and take advantage of tax-saving opportunities included in the recovery law.

The American Recovery and Reinvestment Act (ARRA), enacted in February, created, extended or expanded a variety of business tax deductions and credits. Because some of these changes—the bonus depreciation and increased section 179 deduction, for example—are only available this year, eligible businesses only have a few months to take action and save on their taxes. Here is a quick rundown of some of the key provisions.

Faster Write-Offs for Certain Capital Expenditures

Many small businesses that invest in new property and equipment will be able to write off most or all of these purchases on their 2009 returns. The new law extends through 2009 the special 50 percent depreciation allowance, also known as bonus depreciation, and increased limits on the section 179 deduction, named for the relevant section of the Internal Revenue Code. Normally, businesses recover these capital investments through annual depreciation deductions spread over several years. Both of these provisions encourage these investments by enabling businesses to write them off more quickly.

The bonus depreciation provision generally enables businesses to deduct half the cost of qualifying property in the year it is placed in service.

The section 179 deduction enables small businesses to deduct up to $250,000 of the cost of machinery, equipment, vehicles, furniture and other qualifying property placed in service during 2009. Without the new law, the limit would have dropped to $133,000. The existing $25,000 limit still applies to sport utility vehicles. A special phase-out provision effectively targets the section 179 deduction to small businesses and generally eliminates it for most larger businesses.

Bonus depreciation and the section 179 deduction are claimed on Form 4562. Further details are in the instructions for this form.

Expanded Net Operating Loss Carryback

Many small businesses that had expenses exceeding their incomes for 2008 can choose to carry those losses back for up to five years, instead of the usual two. For small businesses that were profitable in the past but lost money in 2008, this could mean a special tax refund. The option is available for a small business that has no more than an average of $15 million in gross receipts over a three-year period.

This option is still available for most eligible taxpayers, but only for a limited time. A corporation that operates on a calendar-year basis, for example, must file a claim by Sept. 15, 2009. For eligible individuals, the deadline is Oct. 15, 2009.

Eligible individuals should file a claim using Form 1045, and corporations should use Form 1139. Details can be found in the instructions for each of these forms, and answers to frequently-asked questions are posted on IRS.gov.

Exclusion of Gain on the Sale of Certain Small Business Stock

The new law provides an extra incentive for individuals who invest in small businesses. Investors in qualified small business stock can exclude 75 percent of the gain upon sale of the stock. This increased exclusion applies only if the qualified small business stock is acquired after Feb. 17, 2009 and before Jan. 1, 2011, and held for more than five years. For previously-acquired stock, the exclusion rate remains at 50 percent in most cases.

Estimated Tax Requirement Modified

Many individual small business taxpayers may be able to defer, until the end of the year, paying a larger part of their 2009 tax obligations. For 2009, eligible individuals can make quarterly estimated tax payments equal to 90 percent of their 2009 tax or 90 percent of their 2008 tax, whichever is less. Individuals qualify if they received more than half of their gross income from their small businesses in 2008 and meet other requirements. For details, see Publication 505.

COBRA Credit

Employers that provide the 65 percent COBRA premium subsidy under ARRA to eligible former employees claim credit for this subsidy on their quarterly or annual employment tax returns. To help avoid imposing an unnecessary cash-flow burden, affected employers can reduce their employment tax deposits by the amount of the credit. For details, see Form 941. Answers to frequently-asked questions are posted on IRS.gov.

Other ARRA business provisions relate to discharges of certain business indebtedness, the holding period for S corporation built-in gains and acceleration of certain business credits for corporations. Also see Fact Sheet FS-2009-11.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Transactions Require Both Economic Substance And A Nontax Business Motive To Be Valid For Tax Purposes

5th Circuit Joins Georgia's 11th Circuit and the majority view in holding transactions require both economic substance and a nontax business motive to be valid for tax purpose.

The U.S. Court of Appeals for the Fifth Circuit held in Klamath Strategic Investment Fund, et al. v. United States, No. 07-40861 (5th Cir. May 15, 2009), that “a lack of economic substance is sufficient to invalidate [a] transaction regardless of whether the taxpayer has motives other than tax avoidance.” Finding that the taxpayer’s Bond Linked Issue Premium Structure (BLIPS) transaction lacked economic substance, the Klamath panel affirmed the lower court’s ruling that the transaction should be disregarded for tax purposes. The panel also affirmed the lower court’s ruling that no penalties applied.

‘Conjunctive’ v. ‘disjunctive’ test

The Fifth Circuit’s opinion adopts the majority appellate view (following the Third, Tenth, Eleventh, and Federal Circuits) that a transaction will be respected for tax purposes only if it has economic substance and a nontax business purpose. This is often referred to as the “conjunctive” test.

By contrast, in the Fourth Circuit a transaction will be respected if it has economic substance or there is a nontax business purpose. This is often referred to as the “disjunctive” test. (See Rice’s Toyota World, Inc. v. Commissioner, 752 F.2d 89, 91-92 (4th Cir. 1985).)

Codification proposals take ‘conjunctive’ approach

The proposals to codify the economic substance doctrine contained in recent bills – for example, the Heartland, Habitat, Harvest, and Horticulture Act of 2007 (S. 2242) – and in President Obama’s FY 2010 budget follow the majority-view “conjunctive” test, and provide that a transaction will have economic substance only if: (1) the transaction changes the taxpayer’s economic position “in a meaningful way” apart from federal tax effects, and (2) the taxpayer has a “substantial purpose” other than a federal tax purpose for entering into the transaction.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Where Is My Refund??

Most taxpayers have already filed their federal tax returns but may still have questions. Here’s what you need to know about refund status, recordkeeping, mistakes and what to do if you move.

Refund Information

You can go online to check the status of your 2008 refund 72 hours after IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after you mail a paper return. Be sure to have a copy of your 2008 tax return available because you will need to know the filing status, the first SSN shown on the return, and the exact whole-dollar amount of the refund. You have three options for checking on your refund:

• Go to IRS.gov, and click on “Where’s My Refund.”
• Call 1-800-829-4477 24 hours a day, 7 days a week for automated refund information.
• Call 1-800-829-1954 during the hours shown in your form instructions.

What Records Should I Keep?

Good record keeping allows you to prepare a complete and accurate income tax return. You should keep all receipts, canceled checks or other proof of payment, and any other records to support any deductions or credits you claim.

Normally, tax records should be kept for three years, but some documents — such as records relating to a home purchase or sale, stock transactions, IRAs and business or rental property — should be kept longer.

You should keep copies of tax returns you have filed and the tax forms package as part of your records. They may be helpful in amending filed returns or preparing future ones.

Change of Address

If you move after you filed your return, you should send Form 8822, Change of Address to the Internal Revenue Service. If you are expecting a refund through the mail, you should also notify the post office serving your former address, which will ensure your check makes it to your new address.

What If I Made a Mistake?

Errors may delay your refund or result in notices being sent to you. If you discover an error on your return, you can correct your return by filing an amended return using Form 1040X, Amended U.S. Individual Income Tax Return. Here are five reasons to file an amended return:

1. You did not report some income,
2. You claimed deductions or credits you should not have claimed.
3. You did not claim deductions or credits you could have claimed.
4. You should have claimed a different filing status. Taxpayers who filed a joint return cannot choose to file separate returns for that year after the due date of the return. However, an executor may be able to make this change for a deceased spouse.
5. If you bought or are thinking of buying home, you may be able to file an amended return to claim the First Time Home Buyer Credit. Taxpayers who purchased a qualifying home can claim the Homebuyer Credit on the 2008 return without waiting until next year to claim it on their 2009 return.

Visit IRS.gov for more information and Frequently Asked Questions regarding refunds, record keeping, address changes and amended returns.

Links:

• Where's My Refund
• Publication 552, Recordkeeping for Individuals
• Form 8822, Change of Address
• Form 1040X, Amended U.S. Individual Income Tax Return

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Merger Agreement Termination Fee Paid To Potential Acquiring Corporation Is Deductible

The Tax Court on April 27 held that a corporation was entitled to deduct $65 million paid to terminate a merger agreement with a would-be white knight when the corporation agreed to be bought by a competitor that increased its offer in a hostile takeover. (Santa Fe Pacific Gold Co. v. Commissioner, 132 T.C. No. 12 (Apr. 27, 2009).)

Santa Fe Pacific Gold was a publicly held mining company with large land positions, although it was considered “second-tier” in the mining industry, meaning that it was not one of the top mining companies in the country. In 1996, Santa Fe faced a hostile takeover by a first-tier competitor, Newmont. To avoid the takeover, Santa Fe entered into a merger agreement with a white knight, Homestake. That agreement provided for the payment of a termination fee should the agreement be terminated. Shortly thereafter, Newmont increased its offer, and Santa Fe’s board accepted the increased offer. Santa Fe paid a $65 million termination fee to Homestake and claimed a deduction for that amount on its 1997 tax return. The IRS disallowed the deduction.

The court distinguished the facts of this case from those of INDOPCO Inc. v. Commissioner, 503 U.S. 79 (1992), in which the Supreme Court held that no deduction was allowable for fees incurred during a friendly business combination. The High Court held that the fees had to be capitalized because the benefits that resulted for the taxpayer extended beyond the tax year at issue.

In this case, however, the Tax Court found that “Santa Fe did not reap the types of benefits present in INDOPCO.” In fact, “Newmont was primarily interested in obtaining Santa Fe’s land position [and] quickly terminated Santa Fe’s employees and discarded the business plans of Santa Fe’s management. Although Santa Fe the entity continued to exist on paper, it was nothing more than a shell owning valuable land.”

The court also found that Santa Fe agreed to the termination fee to protect its agreement with Homestake. That protective attempt failed when Newmont offered more money, causing Santa Fe’s board of directors to accept the higher offer in fulfillment of its fiduciary duties.

The court rejected the IRS’s assertion that Santa Fe was not facing a hostile takeover and that Santa Fe’s agreement with Homestake was merely a negotiating tactic to drive up Newmont’s offer.

It should be noted that the termination fee at issue was prior to Treasury reg. section 263(a)-5, under which a termination fee paid to a white knight is not deductible on the basis that the completed transaction and the failed transaction with the white knight are mutually exclusive.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Special Tax Avoidance Rules Apply To §1031 Like-Kind Exchanges Between Related Parties

In Ocmulgee Fields Inc. v. Commissioner, 132 T.C. No. 6 (3/31/09), the U.S. Tax Court held that a taxpayer’s participation in a like-kind exchange with a related person was structured to avoid Federal income taxes pursuant to §1031(f) of the Internal Revenue Code of 1986, as amended ("IRC").


Background

In Ocmulgee Fields, the taxpayer used a §1031 Intermediary to sell a parcel of taxpayer's real estate to an unrelated third-party. The taxpayer then used the proceeds from the first sale to purchase §1031 replacement property from a relative, who is a related party as defined under §1031(f). The IRS determined a deficiency because the taxpayer failed to establish that it met all of the requirements for the non-recognition of gain under Section 1031(f), which provides special rules for like-kind exchanges with related persons.

Like-kind exchange transactions

According to §1031(a)(1), generally no gain or loss is recognized on the exchange of property used in a trade or business, or for investment, for another like kind property. Under Section 1031(f)(1), gain or loss on an exchange between related persons is generally not recognized if the property exchanged is not disposed within two years from the date of the exchange. However, under Section 1031(f)(2)(C), the taxpayer must establish to the IRS’s satisfaction that neither the original transaction nor the later disposition had the avoidance of Federal income tax as one of its principal purpose. Further, under Section 1031(f)(4), the non-recognition treatment of a like-kind exchange doesn’t apply to a transaction or series of transactions structured to avoid the purposes of the related party exchange rules.

In Ocmulgee Fields, the Tax Court relied on its earlier decision in Teruya Brothers, Ltd. & Subsidiaries, 124 TC 45 (2005), which also dealt with a like-kind exchange between related parties effected through a qualified intermediary. In that case, the Tax Court held that the transactions involved were economically equivalent to direct exchanges of properties between related parties, followed by the sale of property by one of the related parties to unrelated third parties. The interposition of a qualified intermediary did not obscure the end result. The Tax Court found that the transactions were set up to avoid Federal income taxes under Section 1031(f)(4).

In essence this kind of related party transaction is scrutinized by the IRS as though the cash realized on the first sale and ultimately transferred to the relative (i.e., when the second piece of real estate is purchased from that relative to close the loop on the §1031 Like-Kind Exchange) is funneled back to the taxpayer in a tax avoidance scheme covered by §1031(f)(4).

Tax Court rejected the taxpayer’s claim that it had no tax avoidance purpose and concluded that the substance of the transaction was as if the taxpayer had made an exchange directly with the related person.

The Tax Court stated that it was not prepared to hold, as a matter of law, that a finding of basis shifting precludes the possibility of having a non-tax avoidance principal purpose. However, it found that in Ocmulgee Fields, the immediate tax consequences resulting from the taxpayer’s deemed exchange with a related party included approximately $1.8 million reduction in taxable gain and the substitution of a 15-percent tax rate for a 34-percent tax rate. The Court found that the tax savings were significant and that the taxpayer’s counter arguments were unconvincing or speculative, and thus did not persuade the Court that the principal purpose was something other than to avoid Federal income taxes.

Accuracy-related penalty

The Tax Court found that although the taxpayer’s understatement was substantial under Section 6662(d), the taxpayer showed reasonable cause and good faith for its position. The taxpayer relied on a CPA, who was a member of the largest accounting firm in the taxpayer’s area and had significant experience in the real estate business. The CPA provided tax advice to the taxpayer for many years and was aware of all the facts with respect to the like-kind exchange. In addition, the Tax Court had not yet decided the Teruya Brothers case when the return was prepared. Although the IRS had issued Revenue Ruling 2002-83, the Tax Court found that the Revenue Ruling did not leave the result free from doubt and that the CPA did not make any unreasonable assumptions. Therefore, the Tax Court ruled that the taxpayer was not liable for an accuracy-related penalty.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Withholding Requirements On Differential Pay Paid By Employers To Reservists Called To Active Duty

Revenue Ruling 2009-11 provides that differential pay that employers pay to their employees that leave their job to go on active military duty is subject to income tax withholding, but is not subject to Federal Insurance Contributions Act (“FICA”) or Federal Unemployment Tax Act (“FUTA”) taxes. Additionally, the ruling provides that employers may use the aggregate procedure or optional flat rate withholding to calculate the amount of income taxes required to be withheld on these payments, and that these payments must be reported on Form W-2

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Revenue Ruling 2009-12: Various Prescribed Rates For Federal Income Tax Purposes (May 2009)

Revenue Ruling 2009-12 provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by § 1274.

Part I

Section 1274.--Determination of Issue Price in the Case of
Certain Debt Instruments Issued for Property

(Also Sections 42, 280G, 382, 412, 467, 468, 482, 483, 642, 807, 846, 1288, 7520,
7872.)



Rev. Rul. 2009-12

This revenue ruling provides various prescribed rates for federal income tax
purposes for May 2009 (the current month). Table 1 contains the short-term, mid-term,
and long-term applicable federal rates (AFR) for the current month for purposes of
section 1274(d) of the Internal Revenue Code. Table 2 contains the short-term, mid-
term, and long-term adjusted applicable federal rates (adjusted AFR) for the current
month for purposes of section 1288(b). Table 3 sets forth the adjusted federal long-
term rate and the long-term tax-exempt rate described in section 382(f). Table 4
contains the appropriate percentages for determining the low-income housing credit
described in section 42(b)(1) for buildings placed in service during the current month.
However, under section 42(b)(2), the applicable percentage for non-federally subsidized
new buildings placed in service after July 30, 2008, and before December 31, 2013,
shall not be less than 9%. Finally, Table 5 contains the federal rate for determining the
present value of an annuity, an interest for life or for a term of years, or a remainder or a
reversionary interest for purposes of section 7520.


REV. RUL. 2009-12 TABLE 1

Applicable Federal Rates (AFR) for May 2009

Period for Compounding
Annual Semiannual Quarterly Monthly

Short-term

AFR .76% .76% .76% .76%
110% AFR .84% .84% .84% .84%
120% AFR .91% .91% .91% .91%
130% AFR .99% .99% .99% .99%

Mid-term

AFR 2.05% 2.04% 2.03% 2.03%
110% AFR 2.25% 2.24% 2.23% 2.23%
120% AFR 2.47% 2.45% 2.44% 2.44%
130% AFR 2.67% 2.65% 2.64% 2.64%
150% AFR 3.08% 3.06% 3.05% 3.04%
175% AFR 3.60% 3.57% 3.55% 3.54%

Long-term

AFR 3.58% 3.55% 3.53% 3.52%
110% AFR 3.95% 3.91% 3.89% 3.88%
120% AFR 4.31% 4.26% 4.24% 4.22%
130% AFR 4.67% 4.62% 4.59% 4.58%


REV. RUL. 2009-12 TABLE 2

Adjusted AFR for May 2009

Period for Compounding
Annual Semiannual Quarterly Monthly
Short-term
adjusted AFR .80% .80% .80% .80%

Mid-term
adjusted AFR 2.39% 2.38% 2.37% 2.37%

Long-term
adjusted AFR 4.58% 4.53% 4.50% 4.49%

REV. RUL. 2009-12 TABLE 3

Rates Under Section 382 for May 2009
Adjusted federal long-term rate for the current month 4.58%

Long-term tax-exempt rate for ownership changes during the
current month (the highest of the adjusted federal long-term
rates for the current month and the prior two months.) 4.61%


REV. RUL. 2009-12 TABLE 4

Appropriate Percentages Under Section 42(b)(1) for May 2009

Note: Under Section 42(b)(2), the applicable percentage for non-federally
subsidized new buildings placed in service after July 30, 2008, and before
December 31, 2013, shall not be less than 9%.

Appropriate percentage for the 70% present value low-income
housing credit 7.65%

Appropriate percentage for the 30% present value low-income
housing credit 3.28%


REV. RUL. 2009-12 TABLE 5

Rate Under Section 7520 for May 2009

Applicable federal rate for determining the present value of an
annuity, an interest for life or a term of years, or a remainder or
reversionary interest 2.4%

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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