Now that the dust has settled on the fiscal cliff and President Obama’s signing of the American Taxpayer Relief Act of 2012, taxpayers finally have a clearer picture of the corporate, individual, and estate and gift tax landscape for 2013 and future years.

On Jan. 2, 2013, President Barack Obama signed into law the American Taxpayer Relief Act of 2012 (ATRA).In addition to extending tax rate reductions for individuals, ATRA also extended several business tax provisions. In some cases, these extensions are retroactive to 2012.

The Internal Revenue Service and U.S. Department of Treasury (Treasury) on Nov. 20, 2012, issued Notice 2012-73, which revises the effective date for applying the tangible property regulations (see Tangible Assets – Sorting Through the Regulations, Part 1 and Part 2 , for prior coverage).

Yesterday the U.S. Supreme Court upheld the key provisions of the Patient Protection and Affordable Care Act (PPACA), in the decision National Federation of Independent Business v. Sebelius, No. 11-393, slip op. (U.S. June 28, 2012). The act includes many significant tax changes , which the landmark decision left intact, including the following.

The U.S. Supreme Court recently issued a 5-4 taxpayer-favorable opinion in United States v. Home Concrete & Supply, LLC, et. al.Home Concrete involved the Internal Revenue Service’s (IRS) audit of the taxpayer’s 1999 tax return on which the basis of property sold was overstated through use of the infamous a “Son of BOSS” tax shelter. The IRS assessed Home Concrete for the tax after the general three-year statute had lapsed, and Home Concrete argued that the assessment was not valid because the statute of limitations had expired.

To better reflect the content of this blog, we have renamed it the Federal Tax Briefing Blog. The Federal Tax Briefing Blog is a publication of the Crowe Horwath National Tax Office and will include postings relevant to finance and tax executives about current federal tax developments. All prior blog postings in the former Legislative Blog will be retained in the new blog. We look forward to providing you with timely, actionable information to help you navigate safely and profitably throughout the year. If you have questions, please contact David Holets at david.holets@crowehorwath.com or 317.706.2683.

 Much-needed guidance on the recent tangible assets regulations was provided March 7, 2012, in the form of two revenue procedures (2012-19 and 2012-20). The revenue procedures help taxpayers sort through the intricacies surrounding adopting the monumental temporary regulations that were released on Dec. 23, 2011. As comprehensive as the revenue procedures are, some uncertainties still exist regarding the specific level of detail needed to compute the “catch-up” adjustment required by most of the various method changes.

Yesterday President Barack Obama signed into law the Middle Class Tax Relief and Job Creation Act of 2012 (2012 Tax Relief Act). The act extends through Dec. 31, 2012, a decrease of the employee portion of the Social Security payroll tax that was due to expire Feb. 29, 2012.

The 2012 Tax Relief Act reduces from 6.2 percent to 4.2 percent the amount of Social Security tax required to be withheld from wages through Dec. 31, 2012. The rate reduction applies to employees and self-employed individuals but has no impact on the employer portion of the Social Security payroll tax liability. The act also repeals a provision that imposed a 2 percent income tax on individuals receiving more than $18,350 during the first two months of 2012.

Repair or capital improvement? Capitalize costs or expense them? Is this a change in accounting method or something that can be done prospectively? Reviewing the recently released and much-anticipated tangible assets regulations , it became apparent that these regulations are very technical, very comprehensive, and will significantly affect the way taxpayers view their capitalization policies.

Following President Obama’s speech on Sept. 9, 2011, Senate Majority Leader Harry Reid introduced Senate Bill 1549, the American Jobs Act of 2011 (AJA 2011), on Tuesday, Sept. 12, 2011. President Obama also released his Plan for Economic Growth and Deficit Reduction which, among other things, identifies proposed tax increases to reduce the deficit and pay for AJA 2011. This is the first post in a series of four describing the president’s proposed tax law changes.

As part of the AJA 2011, President Obama has proposed two significant payroll tax cuts for 2012. As I considered how these taxes would affect individuals and businesses, I realized there is some key information needed to assess exactly what these tax cuts could mean in 2012.

On May 25, 2011, Michigan Governor Rick Snyder signed two bills that repeal the Michigan Business Tax (MBT) and adopt a Corporate Income Tax (CIT).

Following are some highlights of the CIT legislation.

• The MBT, including the Modified Gross Receipts Tax, will be repealed effective Jan. 1, 2012, and replaced with the CIT.
• Unlike the MBT, the new tax will only be imposed on corporations. The federal tax classification of pass-through entities generally is followed under the CIT.
• The CIT will be imposed on a unitary basis with a tax rate of 6 percent.
• Net operating losses incurred under the MBT and the special MBT book-tax difference deduction will not carry over to the CIT.
• The MBT single-factor sales apportionment and nexus standards will be retained.
• The only credit available under the CIT will be the small-business credit.
• The agricultural exemptions available under the MBT will not be available under the CIT.
• Businesses with certain credits, such as Michigan Economic Growth Authority (MEGA) credits and some Renaissance Zone credits, will be able to use the credits only if the business elects to remain subject to the MBT. The election will be binding until all credits are used. Once the credits are used, the business will become subject to the CIT.
• Financial institutions remain subject to a capital-based tax, but they no longer will be entitled to a deduction for goodwill.

In this blog, Crowe Horwath LLP tax specialists explore important tax legislative issues and topics. We look forward to providing you with information to help you navigate safely and profitably throughout the year. If you have questions, please contact David Holets at david.holets@crowehorwath.com or 317.706.2683.