Wrong plan investments can create unrelated business tax income

Article Abstract:

Current earnings from individual retirement accounts (IRAs) and other pension schemes are typically excluded from income taxation although such qualified retirement plans may be taxed on unrelated business taxable income (UBTI) in some situations. Tax advisers for IRAs and pension plans are not traditionally on guard against these UBTI provisions because they are typically related to charitable and other exempt organizations or trusts. However, an IRS ruling highlighted that IRA and pension investments may lead to UBTI problems. Taxpayers may commit the mistake of investing exempt organization funds in an asset that will generate UBTI, with the result that the IRA will be taxed and the future retirement benefits reduced.

Commercial Banks, Investment Banking and Securities Dealing, Pension, health, and welfare funds, Pension Funds & Benefit Plans, Pension Funds, Bank Individual Retirement Accounts, Investments, Individual retirement accounts, Unrelated business income tax

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Assessment of employer FICA tax on tipped employees limited by recent cases

Article Abstract:

The IRS is continuing to pursue employers for their portion of FICA taxes on underreported tip income despite IRS defeats in two recent cases, Morrison Restaurants v. United States and Bubble Room, Inc. v. United States. The IRS has attempted to use methods of estimating cash tips based on gross receipts and credit card tipping. In Bubble Room, the Court of Federal Claims refused to allow the IRS to use these methods, also noting that employee Social Security accounts should have been credited. In Morrison, a US district court found the IRS went beyond statutory authority.

FICA Tax Administration, Cases, Tax administration, Payroll tax, Tax collection, Tipping, Social security taxes

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Present and future directions in federal and state taxation of income from cross-border trade

Article Abstract:

Current state and federal income taxation of cross-border trade is focused on certain core principles, including fairness, neutrality and enforcement, but states and the federal government employ divergent systems to serve these goals. Cross-border taxation focuses on double taxation mitigation, transfer pricing and income source rules. At the federal level, arm's-length valuation for transfer pricing is used. States typically use formulary apportionment to allocate income for tax purposes. The future promises increased bilateral tax treaties and further nexus challenges.

Corporate Income Taxes, Interpretation and construction, Tax treaties, International trade, Transfer pricing, Foreign source income taxation, international, states

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