Recent taxpayer experiences suggest that IRS agents are becoming more aggressive in denying taxpayer claims of research and development tax credits through narrow construction of the so-called “substantially all” test of Code § 41(d)(1)(C) which requires that the research activities constitute “elements of a process of experimentation.” Under Treas. Reg. §1.41-4(a)(5), a process of experimentation must be a process designed to evaluate one or more alternatives to achieve a result where the capability or the…
When taxpayers pay fees contingent on the successful closing of certain “covered transactions,” including, for example, taxable acquisitions of assets that constitute a trade or business, such “success-based fees” must be capitalized to the extent such fees are treated as facilitating the transaction. By contrast, any portion of such fees treated as non-facilitative may be currently deductible, depending on the situation. Accordingly, to the extent possible, taxpayers generally prefer success-based fees to be treated as…
The Department of the Treasury and the Internal Revenue Service have extended the treatment provided in Notice 2020-46 to leave-based donation programs and cash payments in connection with such programs that are made to section 170(c) organizations after December 31, 2020 and before January 1, 2022. See Notice 2021-42. Under Notice 2020-46, as modified by Notice 2021-42, where employers have adopted leave-based donation programs, employees can elect to forgo vacation, sick, or personal leave in…
Ohio Governor Mike DeWine recently signed the fiscal year 2022-23 budget bill, which contains several tax provisions and changes that will affect businesses and their owners.  The bill’s general effective date is the 91st day after being filed with the Ohio Secretary of State.  Some of the bill’s highlights are as follows: An income tax deduction for investors in certified, Ohio-based venture capital operating companies (“VCOC”). The deduction will be 100% of the capital gain…
The American Rescue Plan Act of 2021 (ARP) allows certain businesses (generally, employers with fewer than 500 employees and non-federal governmental employers) to claim refundable tax credits as a reimbursement for the cost of providing paid sick and family leave from April 1, 2021 through September 30, 2021 to their employees due to COVID-19, including leave taken by employees to receive or recover from COVID-19 vaccinations. Self-employed individuals are eligible for similar tax credits. The…
On April 19, 2021, Canada’s Deputy Prime Minister and Minister of Finance, Chrystia Freeland, released the first official budget in the past two years, titled, Federal Budget 2021: A Recovery Plan for Jobs, Growth, and Resilience (the “Budget”).  The Budget proposed over $100 billion in spending, and, among the more significant measures, the Budget proposes to extend the Canada Emergency Wage Subsidy (CEWS), the Canada Emergency Rent Subsidy (CERS), and Lockdown Support through September, 2021. …
The federal American Rescue Plan Act signed by President Biden in March 2021 provides that up to $10,200 of state unemployment benefits received by individuals during 2020 are excluded from gross income. Taxpayers are eligible for the exclusion only if federal adjusted gross income is less than $150,000. The mid-March legislation created some initial confusion regarding filing 2020 individual tax returns, particularly for those individuals that had previously filed their returns. The IRS ultimately advised…
May 31 is the deadline for filing property tax assessment appeals in the Michigan Tax Tribunal on commercial and industrial real property.  Assessment notices sent in February show the assessed value and state equalized value which should not exceed 50% of market value. The notices also shows the taxable value (the “TV”).  The TV is the lesser of the State Equalized Value (the “SEV”) or the previous year’s TV adjusted for additions, losses, and inflation. …
At the beginning of, 2021, Congress slipped the so-called Corporate Transparency Act “CTA”), a new business reporting obligation, into the National Defense Authorization Act of 2021. Among other things, the CTA requires every corporation and LLC as well as other entities that meet a definition of a “reporting company” to make a filing with the Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) to identify its “beneficial owners”. The Act also imposes severe penalties for…
The IRS announced late Wednesday, March 17, 2021 that it is moving the federal income tax filing deadline for individuals to May 17, rather than April 15.  In its statement, the IRS said that the extended deadline applies to individual taxpayers, including those who pay self-employment tax. Moreover, federal income tax payments for the 2020 tax year do not need to be paid until May 17, 2021, regardless of the amount owed, and no penalties…