Franchise Tax Board Audits Sale of S Corp in 338(h)(10) Transaction

Shareholders of Subchapter S Corporations frequently sell their stock and are inspired, either by their own tax professionals or the tax professionals of the buyer, to make a Section 338(h)(10) Election to treat such sale of stock as a sale of assets for tax purposes. The expectation is that the buyer can obtain a valuable…

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California Voluntary Compliance Initiative 2

The Franchise Tax Board of California has announced the Voluntary Compliance Initiative 2 (VCI 2) as an opportunity for taxpayers with underreported California tax liabilities relating to either (i) abusive tax avoidance transactions (ATATs) or (ii) offshore financial arrangements (OFAs), to amend their tax returns for 2010 and prior years and obtain a waiver of…

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Amnesty Deadline Nears

On August 31, the IRS Offshore Voluntary Disclosure Initiative is closing. The Initiative allows U.S. taxpayers with unreported income relating to undisclosed foreign bank or financial accounts to make a voluntary disclosure to get current with their taxes and information filing obligations for the past 8 years. When the program closes later this month, U.S.…

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CA Court of Appeals Rules Licensed Software Exempt from CA Sales and Use Tax

For many years retailers and businesses have been paying California state sales and use taxes on transfers of prewritten software. California tax authorities have claimed that taxes were payable on such transfers, but in the recent case of Nortel Networks Inc. v. State Board of Equalization, the CA Court of Appeals ruled that a license…

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