AUGUST 2010 TAX BRIEFING

Adequately Disclosing a Gift for Limitation Purposes:
If a gift is not adequately disclosed on a gift tax return, gift tax can be imposed on the gift at any time under IRC Sec. 6501(c)(9) . According to Reg. 301.6501(c)-1(f)(2) , a gift to a trust is adequately disclosed if the gift tax return (or a statement attached to the return) includes the trust's tax identification number and brief description of the terms of the trust, or in lieu of that description, a copy of the trust instrument. Under the facts of this informal emailed advice, the IRS lawyer concluded that the taxpayer can file an amended gift tax return for the year in question and include the additional information that he believes is necessary to adequately disclose the gift. The IRS will then decide whether to audit the gift tax return. CCA 201030029 .

Defined Benefit Plans Using Special Funding Rules:
A pair of related notices provide guidance on the availability of special funding rules for (1) single-employer defined benefit plans under IRC Sec. 430(c)(2)(D) when Form 5500 (and Schedule SB) has been filed for that year, and (2) multi-employer defined benefit plans under IRC Sec. 431(b)(8) when Form 5500 (and Schedule MB) has been filed for that year. Notice 2010-55 , 2010-33 IRB, and Notice 2010-56, 2010-33 IRB .

HIRE Act Employment-related Tax Breaks:
Thanks to the HIRE Act, employers are exempt from their share of the Social Security tax on wages paid to eligible employees and can also claim a tax credit of up to $1,000 on wages paid to qualified new employees. The IRS recently updated its series of Frequently Asked Questions (FAQs) on these temporary tax breaks on www.irs.gov . The new FAQs address (1) the new hire retention credit and who it applies to, (2) the period of employment eligible for the credit, (3) Alternative Minimum Tax (AMT) implications, (4) eligible workers, and (5) the rules for calculating and claiming the credit. The FAQs note that an employer can claim the payroll tax exemption and the new hire retention credit for the same worker as long as the requirements for each are met.

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