February 2007 Get Ready for IRS Scrutiny of Inter-company Transactions Nexus News: 2006 Year in Review Extensive Modification Means Custom Software Exemption The Home Office Deduction Test: Your Bookkeeping Just Might Qualify Lifecycle of a Federal Tax Controversy Get Ready for IRS Scrutiny of Inter-company Transactions Refresh your knowledge... The IRS and state tax authorities have recently intensified their examination of transfer pricing for transactions between related entities. This stems from tax officials' concern that related taxpayers may set the prices of transactions between companies in a manner that improperly shifts income to achieve desired tax benefits. Christen Adels explains how related taxpayers can defend the arm's length nature of their inter-company prices in her article in Executive's Tax & Management Report. Read this article from Executive's Tax & Management Report Related publications of interest include: International Tax Journal Transfer Pricing Rules and Compliance Handbook Taxes - The Tax Magazine Was this article useful? Send us your comments: CCH-FocusOnTax@cch.com Nexus News: 2006 Year in Review Refresh your knowledge... 2006 was another banner year for nexus developments as states continue to test the limits of permissible authority to tax. Many of these encroachments involve the usual suspects-employee visits, affiliate nexus, and third party activities. For example, Georgia and New Jersey passed affiliate nexus legislation, while Alabama authorized public-contracting nexus. Read analysis of nexus legislation and cases from around the country in a Journal of State Taxation column by Maryann Gall and Laura Kulwicki.  Read this article from the Journal of State Taxation Related publications of interest include: State Income Tax Alert Multistate Corporate Tax Guide Was this article useful? Send us your comments: CCH-FocusOnTax@cch.com Extensive Modification Means Custom Software Exemption  Refresh your knowledge... The Wisconsin Court of Appeals determined in Dept. of Revenue v. Menasha Corp. that much modification to operating software could make it eligible for a custom software exemption. The DOR's emphasis on the mass marketing of identical modules that require extensive customization does not hold sway in pigeonholing software as "canned." Experts tell you how to interpret the DOR's own rule in light of the case and a potential appeal in a Sales & Use Tax Alert article. Read this article from Sales & Use Tax Alert Related publications of interest include: Sales & Use Tax Answer Book Multistate Guide to Sales & Use Tax Audits Was this article useful? Send us your comments: CCH-FocusOnTax@cch.com The Home Office Deduction Test: Your Bookkeeping Just Might Qualify Refresh your knowledge... Code Sec. 280A allows a taxpayer to deduct home office business expenses for a personal residence that would not otherwise be deductible providing certain criteria are met. The principal place of business requirement will be met if the home office is used for administrative or management activities (i.e. record keeping) if there is no other place where such activities are conducted. John C. Zimmerman's article in Taxes - The Tax Magazine examines the home office test of Code Sec. 280A and the implications of Code Sec. 121. Read this article from Taxes - The Tax Magazine Related publications of interest include: Tax and Wealth Strategies for Family Businesses Federal Tax Course:  A Guide for the Tax Practitioner Federal Tax Course Letter Was this article useful? Send us your comments: CCH-FocusOnTax@cch.com Lifecycle of a Federal Tax Controversy Refresh your knowledge... Your client has just received an IRS notice of either 1) a possible balance due; 2) impending collection action; or 3) an investigation underway. A three-year statute of limitations followed by a 10-year collection period governs IRS debts-unless the collection period is extended by a lien, an offer in compromise, a hearing, or a bankruptcy. Chaya Kundra in a Journal of Tax Practice & Procedure article explains the various phases of IRS collections, from notice to court action, as well as the options for paying an IRS debt.  Read this article in the Journal of Tax Practice & Procedure Related publications of interest include: Federal Taxation Practice & Procedure (8th Edition) Tax Planning for Troubled Corporations Was this article useful? Send us your comments: CCH-FocusOnTax@cch.com Executive's Tax & Management Report Wealth-building strategies plus late-breaking news Journal of State Taxation Guidance and workable solutions from leading tax specialists on how to reduce your company's or client's state and local tax liabilities Sales & Use Tax Alert The twice-monthly advisor on law, regulation, compliance and tactics Taxes - The Tax Magazine Insightful articles and columns on current tax issues, trends and hot topics Journal of Tax Practice and Procedure Straightforward commentary, tips, techniques and strategies for effective client representation in tax controversies California Tax Update Audio Seminar Learn about new California tax changes that affect business entities Thursday, March 1st at 1pm Eastern, noon Central. Register now for this insightful program!