IRS Night, Tax Conference Highlight Portland Chapter Agenda
The March 2000 meeting of TEI’s Portland Chapter was preceded by a workshop on tax software products led by Stephanie Kovacevic of IBM/ Sequent Computer. Corptax and AACTS emerged as the most commonly used products by Portland Chapter members, but the discussion also included Tax Dimensions, Fast-tax, and CCH’s tax software products. Most products offered the federal Form 1120 and peripheral schedules for filing separate and consolidated returns as well as separate and combined/consolidated state income tax forms. The software systems usually offered tax provision modules and the larger ones offered international tax modules. Modules tended to be individually priced. Generally, members were satisfied with the software product they are using, although most products had room for improvement.
Robert A. Zarzar of PricewaterhouseCoopers LLP spoke at the March 14 dinner meeting, focusing on accounting methods, particularly in the inventory areas. He pointed out that accounting method changes almost always require permission and emphasized that taxpayers should not stop at the regulations to determine what constitutes a change in method. He also discussed exceptions to method-change rules: a change in facts, minor detail, or mere detail. Mr. Zarzar discussed the Rev. Proc. 99-49 procedures for automatic consent to change methods and elaborated on the circumstances when methods cannot be changed under the new procedure.
Significant developments in LIFO inventory accounting rules and case law, as well as deductions allowable in the post-INDOPCO world, were also covered. Transaction cost analysis, particularly costs associated with takeovers and investigatory costs deductible under section 195 or 162, were discussed in light of recent case law and Revenue Ruling 99-23. Mr. Zarzar noted that accounting systems (ERP implementations) in a worst-case scenario would be amortized over years. He also covered recent developments in environmental costs, adding that treatment of such costs in acquisitions can be tricky.
The chapter held its annual IRS Night on April 11. Guests from the IRS included Gloria Sullivan, Forest Products Industry Specialist and Environmental Issues Specialist from the Seattle District Office, and Joe Vricella and Kristen Moore, Case Managers from the Portland Office. Mr. Sullivan provided an update on three Forest Products Industry coordinated issues: (1) depreciation on logging roads, (2) timber insect losses, and (3) depreciation on paper machine structures. She also discussed timber casualty losses at length and how recent court decisions and Revenue Ruling 99-56 have modified the definition of a “single indentifiable property” for purposes of limiting the casualty loss.
Inverse condemnation suits and “takings,” particularly in the context of logging restrictions, have been identified as one of the emerging environmental issues across the nation. Tax implications of such actions include whether compensation received may be deferred under Section 1033 and whether any adjustment to the basis for depletion account is required. Ms. Sullivan also discussed TAM 20006014, which deals with the transfer of environmental liabilities in a section 351 transaction.
Mr. Vricella provided a brief overview of the new organizational structure of the IRS Large and Mid-Size Business Division, the five industry subdivisions within LMSB, and locations for the territory managers. He also discussed possible organization of the Portland office, but pointed out that it will be several months before any final decisions are made.
The IRS dinner meeting was preceded by a roundtable discussion of IRS audit issues with Mark Modjeski of Tektronix, Inc. leading the discussion. Topics included the type of IRS personnel involved in audits, currency of audits, types of federal taxes under audit, as well as methods for managing IDRs and reviewing NOPAs.
The chapter’s Annual Tax Conference was held at the Multnomah Athletic Club on April 21. The one-day event drew more than 80 participants from the Portland area. Topics covered included: property tax valuation and management, federal tax update, FAS 109, foreign tax credits, section 78 grossup, Subpart F income, state tax update, and best practices for implementing technology. Speakers for the conference included Larry Tapanen and Deanna Trail of the Tapanen Group; Rick Hawkins, Dan O’Leary, Brian Pederson, and Gary Holcomb of Arthur Andersen; Dan Giannini of PricewaterhouseCoopers; and Greg Engrave of BTI. The committee organizing the 2000 tax conference consisted of John Gardner of Pope & Talbot, Inc.; Brad George of Oregon Stell Mills; Stephanie Kovacevic of IBM/Sequent Computers; and Ellen McMillan of NACCO Materials Handling Group. The Chapter’s thanks to the committee and speakers for another successful conference.
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