The AJCAs Domestic Business Provisions footnotes

¹P.L. 108-357.

²However, the Sec. 179(a)(3) limit, based on taxable income from all of a taxpayers trades or businesses, must also be taken into account.

³At press time, the IRS issued Notice 2005-14, 2005 IRB-7, providing broad interim guidance on most aspects of the domestic production activities deduction, which may be relied on until regulations are issued. The Service expects that regulations will incorporate the rules set forth in the notice and will be effective for tax years beginning after 2004. The notice requests comments on the interim guidance and any additional guidance that should be provided in regulations.

⁴In effect, the new law obsoletes the decision in Vogel Fertilizer Co., 455 US 16 (1982), as to Sec. 1561 benefits.

⁵See Regs. Sec. 1.170A-13 and John T. Hewitt, 109 TC 258 (1997), affd, 166 F3d 332 (4th Cir. 1998), for examples of this rules potential application.

⁶Sutherland Lumber-Southwest, Inc., 114 TC 197 (2000), affd, 255 F3d 495 (8th Cir. 2001), acq., AOD 2002-02; for a discussion, see McGuire, Tax Clinic, Company Planes: the AJCA Extends Bonus Depreciation, but Grounds Sutherland Lumber, 36 The Tax Adviser 68 (February 2005).

⁷Generally, officers, directors and 10%-or-greater shareholders of public or private companies would be included in this category.

⁸See Conf. Rept No. 108-755, 108th Cong., 2d Sess. (2004)

⁹Also, AJCA Section 231(b) amends Sec. 1362(f) to provide that an inadvertently invalid election or termination under this rule may be waived by the IRS. The conditions of Sec. 1362(f) (e.g., inadvertence, corrective steps and agreement to IRS conditions) must be met.

¹⁰See Rev. Rul. 92-73, 1992-2 CB 224. But see Rev. Proc 2004-14, IRB 2004-7, 489, which provides that if certain requirements are met (including immediate repurchase of the stock by the S corporation or employee stock ownership plan (ESOP)), a corporations S status will not terminate on a direct rollover of the corporations stock from the ESOP to a participants IRA.

¹¹This provision applies only to the extent of bank stock held by an IRA on Oct. 22, 2004.

¹²For more details on S elections, see MacDonough and Orbach, S Corporation Elections Guide, 34 The Tax Adviser 540 (September 2003).

¹³See Regs. Sec. 1.1361-1(m)(8), Example (7).

¹⁴See pre-AJCA Sec. 1366(d)(2) and Regs. Sec. 1.1366-2(a)(5).

¹⁵See Prop. Regs. Sec. 1.465-66.

¹⁶See Regs. Sec. 1.1361-4(a)(2)(ii), Example (3).

¹⁷See Secs. 404(k)(5)(B), (2)(A)(iv) and (2)(B).