By Jerry Kissell and Ryan Hermunslie

The recently enacted the Small Business Jobs Act of 2010 (the Act) contains significant tax provisions including changes to the built-in gains tax for Subchapter S corporations and increased deductions for investments in fixed assets. Read the full story.

By Jerry Kissell

The IRS issued an "Action on Decision" dated Dec. 27, 2010, with regard to the Seventh Circuit Court of Appeal's decision in Vainisi v. Commissioner. As you are likely aware, this case dealt with whether a Subchapter S corporation bank was subject to the disallowance of interest expense due to holding tax-exempt bonds. The Court of Appeals held for the taxpayer in determining that there was no interest expense disallowed with respect to bank qualified bonds owned by an S corporation that had not been a C corporation for any of the prior three years.

In the Action on Decision, the IRS states its position is "acquiescence in result only." This means that the IRS accepts the court's decision and will follow it in cases having the same fact pattern, but the IRS does not agree with some or all of the reasons the court gave for its decision. 

The IRS's ruling confirms the treatment for all impacted taxpayers for 2010, particularly for taxpayers who are outside of the Seventh Circuit or who have not yet filed amended returns to reflect the Appeals Court decision.