News Notes.

• Author: Laffie, Lesli S.

EXPECTED IRS GUIDANCE * ROTH IRAs * INTERNET TAX FREEDOM ACT * SOCIAL SECURITY LIMITS * AICPA BROCHURES (CHART)

FROM THE IRS

Expected Guidance

By year-end, the IRS expects to finish a host of guidance projects, including regulations on the following:

* Sec. 197 amortization of intangibles.

* Capitalization of certain acquisition costs.

* Accounting for rental agreements under Sec. 467.

* Reporting for S corporations acquired by consolidated groups.

* When costs associated with investigating an acquisition would be eligible for favorable treatment under Sec. 195.

* The tax treatment of gain realized under Sec. 337(d) when a taxable corporation transfers assets to an exempt organization.

* Reconciling the interest differential between tax overpayments and underpayments.

* Joint and several liability for innocent spouses.

* The new appeal rights given to taxpayers if the IRS places a lien or levy on their property.

Some of the above projects may be pushed back to the 1999 business plan, but the last three items have high priority, under the IRS Restructuring and Reform Act of 1998.

Roth IRA Reconversions

Notice 98-50 explains whether and how taxpayers can reconvert amounts that have been transferred back and forth between regular and Roth individual retirement accounts (IRAs).

The notice stems from questions regarding whether a taxpayer who has converted an amount from a regular to a Roth IRA may transfer the amount back to the former in a "recharacterization," then subsequently "reconvert" that amount from the regular to the Roth IRA. A taxpayer would do this, for example, if the value of the Roth IRA decreased after the initial conversion due to stock market volatility.

Generally, a taxpayer who converts an amount from a traditional to a Roth IRA during 1998, then transfers that amount back via a recharacterization can reconvert that amount to a Roth IRA once, on or after Nov. 1, 1998, and on or before Dec. 31, 1998. The taxpayer is also eligible to reconvert that amount once during 1999.

A taxpayer who converts an amount from a traditional to a Roth IRA during 1999 that has not been converted previously and then transfers that amount back via a recharacterization can reconvert that amount to a Roth IRA once, on or before Dec. 31, 1999.

Any excess reconversion of an amount during 1998 or 1999 will not change the taxpayer's taxable conversion amount; instead, the excess reconversion and the last preceding recharacterization will not be taken...