Building Placed in Service When Substantially Complete and Available for Use Even Though Not Open

The concept of “placed in service” for purposes of beginning to deduct depreciation is often a tricky one to deal with in real life, and the date of placing an item in service may not be as simple as some might believe.  Certainly, in the case of Stine, LLC v. United States, 115 AFTR 2d ¶ 2015-381, DC LA, the IRS’s view of a “bright line” test based on a when a building was open for business was rejected by the Court.

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TIGTA Warns of Phone Scams Related to IRS

In press release TIGTA 2015-01 J. Russell George, Treasury Inspector General for Taxpayer Administration (TIGTA) warned of the threat of phone scams where the individual claims to represent the Internal Revenue Service in order to defraud individuals.

Phone scams have become the new favorite tool for those running scams since some individuals may mistakenly believe they are safe from scams and financial risks if they avoid online interactions.  The criminal generally uses information obtained about the mark from various sources to convince them that they represent the IRS and, often, that unless the mark does something immediately (like give a credit card number, buy a prepaid debit card to send to the government, etc.) some dire result will occur.

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Relief from Late Payment and Underpayment of Estimated Tax Penalties Offered for Repayment of Advance Premium Credit for 2014

The IRS announced relief for certain taxpayers who end up having to repay amounts related to advance payment of the premium tax credit in Notice 2015-9.  The IRS announced that the relief will apply to liabilities under IRC §6651(a)(2) for late payment of a balance due for taxpayers unable to pay the balance due and under IRC §6654(a) for underpayment of estimated taxes.  The relief will only apply to 2014 taxes.

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Late Rollover Allowed When Custodian Transferred Funds to State Agency Without Taxpayer's Knowledge

What happens if your IRA runs afoul of (or your custodian believes it runs afoul of) your state’s unclaimed property law and the account is forwarded to the state?  Well, technically your funds are no longer held by an IRA custodian—a problem, as that creates a deemed distribution of the funds in the IRA.

This problem appears to be what confronted the taxpayer in PLR 201504021.  The facts indicate that the IRA custodian, without the taxpayer’s knowledge, transferred the taxpayer’s account to “Division M of State N.”  While the exact details are, as required, redacted, it seems reasonable to assume that “Division M” was the state’s unclaimed property department.

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Uniform Capitalization Rules Do Not Apply to Sellers and Producers of Marijuana

The IRS, in Chief Counsel Memorandum 201504011, decided that a class of taxpayers is effectively “exempt” from the provisions of IRC §263A.  But it turns out not to be a win for these taxpayers.

Because the group of taxpayers who are found to not be subject to the rules of §263A are those who are growing marijuana under various state laws that make their business legal at the state law level, although the production and sale of the product remains illegal at the federal level.

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Compensation for Undergoing Procedures to Donate Eggs to Infertile Couples Not Excludable Under §104(a)(2)

In the case of Perez v. Commissioner, 144 TC No. 4, the Tax Court took care immediately upon starting the opinion section by explaining what it wasn’t deciding, a somewhat unusual step.  But, then again, this was a somewhat unusual case.

The issue in this case was whether Nichelle Perez had taxable income for payment she received for undergoing procedures to donate her eggs to infertile couples. 

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Majority Owner of Accounting Firm Found to Have Willfully Issued Erroneous Information Returns, Subjected to Penalties

As Neil Sadaka crooned, breaking up is hard to do.  And it certainly proved so for an accounting firm.  The acrimonious breakup did result in a tax case, this time looking at liability for filing a false information return under IRC §7434.

The Sixth Circuit court of appeals was called by both parties to review decisions of the U.S. District Court in the case of Pitcher and Enders v. Waldman, et al, CA6, Case Nos. 14-3369/14-3392, on appeal from the U.S District Court for the Southern District of Ohio.

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Taxpayer Allowed to Revoke Election Out of Installment Reporting Where Accountant Made Error in Computing Taxable Income

Mistakes happen, but in this case the IRS allowed a tax advisers a “get of jail (not quite) free” card with regard to giving bad advice to a client due to an error in computing the taxpayer’s taxable income when preparing a return.  In PLR 201503005 the IRS granted the taxpayer the right to revoke an election out of the installment basis of accounting.

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Tax Court Has Jurisdiction So Long as Section 530 Qualification is at Issue, Even if No Determination of Employee Status Issued by IRS

When discussing “Section 530 relief” regarding payroll tax issues we are not, as many initially assume discussing §530 of the Internal Revenue Code (which actually deals with Coverdell Education Savings Accounts).  Rather that term refers to a provision in the Revenue Act of 1978 found in Section 530 of the act that provides relief from liability in certain cases from payroll tax liabilities.

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Wrong Dates on Form 872 Did Not Control, Facts Make Clear the Taxpayer's Attorney/CPA Was Aware IRS Meant to Extend Year Under Exam

In the case of Hartland Management Services, et al v. Commissioner, TC Memo 2015-8, the taxpayer argued that since the IRS put the wrong years on Forms 872, Consent to Extend the Time to Assess Tax, (which the taxpayer signed) the statute of limitations for the real years under examination had expired by the time the IRS actually issued notices of deficiency.

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Reimbursement of Individual Plan Premiums by an Employer: The Issue and How to Deal with Clients Impacted by It

An important new notice was issued on February 18 that provides relief for many affected taxpayers through June 30, 2015.  See the write-up elsewhere on this site regarding Notice 2015-17.

Much confusion and angst has resulted from the recent discovery by some of the impact of a ruling issued by the IRS (with an identical DOL ruling) in September of 2013 that, for most employers, makes impractical the reimbursement of individual health policies.  

This article tries to outline what the position of the agencies are, the underlying law that resulted in these rulings, plans that do and do not run afoul of these rules and how to deal with a client that has been operating in ignorance of these rules and running an impermissible arrangement.

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Special Procedures to Handle Payroll Tax Issues on Transit Benefits Made Retroactively Nontaxable by Tax Increase Prevention Act of 2014 Issued

The IRS has issued procedures for employers who paid transit benefits during 2014 that were included in employee’s income, but which since qualified as excludable benefits due to the increase in the limits for such benefits from $130 to $250 per participating employee due to Section 103 of the Tax Increase Prevention Act of 2014.  The guidance is found in Notice 2015-2.

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Attorney's Malpractice in Misleading Estate Regarding Having Filed for an Extension Was Not Reasonable Cause to Avoid Late Filing Penalty

In the case of the Estate of Escher v. United States (USDC SD Ohio, Case No. 1:13-cv-00705, 2015 TNT 5-12) the issue involved whether a taxpayer should be found to have reasonable cause for the late filing of a tax return if the client’s attorney misled the estate into believing the attorney had filed an extension for filing the return

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