Keeping CPAs Up to Date on Tax Matters
A site devoted to articles on current developments in federal taxes geared toward CPAs in tax practice.
In Notice 2015-15 the IRS attempts to address what constitutes employee’s consent to support a claim for refund of FICA taxes by an employer. Specifically the notice contains a proposed revenue procedure that would provide for requirements for employers who obtain electronic consent from their employees.
Read MoreFacing mounting pressure from various parties to grant relief, the IRS has provided an optional “simplified” method of complying with the new repair/tangible property capitalization regulations in Revenue Procedure 2015-20. In addition to issuing the ruling, the IRS also issued a press release (IR-2015-29) describing the relief.
Read MoreI will post more details shortly, but the IRS has issued revisions to the applicability of the tangible property/repair rules for "small businesses" in Revenue Procedure 2015-20.
Read MoreThe credibility of a taxpayer when testifying can often make or break a case at the Tax Court. That is especially true when the taxpayer is claiming certain defenses—such as the claim that funds the taxpayer deposited into her bank account were not truly her income, but that of her employer.
In the case of Na v. Commissioner, TC Memo 2015-21 the taxpayer’s testimony was found to be credible.
Read MoreMerely charging your daughter a monthly rent that is at or above fair rental isn’t enough if you actually don’t do much to attempt to collect the rent. This lesson was learned by the taxpayer in Savello v. Commissioner, TC Memo 2015-24.
Read MoreThe U.S. Supreme Court resolved a split among lower courts regarding whether severance payments under a severance plan are subject to FICA, overruling the holding of the Sixth Circuit Court of Appeals in the case of United States v. Quality Stores, 113 AFTR 2d 2014-1326 reversing CA6, 110 AFTR 2d 2012-5827. The IRS, nearly eleven months later, officially announced [Announcement 2015-8] that based on that decision the agency was going to deny all pending claims for refund.
Read MoreThe IRS Office of Professional Responsibility has issued Alerts from the Office Professional Responsibility Issue 2015-02 that discusses the implications of a preparing using Form 1099C as a “collection tool” to encourage clients to pay the balances due to the professional.
The alert specifically avoids giving a direct answer on whether the proposed conduct violates federal law and/or provisions of Circular 230, but certainly raises areas of concern.
Read MoreClients are known to misplace tax related documents which can complicate the process of getting their tax returns completed. However, over time more and more organizations have established processes to let taxpayers download additional copies of tax documents online.
Now the Social Security Administration has joined that group. In a News Release the Social Security Administration announced that social security beneficiaries will be able to obtain a copy of their Form 1099-SSA from the agency’s website.
Read MoreIn Revenue Procedure 2015-19 the IRS released the limits on depreciation for vehicles subject to the limitations of §280F(d)(7)(B)(i) for items placed in service in 2015, as well as the revised limits for 2014 for autos qualifying for bonus depreciation under IRC §168(k). The latter revisions were needed since Congress finally extended the bonus depreciation rules through the end of 2014 in the Tax Increase Prevention Act of 2014, signed into law on December 19, 2014.
Read MoreThe case of Saenz v. Commissioner, TC Summary Opinion 2015-6, turned on whether Leticia Saenz’s daughter, who filed a joint return for 2011, was actually married to the person she filed a joint return with.
Read MoreIn the case of SI Boo v. Commissioner, TC Memo 2015-19 the proper tax treatment of real property sales from property obtained by the taxpayer due to their business of acquiring Illinois tax liens was in question.
Read MoreThe Eleventh Circuit Court of Appeals took a look at what constitutes research funded by a third party in the case of Geosyntec Consultants, Inc. v. United States, CA 11, 115 AFTR 2d ¶ 2015-384.
Read MoreIn Action on Decision 2015-01 the IRS announced that it will not follow the Tax Court’s decision in four cases that were decided on the same day in 2004 that involved the interaction of the bankruptcy code and taxation of partners on cancellation of debt income.
Read MoreWhen a LLC “checks the box” by filing a Form 2553 to elect to be treated as a corporation and simultaneously elect S status, it must live by all the S corporation restrictions. That includes the restriction on only having one class of “stock” issued by the entity during the time it wishes to remain an S corporation.
In reality, there is no such federal tax entity as an “LLC”—the structure was originally designed when the first statute was adopted by Wyoming decades ago to be an entity for which there was no federal tax treatment specifically mandated. To this day the IRC does not have provisions outlining the tax treatment of “LLCs” but rather, under the check the box regulations found at Reg. §301.7701‑2 the entity is treated for federal tax purposes as one of the entities that the IRC knows about.
Read MoreThe 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.
Read MoreIn 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.
Read MoreThe 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.
Read MoreWhat 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.
Read MoreThe 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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In order to qualify for “real estate professional” status for the taxpayer’s rental properties, the taxpayer must meet certain participation requirements in a real estate trade or business.
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