Re-Adoption in U.S. Not Required for Taxpayer with Valid Foreign Adoption to Claim Adoption Credit
The IRS National Office clarified a mistaken reading of Revenue Procedure 2005-31 in Chief Counsel Email 201509037.
Read MoreLate Election Relief Granted Where Partnership Tax Adviser Failed to Follow Through on Providing Guidance to LLC Members on Making Qualified Real Property COD Election
Sometimes events occur during an engagement that can cause an advisor to lose focus and fail to take into account issues the adviser knows about. That appears to have been the case in a series of private letter rulings, each of which basically duplicates what is found in PLR 201509020.
Read MoreReceipt for Noncash Contribution Lacked Statement that Taxpayer Received Nothing of Value in Exchange for Donation, Deduction Denied
In the case of Legaspi v. Commissioner, TC Summary Opinion 2015-14, the Tax Court denied deductions claimed by a taxpayer—but did so using a standard that raises questions about what many clients obtain to document their charitable contributions.
Read MoreAmounts Individual Ordered to Pay on Mortgage Not Alimony, Had Child Related Contingency
George Resnik paid funds on behalf of his ex-spouse that initially met all of the requirements for deductible alimony and were labeled as support in his divorce decree. George’s payments met all of the basic “big four” requirements found in IRC §71(b)(1):
Read MoreIRS Asks for Comments on Guidance to Be Issued on Cadillac Plan Tax That Takes Effect in 2018
The next item the IRS has turned its sights on with regard to the Affordable Care Act is the “Cadillac tax” found in IRC §4980I on high cost coverage that will take effect for taxable years beginning after December 31, 2017. In Notice 2015-16 the IRS details proposed approaches to dealing with various issues under that tax.
Read MoreWhistleblower Settlement Taxable as Ordinary Income, Not Excludable as Personal Injury Settlement Nor a Capital Gain from Sale of Personal Goodwill
In the case of Duffy v. United States, US Court of Federal Claims, 115 AFTR 2d ¶2015-438 the taxpayers were looking to either exclude $50,000 in a legal settlement from income or have it taxed as capital gains—and they succeeded in neither attempt.
Read MoreProcedures for Obtaining Work Opportunity Credit Certifications for 2014 Hires Outlined by IRS
The IRS has issued another notice to “clean up” problems created by Congress’s delay in extending expired code provisions, waiting until late December to pass the Tax Increase Prevention Act of 2014 (TIPA 2014). In Notice 2015-13 the IRS provided procedures to be used for employers that hired individuals that retroactively qualify as “targeted” individuals during the period where the work opportunity credit under IRC §51 had expired.
Read MoreIRS Warns of Phishing Scheme Aimed at Tax Professionals
Phishing scams masquerading as the IRS have now moved from attempting to get access to taxpayers’ personal information to attempting to obtain e-services and Electronic Filing Information Number (EFIN) information from tax professionals, according to IRS News Release 2015-31.
Read MoreAttempt to Avoid Fees on Transferring IRA Creates Late Rollover, IRS Grants Relief
A taxpayer who received advice from an adviser at a financial institution to which he planned to transfer her IRA was given relief by the IRS in PLR 201508021. That by itself is not unusual, but the nature of the “deficiency” in the advice was a bit unusual, as the situation was one where the IRS could have concluded that this was actually a taxpayer error, something the IRS has generally not been willing to forgive.
Read MoreEstate Did Not Permanently Set Aside Funds for Charitable Purpose When It Knew of Possibility of Prolonged Litigation
The Tax Court had to decide when a part of the gross income of an estate is considered “permanently set aside” for a charitable purpose as defined in IRC §642(c)(2) in the case of Estate of Belmont v. Commissioner, 144 TC No. 6. In such a situation an estate would be allowed a charitable contribution deduction for the year in which this occurred.
Read MoreTemporary Relief Offered From Penalties Under §4980D for Health Insurance Reimbursement Arrangements
The continuing saga of employer reimbursement of individual health plans took another turn in IRS Notice 2015-17 which provides relief to taxpayers with arrangements in violation of Notice 2013-54.
Read MoreMethods for Obtaining Electronic Consent for Employer to Request Refunds of FICA Published in Proposed Form
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 MoreSimplified Accounting Method Change Procedures Issued by IRS for Small Taxpayers to Comply with Repair/Tangible Property Regulations
Facing 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 MoreIRS Issues Relief Provisions on Repair Regulations/Form 3115
I 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 MoreFunds Deposited to Taxpayer's Account Were Held in Trust for Her Boss, Amounts Generally Not Taxable to Her
The 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 MoreFailure to Collect Rent From Daughters Rendered Their Use Personal to Mother Despite Fact Stated Rent was Fair Value
Merely 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 MoreIRS to Disallow All Pending Claims for Payroll Tax Refunds on Severance Pay, Implementing Supreme Court Decision in Quality Stores
The 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 MorePreparer's Use of Forms 1099C as "Collection Technique" Discussed by Office of Professional Responsibility
The 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 MoreSocial Security Beneficiaries May Obtain Copy of Form 1099SSA Online
Clients 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 MoreIRS Announces Depreciation and Lease Inclusion Amounts on Vehicles for 2015
In 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.
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