The word “including” in the Internal Revenue Code creates a potential trap that taxpayers fall into from time to time.  IRC §7701(c) tells us that when we see that word in the code we need to understand that the list presented is not every item that could apply to the situation.

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The IRS released inflation adjusted amounts for a number of tax related items for 2017 in Revenue Procedure 2016-55.  This year’s information includes a number of additional entries, including §179 adjustments and revisions of the amounts for various penalties, that Congress added in the various tax bills that were passed in 2015.

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The Social Security Administration has provided on the Employment Coverage Threshold page on their website, information on the coverage threshold levels for domestic workers in 2017.  The threshold will remain at $2,000 in 2017, the same level as it was set at for 2016.

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The Social Security Administration announced in an October 19, 2016 news release that the maximum amount of earnings subject to Social Security tax in 2017 will rise to $127,200 from the maximum $118,500 that applied for 2016.

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The federal transfers (gift and estate) are computed based on lifetime transfers—thus, in order to compute the current year’s gift tax the gifts made during the year are reported along with gifts made in prior years.  In Chief Counsel Advice 201643020 the IRS was looking a situation where a taxpayer had reported the proper amount of current year’s gifts but had omitted prior years gifts from the Form 709.

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January 20, 2017 will be the date on which the new President is to be inaugurated—and in emailed advice the IRS Chief Counsel’s office noted that this date will be considered “holiday” for tax purposes.  Thus, any deadlines that fall on January 20, 2017 (a Friday) will instead be treated as actually having a deadline of the following Monday (January 21, 2017).

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In response to Hurricane Matthew the IRS in Announcement 2016-39 granted the option to qualified plans to give access to retirement funds to individuals impacted by the disaster without requiring certain the plans to go through certain verification procedures required of such plans when making loans or hardship distributions.

Employer retirement plans of various sorts (§§401(k), 403(b) and 457) must follow certain procedures in order to make distributions or loans to account holders.  Distributions can only be made upon the occurrence of certain events that the IRC allows, and then only if the plan itself allows for such a distribution. As well, distributions will generally be subject to tax except to the extent the distribution consists of already taxed amounts.

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In the case of United States v. McGrew, et. al, CA9, 118 AFTR 2d ¶2016-5319, the Ninth Circuit looked at whether the IRS could foreclose liens on property that the taxpayer had previously owned as community property with her former husband.  The liens were being forceclosed against the taxpayer’s former husband. 

Ms. McGrew had received the residence in question as part of the division of community property at the termination of her marriage to Kenneth McGrew.  Ms. McGrew argued that because the liens were against her former husband that the IRS did not have the right to foreclose the liens against the property that was now solely.

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The IRS has issued a revised 202 page Audit Technique Guide for Capitalization of Tangible Property that is meant to outline what agents should do in an examination when looking at the applying the regulations that took effect for tax years beginning on or after January 1, 2014 under IRC §263(a).

In the case of Harvey C. Hubbell Trust et al. v. Commissioner; T.C. Summary Opinion 2016-67 the IRS was disallowing all of the charitable contributions claimed by the trust for 2009.  The IRS did not deny that the contributions were made.  The agency also did not claim the recipients were not qualified charitable organizations. Rather, the IRS claimed the contributions were not made according to the terms of the will that established the trust.

The trust in question had been making charitable contributions for many years (going back to 1985) and in quite substantial amounts.  For instance, in 1985 the trust made (and deducted) charitable contributions of $384,976, and had made contributions, often in excess of $100,000, for many years between 1985 and 2008.  Apparently the IRS had never raised any issue with regard to these contributions—likely because the IRS had never examined the trust.

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IRC §165(i) provides for a taxpayer to electively claim a loss on a federally declared disaster on the return for the year prior to when the disaster occurred.  The IRS has issued Revenue Procedure 2016-53 and proposed regulations (REG-150992-13) for taxpayers who wish to take advantage of this election.

The proposed regulations would set the deadline for both making the election (six months after the due date of the tax return for the year of the disaster excluding any extensions) and for revoking a previous election (90 days after the due date for making the election).

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The IRS has expanded its view of what doesn’t work for treating an LLC member’s income as not subject to self-employment tax in Chief Counsel Advice 201640014.

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The IRS in Notice 2016-58 provided updated special per diem effective for the period from October 1, 2016 to September 30, 2017.  These special rates include the rate for the special transportation industry meals and incidental expenses (M&IE) rate, the rate for the incidentals-only deduction and the rates and list of high-cost localities for purposes of the high-low substantiation method.

The special transportation industry rates for 2016-2017 are $63 for any locality of travel in the continental United States and $68 for any locality of travel outside the continental United States.  The general rules for qualifying to use these rates and how to use them are found in Section 4.04 of Revenue Procedure 2011-47.

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