The key factor to sustaining a taxpayer’s claim to be a real estate professional in cases before the Tax Court generally comes down to whether the taxpayer has sufficient and reliable records to back up their activity.  In the case of Birdsong v. Commissioner, TC Memo 2018-148 the taxpayer’s records were found to be sufficient to sustain her contention that she was a real estate professional.

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In a Project Manager Technical Advice addressed to the IRS Taxpayer Advocate and the Commissioner of the Wage and Investment Division, the Chief Counsel’s office concluded that the IRS can use the math authority to correct errors in the earned income tax credit, child tax credit, additional child tax credit and the American opportunity tax credit even if the return has already been processed and a refund issued (PMTA 2018-017).

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In what can be called an “interesting” news release (IR-2018-178), the IRS clarified that the proposed regulations that dealt with a required reduction of charitable contributions for state tax credits will not impact deductions claimed for business related payments to charities.

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Close only counts in horseshoes and hand grenades as the saying goes--and tax relief provisions are in neither category as the taxpayer in the case of Thompson v. United States, Case No. 3:18-cv-01675, US DC ND CA discovered.  The problem arose over an exception to the 10% premature distribution tax of IRC §72(t) for distributions made on account of a levy under IRC §6331.[1]

The exception, found at IRC §72(t)(2)(A)(vii) provides the early distribution tax does not apply “made on account of a levy under section 6331 on the qualified retirement plan.”

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On August 31, 2018 the President signed an executive order entitled “Executive Order on Strengthening Retirement Security in America” that was aimed at increasing the number of employees being offered retirement programs via their employer and to slow the required distributions from such plans.  The order contains instructions for the Department of Labor and Treasury Department to consider various revisions to requirements related to qualified retirement plans.

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In CCA 201835004 the question was posed regarding whether seismic surveys information obtained to determine the placement of offshore gas and oil development wells should be treated as geological and geophysical costs, amortizable under §167(h), or as intangible drilling costs, deductible under IRC §263(c).

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While a lot of attention has been focused on the Wayfair decision and how it can require an out of state seller to collect sales taxes on behalf of a state under certain conditions, it is important to remember that prior laws that were written to work with the Quill decision are still on the books.  As the Supreme Court noted in the Wayfair decision, Quill seemed to stand for the proposition that any physical presence in a state enabled a state to impose a sales tax collection requirement.  Thus, such statutes were sometimes drafted with a very low de minimis exception for out of state sellers, well below the $100,000 level found in South Dakota’s statute.

The state of Idaho has announced plans to continue to move forward with enforcing the state’s affiliate agreement nexus law and that the Idaho State Tax Commission has contacted 500 out of state sellers to “remind” them of the requirement to begin collecting the tax (“Some out-of-state retailers required to collect Idaho sales tax”, Idaho State Tax Commission News Release).

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While the Wayfair decision involved sales tax issues, the fact that the Supreme Court found that there was no need for physical presence for a business to be required to collect sales taxes suggested it was unlikely that such a test would apply for other types of taxes.  Shortly after the Wayfair decision was announced, Wells Fargo announced it was picking up an additional $481 million in state income taxes on its financial statements.[1]

Now the Oregon Supreme Court has ruled that the state’s corporate income tax does not require the physical presence of the corporation in the case of Capital One Auto Finance, Inc. v. Department of Revenue, Docket No. SC S064803.

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