When two provisions in the tax law produce conflicting outcomes, the Courts utilize specific rules of interpretation to ascertain which provision takes precedence. A fundamental principle is that a more specific provision will override the conclusion drawn from a broader one.

In the case of Hoops, LP v. Commissioner,[1] the court had to decide if the timing of a deduction for a deferred compensation transaction would be governed by a regulation under IRC §461 (allowing a deduction upon the sale of the partnership's business) or by IRC §404(a)(5) (which would postpone the deduction until the employees received and recognized their deferred compensation as income).

The IRS has proposed regulations (Prop. Reg. §1.6011-13[1]) that would add monetized installment sales as a listed transaction, subject to the reporting provisions found in the regulations under IRC §6011 and the penalty rules of IRC §6707A when such disclosure is not properly and timely made.

One of the credits introduced by the Inflation Reduction Act is a credit for obtaining a home energy audit on the taxpayer's principal residence. In Notice 2023-59,[1] the IRS announced its intention to issue regulations under this provision and provided interim guidance that taxpayers can rely on until such regulations are published.

At the same time, the IRS issued a news release, IR-2023-140,[2] explaining the guidance outlined in the notice.

In Revenue Ruling 2023-14[1], the IRS formalized its stance regarding an issue first raised by the taxpayers in the Jarrett[2] case. The agency clarified that cryptocurrency earned from staking constitutes taxable income under federal tax law.

Revenue Officers generally will longer make unannounced visits to taxpayers the IRS announced in News Release IR-2023-133.[1]

The release begins:

As part of a larger transformation effort, the Internal Revenue Service today announced a major policy change that will end most unannounced visits to taxpayers by agency revenue officers to reduce public confusion and enhance overall safety measures for taxpayers and employees.

The change reverses a decades-long practice by IRS revenue officers, the unarmed agency employees whose duties include visiting households and businesses to help taxpayers resolve their account balances by collecting unpaid taxes and unfiled tax returns. Effective immediately, unannounced visits will end except in a few unique circumstances and will be replaced with mailed letters to schedule meetings.[2]

In the case of Doggart v. Commissioner,[1] a taxpayer lodged a complaint, arguing that they couldn’t have taxable income for the year 2017 since they did not receive any cash during that period. However, the taxpayer will soon discover that this assumption does not necessarily hold true when dealing with a lapsed life insurance policy coupled with outstanding loans taken against the cash value of the policy.

The Oversight Subcommittee of the House Ways & Means Committee convened a hearing on July 27, 2023, to discuss “The Employee Retention Tax Credit Experience: Confusion, Delays, and Fraud.”[1] Although the agenda covered three topics, the focus and highlights of the hearing centered around the issue of fraud. Notably, Representative Beth Van Duyne (R-TX) played a key role during the session by sharing a voice mail she received that very morning from an individual claiming to be “Beth” and working for an Employee Retention Credit (ERC) mill. In the voice mail, the representative was informed that she was eligible to receive a payment of $26,000 for every W-2 employee she employs.

In the Generic Legal Advice Memorandum (AM 2023-05),[1] the IRS scrutinized some of the questionable supply chain-based justifications for claiming the employee retention credit. The memorandum emphasizes the necessity of documenting the specific government orders that the employer relied upon, demonstrating how these orders created challenges for the supplier. Moreover, it highlights the employer's inability to procure critical and necessary supplies due to these issues and how such circumstances resulted in a qualifying suspension of the employer's own business. By clarifying these requirements, the IRS aims to ensure more accurate and substantiated claims for the employee retention credit.

In November of 2022, the Tax Court rendered a decision in Hallmark Research Collective v. Commissioner, 159 TC No. 6, stating that the Supreme Court's ruling in Boechler PC v. Commissioner, 142 S. Ct. 1493 (2022), which established that the 90-day limit for filing a Tax Court petition for collection actions under IRC §6330 is not jurisdictional, did not alter the Tax Court's longstanding stance that the 90-day filing deadline specified in IRC §6213(a) for filing a deficiency petition remains jurisdictional. Consequently, no equitable relief for late filing of the petition is accessible in this context.

The Tax Court, at present, has declined to grant the plaintiff's motion for summary judgment regarding the IRS's suspense account method for handling S corporation basis claimed by a shareholder that exceeds his basis in the Kanwal v. Commissioner[1] case. However, the judge conveyed concerns about the method in the order, requiring the IRS to submit a supplemental memorandum further justifying its position.

In this specific case (Gomas v. United States)[1], the judge proposed that the IRS should have considered overlooking the tax issue at hand and granting leniency. Surprisingly, the judge himself refrained from exercising such discretion and instead ruled against the taxpayer, most likely due to the same constraints the IRS faced. This is because the applicable law mandated that the taxpayers were obligated to pay taxes in this particular scenario, despite the unfortunate circumstances wherein they were deceived into withdrawing substantial sums from their retirement account and delivering them to a fraudster. Notably, the fraudster happened to be the daughter of one taxpayer and the stepdaughter of the other.

It’s not often you see a private letter ruling asking for permission to make a late election to not deduct bonus depreciation under IRC §168(k), but even less often do we see eleven virtually identical requests for that ruling issued in the same week.  But, beginning with PLR 202328007[1] that’s what we saw this week.

The IRS has granted relief on specific tax deadlines to individuals in Vermont who have been impacted by the recent flooding. This relief was announced in IRS News Release IR-2023-125.[1]  Generally, the relief will provide individuals impacted by the recent flooding in Vermont with an extended deadline until November 15, 2023, to file any tax return that was originally due after July 9, 2023, and before November 15, 2023.

In Notice 2022-53, the IRS stipulated that the minimum distribution rules for defined contribution plan balances (including IRAs) inherited from a beneficiary who had passed away after their required beginning date— as outlined in the proposed regulations under the SECURE Act—would not take effect until 2023 at the earliest. However, with the release of Notice 2023-54,[1] the IRS has further delayed the implementation of these rules by at least one year, meaning they will not be applicable until 2024 at the earliest.

The Notice also provides relief to individuals born in 1951 who, under the law prior to the enactment of the SECURE 2.0 Act, were informed they would need to take required minimum distribution (RMD) payments by April 1, 2024, as they would turn 72 in 2023. Payments to cover these initial RMDs could have been initiated as early as January 2023, and some taxpayers may have scheduled such payments accordingly.

The tax treatment of legal settlements can be confusing for individuals who receive them, especially when they involve employment-related claims. One such issue was the subject of the Tax Court case Montes v. Commissioner,[1] which examined whether payments from an employment suit could be excluded from income.

Please note that this is a transcription of the oral findings, so there may be some grammatical errors or awkward expressions in the opinion. However, you should be able to understand the intended meaning without much difficulty.

As we transition into the second half of 2023, the Internal Revenue Service (IRS) has commenced the release of draft tax forms for the current year. We will be focusing on the draft versions of the 2023 partnership tax forms that have been recently disseminated by the IRS. The pertinent forms under consideration are:

• Form 1065[1]

• Schedule K-1 (Form 1065)[2] and

• Schedule K-3 (Form 1065).[3]

While the practical application of these draft forms may be somewhat restricted due to the absence of corresponding draft instructions for 2023, they nonetheless provide valuable insights. Even in their draft state, these forms can offer preliminary indications regarding potential modifications to the reporting requirements set by the IRS for partnerships in 2023.

The US Supreme Court has granted an appeal to review the Ninth Circuit's ruling in the case of Moore v. United States.[1] Previously, the Ninth Circuit had declined a motion to reconsider the case en banc, despite four judges expressing dissent from the decision. The original panel had upheld the constitutionality of the IRC §965 transition tax, which was introduced as part of the Tax Cuts and Jobs Act.

Most likely, everyone has encountered a situation where a phone, computer, website, or app did not function as expected or required. A similar circumstance arose for the taxpayer in the case of Sanders v. Commissioner, 160 TC No. 16.[1]  However, Mr. Sanders discovered that the Tax Court did not recognize his technological difficulties as a valid reason to accept his Tax Court petition, which was ultimately filed electronically just eleven seconds past midnight.

In my experience, day traders generally fall into one of two categories: a small minority achieving considerable success, or the majority, rapidly diminishing their previously amassed fortunes once they venture into day trading.

Day trading entails executing a vast number of security sales on a daily basis. An unsuccessful day trader quickly learns that, by default, they are restricted to a net deduction of only $3,000 in losses per year due to the annual limitation on individual capital loss deductions stipulated in Internal Revenue Code (IRC) §1211(b)(1). When the trader’s net losses extend into the six-figure realm, this $3,000 annual limitation can be significantly distressing.

The Internal Revenue Service (IRS) has issued Notice 2023-37, [1] declaring the cessation of unique provisions enabling high deductible health plans (HDHP) to extend certain benefits specifically for COVID-19 diagnosis and treatment before the participant had met his/her deductible for the plan year. These provisions were introduced during the COVID-19 public health emergency (PHE). The notice modifies the guidance found in Notice 2020-15 and provides clarification of Notice 2004-23.