2019-10-14 Virtual Currency and Taxes

Current Federal Tax Developments for the week of October 7, 2019: Virtual Currency and Taxes

• IRS expands IP PIN program to 10 more states

• Question on virtual currency transactions will be on Schedule 1, Form 1040 and 1040SR, along with release of more draft instructions

• Hard forks of virtual currencies are taxable events per IRS and the rule appears to apply retroactively

• Additional set of FAQs added for taxation of virtual currencies to IRS website

Articles on this week’s update are available in the following PDF.

2019-10-14 Current Federal Tax Developments

2019-10-07 Get Ready for the 2019 Passthrough Forms

Current Federal Tax Developments for the week of October 7, 2019

• Pennsylvania cites Wayfair in providing for sales only based income tax nexus

• Taxes on investment real estate under IRC §164 - no $10,000 limit?

• Drafts of 2019 Forms 1065, 1120-S and related K-1s released by IRS

• Proposed regulations for ALEs using individual coverage HRAs released

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2019-10-07 Current Federal Tax Developments

2019-09-30 Rentals and the Safe Harbor

Current Federal Tax Developments for the week of September 30, 2019:

• Rentals and the Safe Harbor IRS releases final version of §199A rental safe harbor

• Special per diem rates that take effect on October 1, 2019 released

• Tax Court does not accept imprisonment and lack of access to what might be deductible expense documentation as reasonable cause for late filing.

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2019-09-30 Current Federal Tax Developments

2019-09-23 Zombie Power of Attorney

Current Federal Tax Developments for the week of September 23, 2019: Zombie Power of Attorney

• IRS releases final and new proposed regulations on §168(k) bonus depreciation

• Settlement offer to be sent to 200 taxpayers under exam for microcaptive structures

• Government shutdown causes IRS to lose ability to extend statute taxpayer had already agreed to extend

• Power of attorney not used by son nevertheless left him authorized to act for father, barring claim for extended statute

• CPA ordered to turn over tax returns of client based on two factor test

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2019-09-23 Current Federal Tax Developments

Section 451 Week

Current Federal Tax Developments for the week of September 16, 2019:

• §451 Week Students learns real life lesson on taxation of prizes, and we get a tax history lesson

• Proposed regulations issued for advance payments under TCJA §451(c)

• Proposed regulations issued for §451(b) revenue conformity added by TCJA

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2019-09-16 Current Federal Tax Developments

2019-09-09 But I Promise, Really!

Current Federal Tax Developments for the week of September 9, 2019: But I Promise, Really!

• IRS release instructions to 2019 §199A simple deduction form with additional informal guidance

• Memorandum discusses what does and does not qualify as having made a payment to a retirement plan

• Relief granted to file the second copy of the Form 3115 late for an automatic method change, but at a cost

• Activities failed to count as rentals, could not be combined into rental activity by real estate professional

• A flawed S election uncovered during due diligence for sale of the corporation

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2019-09-09 Current Federal Tax Developments

2019-09-03 No Horse, No Business

Current Federal Tax Developments for the week of September 3, 2019: No Horse, No Business

• Tax Court finds that taxpayer did not have a trade or business of raising/showing horses since she didn’t have a horse

• Tax Court rejects IRS’s “step in the shoes” theory for gifted partnership interest with interest from debt-financed distribution received by donor

• IRS accepts court’s revision of IRA beneficiary, surviving spouse allowed to treat IRA as her own

• Coffeehouse was not a §501(c)(3) charitable organization

• Notice of deficiency sent to addresses used on returns found to be sent to last known address

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2019-09-03 Current Federal Tax Developments

2019-08-24 Watching Paint Dry Doesn't Count

Current Federal Tax Developments for the week of August 26, 2019: Watching Paint Dry Doesn’t Count

• Taxpayer found both to have chosen the accrual method and to be required to use it as well

• §451 proposed regulations exit OIRA review

• Taxpayers records found to overstate hours by 150 hours, not qualified as a real estate professional

• IRS issues formal memo changing position on ability to claim foreign tax credit on certain French taxes

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2019-08-26 Current Federal Tax Developments

2019-08-19 George M Would Be Proud

Current Federal Tax Developments for the week of August 19, 2019: George M Would Be Proud...

• Taxpayer “wins” on a Cohan style case, but things don’t really go well

• Qualified plan distribution is part of taxable income for the taxpayer even if the taxpayer doesn’t cash the check

• An estate cannot avail itself of the economic disability tolling of the statute of limitations (and it wouldn’t have mattered anyway).

• IRS to send out estimated tax penalty refund checks to 400,000 taxpayers

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2019-08-19 Current Federal Tax Developments

2019-08-12 Toto Needs Sales Tax Money

Current Federal Tax Developments for the week of August 12, 2019: Dorothy and Toto Need Money

• Kansas releases out of state seller rules that have no de minimis levels

• Memorandum holds that partial denial of earned income tax credit can lead to loss of all credit for following two years

• Tennessee court finds that Boyle rule still applies, taxpayer cannot rely on preparer to efile extension

• New online tax withholding estimator released by IRS, second revised Form W-4 follows shortly after

• Revised third-party contact rules released prior to Taxpayer First Rule change that takes effect August 15, 2019

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2019-08-12 Current Federal Tax Developments

2019-08-05 About That Bitcoin

Current Federal Tax Developments for the week of August 5, 2019: About that Bitcoin...

• IRS sends out 10,000 letters on cryptocurrency, including some demanding a response

• Relief granted on three bonus depreciation elections for year that includes September 28, 2017

• Draft Schedule K-1 for Form 1120S revised to change §199A information reporting

• Letter ruling holds a partial deduction allowed for DNA tests requested by an individual

• Organization not operated exclusively for charitable purpose, §501(c)(3) status revoked retroactively

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2019-08-05 Current Federal Tax Developments

2019-07-29 1982 Tax Form Nostalgia Week

Current Federal Tax Developments for the week of July 29, 2019: 1982 Tax Form Nostalgia

• IRS releases final regulations on §501(c)(4) notice

• Taxpayers who paid certain French taxes may have refund opportunities

• Six new compliance initiatives announced by IRS

• Minor relief granted to file superseding returns to some CPAR covered partnerships

• IRS releases a new draft version of Form 1099-NEC for the first time in 38 years

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2019-07-29 Current Federal Tax Developments

2019-07-22 The Short Lived 1040 Postcard

Current Federal Tax Developments for the week of July 22, 2019: The Short-Lived 1040 Postcard

• Taxpayer who failed to file a signed Form 8332 with his return was denied the dependency exemption even though he eventually got a signed form

• IRS updates list of allowed preventive care for high deductible health plans

• IRS debuts new Form 1040-SR and revises Form 1040 to get rid of the postcard on draft 2019 forms the agency released

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2019-07-22 Current Federal Tax Developments

2019-07-15 Fixing Typos Proves to Be Hard

Current Federal Tax Developments for the week of July 15, 2019: Typos are Hard to Catch

• Taxes-Security-Together Checklist for tax professionals issued by the IRS

• Tax Court found that taxpayer was victim of a bookkeeping error and had sent IRA rollover contribution to custodian, late rollover allowed

• IRS discovers 31 years after the fact that a typo fix never was picked up in the Code of Federal Regulations

• Frequently asked questions page issued to explain TCJA change to §704(d) partner basis limits on charitable deductions and foreign taxes

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2019-07-15 Current Federal Tax Developments

2019-07-08 Congress Enacts the Taxpayer First Act

Update for the week of July 8, 2019. This week we look at:

• The Taxpayer First Act of 2019, signed into law on July 1, 2019

• The Supreme Court decides one trust due process case is enough for a single term

• IRS proposed a change in MEP to allow a solution to the one bad apple problem

• IRS goes back to issuing guidance via website FAQs, this time for QOFs

• Employers will be able to truncate SSNs on W-2s given to employees--but not right away

• IRS finalizes regulations barring partnerships from using disregarded entities to put partners on the payroll

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• 2019-07-08 Current Federal Tax Developments

• Taxpayer First Act of 2019 Highlights

2019-07-01 About that Drive from Florida to South Africa

Current Federal Tax Developments for the week of July 1, 2019:

• IRS issues notice to advisers regarding what to do in the event of a data breach

• IRS official confirms a §199A trade or business can include both commercial and residential rental

• Taxpayer found Tax Court didn't believe his vehicle logs

• Transaction found to be substantially similar to a listed transaction

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2019-07-01 Current Federal Tax Developments

2019-06-24 Supreme Court Just Says No

Current Federal Tax Developments for the week of June 24, 2019: SCOTUS Just Says No

• Proposed regulations issued on qualified agricultural cooperatives

• US Supreme Court rules mere residence of beneficiary not enough to all state to tax entire income of trust

• Taxpayer had a proper claim of right situation when she paid ½ of wages paid back by ex-spouse

• IRS finalizes non-resident alien ESBT regulations

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2019-06-24 Current Federal Tax Developments

2019-06-17 Bring on the New HRAs

Current Federal Tax Developments for the week of June 17, 2019: Bring on the New HRAs

• IRS to stop faxing transcripts, only mail them to taxpayer’s address of record

• Final regulations issued for state tax credit donations and new way to report credit as tax paid

• IRS finalizes regulations creating two new HRAs

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2019-06-17 Current Federal Tax Developments

2019-06-10 Being Yourself as a Business

Current Federal Tax Developments for the week of June 10, 2019: Being Yourself as a Business

• S corporation status lost when SMLLC shareholder adds a new interest holder

• Tax Court does not accept author’s attempt to treat a portion of her income as not self-employment income

• IRS releases employer tables and worksheets for TCJA-aware draft Form W-4

• TIGTA finds that LB&I imposes accuracy-related penalties at lower rate than does SE/SE

• Envelope used to file Tax Court petition lacked postmark, taxpayer could not explain delivery much later than would be expected for timely mailed document

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2019-06-10 Current Federal Tax Developments

2019-06-03 Sweating the Details (or Lose Out)

Current Federal Tax Developments for the week of May 28, 2019: Sweating the Details (or Lose Out)

• Evangelizing did not give rise to charitable deduction for most expenses

• DC Circuit agrees with Tax Court that failure to disclose basis of asset doomed $33 million contribution

• Taxpayers lose nearly $1 million of basis due to lack of old documents

• IRS tries one more time to develop a W-4 for the TCJA era

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2019-06-03 Current Federal tax Developements