Line items


Sec. 83(b) election statement is no longer required with return

The IRS finalized "reliance" regulations (T.D. 9779) to eliminate a requirement under Regs. Sec. 1.83-2(c) that taxpayers include a copy of their Sec. 83(b) election with their tax return. The election allows taxpayers who perform services for which property is transferred (often, an employer's restricted stock or stock options) to include in income for the year of the transfer the fair market value of the property over any amount paid for it. In some instances, the election is advantageous over the general rule under Sec. 83(a) that taxpayers may defer gain recognition until the earlier of when the property is transferable or not subject to a substantial risk of forfeiture. Because the IRS electronically scans the election statement that taxpayers must file within 30 days after the property transfer, an additional copy with a return was unnecessary and in many cases prevented e-filing of those returns, the IRS said.


IRS acquiesces to full mortgage interest deduction per individual co-owner

In Action on Decision 2016-02, the IRS acquiesced to the Ninth Circuit's holding in Voss, 796 F.3d 1051 (9th Cir. 2015) (see also "Tax Matters: Mortgage Debt Limit Applied Per Taxpayer," JofA, Nov. 2015), that the indebtedness limit for the mortgage interest deduction could be applied separately to each of two unmarried co-owner residents. The Ninth Circuit reversed the Tax Court to find that the Sec. 163(h)(3) limits of $1 million in acquisition debt and $100,000 in home-equity debt apply per individual rather than, as the IRS had argued, per residence.

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