Line items


Tax Court allows D.C. snow day extension for petition filing

The Tax Court in Guralnik, 146 T.C. No. 15 (2016), denied the IRS's motion to dismiss the case for lack of jurisdiction, consistent with the earlier findings and recommendation of a special trial judge (order 8/24/15; see "Tax Practice Corner: Let It Snow (but to Be Sure, Use an IRS-Approved PDS)," JofA, Feb. 2016). The taxpayer mailed a Tax Court petition for redetermination, using a service that had not yet been added to the IRS's approved list of private delivery services that taxpayers may rely upon under the timely mailing/timely filing rule. The 30-day filing deadline for the petition fell on a Sunday, which was followed by a legal holiday. The next day would have been a normal business day, except the Tax Court and other federal offices in the District of Columbia were closed due to snow. The petition was delivered the following day, when the court reopened, and was timely filed, the court held.
 

Wellness rewards and premiums not excludable from employees' income

Employers may not exclude from employees' gross income cash rewards for participating in certain wellness programs or reimbursement of premiums for such participation if the premiums were paid by a salary reduction through a Sec. 125 cafeteria plan, the IRS Office of Chief Counsel advised in Chief Counsel Advice (CCA) 201622031. The CCA noted that an employer-provided wellness program that constitutes medical care as defined in Sec. 213(d) is generally excluded from income. However, any reward, incentive, or other benefit under such a program that is not medical care is included in income unless it is excludable as an employee fringe benefit under Sec. 132. A cash benefit is generally not excludable as a de minimis fringe benefit under Sec. 132(e). Payment of gym fees that do not qualify as medical care would not be excludable from employees' income even if provided through a wellness program because it is a cash benefit, the CCA concluded.
 

IRS notes general principles of crowdfunding income

In Information Letter 2016-0036 (available at irs.gov, the IRS outlined tax principles that may be relevant to crowdfunding income (see also "Crowdfunding and Income Taxes," JofA, Oct. 2015). The letter addresses whether funds raised by a crowdfunding appeal to purchase a company, in which contributors receive something (redacted), are constructively received if the funds "may have to be returned to the contributors." The letter states that, generally, crowdfunding revenues are includible in income if they are not loans that must be repaid, capital contributed to an entity in exchange for an equity interest in the entity, or gifts made out of detached generosity and without any "quid pro quo." The IRS noted that income is not constructively received if the taxpayer's control of its receipt is subject to substantial limitations or restrictions, but a self-imposed restriction on the availability of income does not legally defer its recognition.

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