Line items

Foreign tax credit ban lifted for Cuba

Effective Dec. 31, 2015, the IRS removed Cuba from the list of terrorism-supporting countries with respect to which a foreign tax credit is not allowed and certain related restrictions and limitations must be applied separately (Rev. Rul. 2016-8). A credit for taxes paid or accrued or deemed paid to foreign countries under Sec. 901 is denied with respect to countries with which the United States has severed or does not conduct diplomatic relations or whose governments the United States does not recognize. The credit is also denied under Sec. 901(j)(2)(A)(iv) with respect to certain countries the State Department designates as repeatedly providing support for international terrorism. Taxes paid to Cuba were not creditable from 1987 until last year, when the United States restored diplomatic relations with it and the State Department certified to Treasury that the regime no longer was deemed to support terrorism. Taxes paid to Iran, North Korea, Sudan, and Syria remain subject to the ban.

WOTC transition relief expires soon

Employers of members of groups targeted for the work opportunity tax credit (WOTC) have until June 29 to submit Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, for qualifying employees who began work between Jan. 1, 2015, and May 31, 2016, under transition relief announced in Notice 2016-22. Otherwise, if the employer has not obtained advance certification for the employee, Form 8850 must be submitted within 28 days of the date the employee begins work. The WOTC expired at the end of 2014 but was extended by the Protecting Americans From Tax Hikes Act of 2015, P.L. 114-113, through Dec. 31, 2019. Effective Jan. 1, 2016, it was also expanded to cover a new group: qualified long-term unemployment recipients, defined as individuals certified by a state employment security agency as having been unemployed for at least 27 consecutive weeks and receiving unemployment compensation under state or federal law for some period during that time.

Estates have until June 30 to file new estate basis form

The IRS in Notice 2016-27 further extended until June 30 the deadline for filing Form 8971, Information Regarding Beneficiaries Acquiring Property From a Decedent, for estates filing estate tax returns after July 31, 2015, where Form 8971 otherwise would have been due before June 30. The reporting is required under Sec. 6035, which was enacted in tandem with the new requirement under Sec. 1014(f) that the initial basis of property passing to or acquired by a taxpayer from an estate must generally be consistent with the value reported for estate tax purposes. For more, see "Estate Basis Consistency and Reporting: What Practitioners Need to Know," on page 60.

Charitable donation of coin collection requires appraisal

In Chief Counsel Advice Memo 201608012, the IRS Office of Chief Counsel advised that the charitable donation qualified appraisal rules' exception under Sec. 170(f)(11)(A)(ii)(I) for cash and other "readily valued property" does not apply to the donation of a coin or coin collection with a claimed value exceeding $5,000, unless (1) the coins are acceptable as legal tender and (2) their claimed value is no more than their face amount.

Where to find January’s flipbook issue

Starting this month, all Association magazines — the Journal of Accountancy, The Tax Adviser, and FM magazine (coming in February) — are completely digital. Read more about the change and get tips on how to access the new flipbook digital issues.


Get your clients ready for tax season

Upon its enactment in March, the American Rescue Plan Act (ARPA) introduced many new tax changes, some of which retroactively affected 2020 returns. Making the right moves now can help you mitigate any surprises heading into 2022.