Explaining a recent reversal of a long-held IRS stance, the Office of Chief Counsel advised IRS attorneys on Friday that self-employed individuals may deduct Medicare premiums from their self-employment income. Chief Counsel Advice (CCA) 201228037 clarifies an IRS position that previously has appeared only in instructions to Form 1040, U.S.
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TOPICS / TAX
Business tax
Tax Court petition challenging a notice of deficiency suspends statute of limitation
The Eleventh Circuit overturned a Tax Court decision and held that a petition filed by taxpayers who had transferee liability for their corporation’s tax liability was a “proceeding in respect of the deficiency” under Sec. 6503(a)(1) that suspended the limitation period for assessment (Shockley, No. 11-13494 (11th Cir. 7/11/12), rev’g
IRS suspends repair/capitalization exams
In March, in a Large Business & Industry (LB&I) Directive (LB&I-4-0312-004), the IRS suspended current field examinations on the repair vs. capitalization issue to permit taxpayers to file accounting method changes under recently issued temporary regulations and revenue procedures. Taxpayers that are subject to the temporary regulations (T.D. 9564; see
Medical center’s FICA refund claim dismissed as untimely
The First Circuit Court of Appeals dismissed a suit for refund of FICA taxes Maine Medical Center mistakenly paid for its medical residents in the 2001 tax year, upholding a lower court determination that Maine Medical’s discovery requests were not warranted and that the information it sought from the IRS
Independent contractors and the Section 530 safe harbor
In September 2011 the IRS announced a new voluntary classification settlement program (VCSP) providing partial relief from retroactive federal employment tax assessments for eligible taxpayers that agree to prospectively treat their workers, or a class or group of their workers, as employees (see “Tax Matters: IRS Offers Employee Reclassification Agreement,”
Tax Court disallows cost segregation of apartment building components
In a case exploring the extent of allowable cost segregation in depreciable rental real estate, the Tax Court held that all but a small handful of items identified by the building’s owner had to be depreciated over the life of the building. AmeriSouth, a limited partnership, bought an apartment complex
Prop. regs. allow local lodging deduction
The IRS issued proposed regulations that permit employees to treat certain expenses paid or incurred for local lodging as deductible business expenses (REG-137589-07). Living expenses paid or incurred when not traveling away from home generally are considered nondeductible personal expenses under Sec. 262. The proposed regulations state that under certain circumstances,
Supreme Court upholds health care law
The U.S. Supreme Court on Thursday declared the mandate in Sec. 5000A, requiring U.S. citizens and legal residents to maintain minimum essential health coverage, to be a permissible exercise of Congress’s taxing powers under the Constitution (National Federation of Independent Business v. Sebelius, Sup. Ct. Dkt. No. 11-393 (U.S. 6/28/12)).
Sample text for Sec. 83(b) election released by IRS
On Tuesday, the IRS released a ruling under Sec. 83(b), the election to include property received in connection with the performance of services in income in the year the property is received even if there is a substantial risk that the property will later be forfeited (Rev. Rul. 2012-29). The
Guidance clarifies when dividends are qualified performance-based compensation
In Rev. Rul. 2012-19, the IRS ruled on whether dividends and dividend equivalents paid on restricted stock were qualified performance-based compensation excluded from the applicable employee remuneration to which the $1 million limitation on the deduction for compensation by publicly held corporations applies. The revenue ruling addressed two situations involving
PTPs can use safe harbor to determine COD income that is “qualifying income”
In Rev. Proc. 2012-28, the IRS issued a safe harbor for publicly traded partnerships (PTPs) that want to avoid corporate taxation by qualifying under Sec. 7704(c) as partnerships with 90% or more of their income from qualifying sources. Under the safe harbor, the IRS will not challenge a PTP’s determination
Proposed regs. on basis for S corporation shareholders from bona fide indebtedness
On Monday, the IRS issued proposed regulations on the contentious subject of when an S corporation shareholder can increase his or her basis in the S corporation’s stock, based on loans to the corporation, and thereby increase the amount of the corporation’s losses and deductions the shareholder can recognize (REG-134042-07).
IRS issues regulations on “expatriated entities” under Sec. 7874
On Thursday, the IRS issued temporary regulations governing whether a foreign corporation has “substantial business activities” in the foreign country in which, or under the law of which, the corporation is created or organized, compared to the total business activities of the expanded affiliated group (T.D. 9592). At the same
Pioneer specialists
CPAs have been the leaders in offering clients tax preparation, planning, and advice since the early 20th century, when landmark legislation instituted taxes on corporate and individual incomes. This article traces the history and development of the CPA tax practitioner over the past century.
Prop. regs. clarify meaning of “substantial risk of forfeiture” under Sec. 83
The IRS on Tuesday issued proposed regulations that would clarify when a substantial risk of forfeiture exists on the transfer of stock to an employee that is treated as compensation under Sec. 83 (REG-141075-09). When a substantial risk of forfeiture exists, the employee does not yet have to recognize the
Illinois “click-through nexus” law held unconstitutional
On Monday, the Circuit Court for Cook County in Illinois issued an eagerly awaited order explaining its bench decision on April 25, which declared Illinois’s “click-through nexus” law unconstitutional (Performance Marketing Ass’n v. Hamer, No. 2011 CH 26333 (Ill. Cir. Ct. Cook Cty. 5/7/12)). The order found that the law
Basis reporting rules for debt instruments and options postponed for one year
In Notice 2012-34, the IRS postponed the basis and gain reporting rules under Secs. 6045(g), 6045(h), 6045A, and 6045B for debt instruments and options, so they will apply to those acquired on or after Jan. 1, 2014. The postponement was in response to the many comments the IRS received on
Partnerships can issue Schedules K-1 electronically
The IRS issued Rev. Proc. 2012-17, which contains rules partnerships must follow to supply Schedules K-1, Partner’s Share of Income, Deductions, Credits, etc., electronically. The guidance was effective Feb. 13. A person required to furnish Schedules K-1 to partners (furnisher) can do so in an electronic format, provided the recipient
Tax Court respects stock sale, denies transferee liability
In Norma L. Slone, the petitioners prevailed when the Tax Court refused to apply the substance-over-form doctrine to recast a sale of a company’s stock following an asset sale as a liquidating distribution. The court further found that the taxpayers were not liable as transferees under Sec. 6901 for taxes
Hire a hero, enjoy the benefits
Most provisions of the work opportunity tax credit (WOTC) expired on Jan. 1, 2012, but the program was modified and partially extended by the VOW to Hire Heroes Act of 2011, P.L. 112-56, to cover military veteran hires. Under Sec. 51, as amended, employers may be eligible for a credit
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From The Tax Adviser
July 31, 2026
Current developments in S corporations
July 31, 2026
