The Tax Court held that a married couple could not exclude gain under IRC § 121 from the sale of a house that they had never lived in, built after they had demolished their former residence on the same site. The court held that Congress intended that the exclusion should
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TOPICS / TAX
IRS practice & procedure
Final Regs Deny Interest and Penalty Suspension
The IRS issued final regulations under IRC § 6404(g)(2)(E) regarding an exception to interest and penalty suspension if the amounts are related to listed transactions and undisclosed reportable transactions. Section 6404(g) generally provides for the suspension of interest and penalties if the IRS does not contact the taxpayer regarding the
AICPA Urges Lawmakers to Ban Tax Patents
The AICPA joined a group of national consumer and taxpayer organizations to urge Congress to ban tax strategy patents before adjourning for the year. In a letter to lawmakers, the groups said that tax strategy patents effectively create a monopoly for patent holders on certain parts of the U.S. tax
IRS Activates New PTIN System
The IRS deployed a new preparer tax identification number (PTIN) registration system Tuesday as a component of its initiative to register and regulate paid tax return preparers. All paid tax return preparers (including CPAs, attorneys and enrolled agents) must apply for and obtain a PTIN—even if they already have one—before
IRS Says It Won’t Give Advance Guidance on Transactions Under Codified Economic Substance Doctrine
The IRS issued its first guidance on the newly codified economic substance doctrine on Monday (Notice 2010-62). In general, the IRS says it will enforce the two-prong test mandated in the Code and will not issue guidance on whether specific transactions pass muster. The economic substance doctrine was originally created
Comments Requested on Expanded Payment Information Reporting
The IRS requested comments on 2012-effective amendments to IRC § 6041 expanding requirements to report on Form 1099 business payments totaling $600 or more to any person in a calendar year. The amendments were made by the Patient Protection and Affordable Care Act of 2010 (PL 111-148). They provide that,
Son Liable for Father’s Unpaid Taxes
The Tax Court affirmed an IRS determination that a son is liable for his father’s unpaid taxes as the transferee of his father’s Florida condominium. Florida’s Uniform Fraudulent Transfer Act (FUFTA) did not protect the son from the liability. When his mother’s health declined in 1989, Scott Rubenstein moved from
Currency Option Not a Contract in “Major/Minor” Shelter
The Tax Court held that a foreign currency call option is not a foreign currency contract under the plain language of the IRC § 1256 contract mark-to-market rules. Thus an unrealized loss existing on the date that a foreign currency option was transferred to a charity was disallowed. Section 1256
IRS Moves Forward With Preparer Registration Plan
On Thursday, the IRS issued proposed regulations that would put into place many of the parts of its plan to register and regulate tax return preparers (REG-138637-07). Proposed amendments to Circular 230 would clarify the definition of tax practice, establish a new “registered tax return preparer” designation, define the eligibility
Members of Congress Ask Treasury to Modify Return Preparer Registration Plans
Thirty-one members of the House of Representatives wrote to Treasury Secretary Timothy Geithner on Aug. 2, expressing concerns with aspects of the IRS’ proposal to regulate paid tax return preparers. The House members asked that the plan be modified to exempt nonsigning preparers who work for a CPA firm from
IRS Will Stop Providing Debt Indicators; Exploring Ways for Taxpayers to Use Refunds to Pay Preparers
The IRS on Thursday announced that it will stop providing “debt indicators” to tax preparers and associated financial institutions (IR-2010-89). Currently, when a tax preparer e-files a client’s tax return, the IRS indicates in the acknowledgment file if the taxpayer will have any portion of the refund offset for delinquent
IRS Changes Name of LMSB Division, Expands Focus
On Wednesday, the IRS announced that it is reorganizing and changing the name of its Large and Mid-Size Business (LMSB) division as part of its ongoing effort to focus more on international tax compliance (IR-2010-88). Starting Oct. 1, the division will be known as the Large Business and International (LB&I)
Beware of State-Federal NOL Differences
State net operating loss (NOL) rules generally differ from federal NOL rules, and state NOL rules often differ from one another. This is especially true with respect to carrybacks of NOLs—which, unlike for federal returns, the majority of states do not allow—and carryforwards. This lack of consistency can lead to
Is Your College Student Still a Dependent?
College students combine many sources of funds to pay for their education, including personal savings, family savings, income from jobs, scholarships and/or student loans. As the percentage of funds from the student’s sources increases, parents risk losing the student as a dependent on their tax return. Not only do the
IRS Provides Relief for Small Tax-Exempt Nonfilers
The IRS announced that is providing relief for small tax-exempt organizations that are supposed to automatically lose their tax-exempt status because they failed to file Forms 990-EZ or 990-N for the years 2007, 2008 and 2009. Under a special one-time program, the IRS is giving those organizations until Oct. 15
Appeals Court Overturns Taxpayer Win in Tax Shelter Case
The U.S. Court of Appeals for the Tenth Circuit has held that a taxpayer’s investment in a “Son of BOSS” tax shelter lacked economic substance and therefore did not generate deductible losses (Sala, No. 08-1333 (10th Cir. 7/23/10)). This holding reverses a rare taxpayer win on the issue of Son
Regulations Issued on Preventive Services
As part of ongoing guidance on this spring’s health reform legislation, the IRS, Department of Labor, and Department of Health and Human Services have issued interim final and proposed regulations implementing the preventive health services rules in the acts (TD 9493; REG-120391-10). The Patient Protection and Affordable Care Act (PL
Line Items
UNCERTAIN TAX POSITIONS DRAFT SCHEDULE RELEASED The IRS released a draft of new Schedule UTP, Uncertain Tax Position Statement, (tinyurl.com/27jmhm7) and instructions (tinyurl.com/25uorpf) as part of its initiative to require certain business taxpayers to report uncertain tax positions on their returns (Announcement 2010-30). (For previous JofA coverage of the initiative,
High Court Denies Business-Method Patent
The U.S. Supreme Court ruled Monday that a method of hedging against fluctuations in the price of energy or other commodities was an unpatentable abstract idea. The court, however, rejected the idea that a business method could never be patentable. The case, Bilski v. Kappos (08-964), has been widely followed
Health Care Regulations Issued
The IRS and Treasury Department issued proposed regulations (TD 9491, REG-120399-10) Tuesday implementing rules for health care insurance coverage and group health plans under the Patient Protection and Affordable Care Act (PL 111-148) and the Health Care and Education Reconciliation Act (PL 111-152). The text of the proposed regulations is
Features
FROM THIS MONTH'S ISSUE
4 ways solo practitioners can stand out
Five years ago, a grieving Angel Zhen started his own CPA firm with no clients and no revenue. Today, he has 300 clients, $600,000 in revenue and 12 weeks of annual vacation. In this JofA article, he shares how he set up his firm and how you could do the same.
From The Tax Adviser
April 30, 2026
Current developments in taxation of individuals: Part 2
April 30, 2026
