The Treasury Inspector General for Tax Administration (TIGTA) announced on Tuesday that it has reached an agreement with the IRS to conduct a program to detect and deter waste, fraud and abuse in IRS programs and operations. The purpose of the program is to protect against attempts to interfere with
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TOPICS / TAX
IRS practice & procedure
Pre-2004 Termination Fee to “White Knight” Held Deductible
The Tax Court concluded that $65 million paid to terminate a merger contract was deductible under IRC § 162 or IRC § 165 and did not require capitalization under IRC § 263. IRC § 162 allows a deduction for the ordinary and necessary expenses paid or incurred during the tax
The IRS Whistleblower Program: What CPAs Should Know
Since Congress amended IRC § 7623 in 2006, the IRS’ new Whistleblower Office has seen significant interest from potential informants with tips about multimillion-dollar cases of tax noncompliance. In the first 12 months after it was established in February 2007, the Whistleblower Office received 116 reports of underpayments of more
Reduced Gain Opportunity Means Higher Tax Bill
The Tax Court held that a leveraged securities agreement was not a securities lending arrangement under IRC § 1058 since its economic substance indicated the taxpayers’ opportunity for gain had been reduced. Thus the arrangement was treated as two separate sales transactions; the first resulted in no gain or loss,
Broader Interpretation of Economic Substance Blunts Deductions
The Fifth Circuit Court of Appeals affirmed a district court ruling that Klamath Strategic Investment Fund’s loan transactions lacked economic substance and that no penalties applied. Furthermore, the appeals court held that the lower court erred in allowing Klamath deductions for operational expenses in connection with a sham transaction and
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IRS to Recommend New Tax Preparer Standards The IRS plans before the end of the year to recommend new standards for tax preparers, Commissioner Doug Shulman announced June 5. In testimony before the House Ways and Means Oversight Subcommittee and in a news release, Shulman said he would propose to
IRS Releases Streamlined Offshore Voluntary Disclosure Form
The IRS has posted to its Web site a three-page “optional format” short form for taxpayers to use when applying for the Voluntary Disclosure Program. The form asks taxpayers to estimate the annual highest aggregate value for their offshore accounts or assets for the years 2003–2008. It also requires them
IRS Launches Dialogue on Preparer Standards
An IRS public dialogue on new standards for tax preparers gets under way this week with public forums and a formal request for comments. The Service announced last month it would propose a new regulatory regime for paid tax return preparers, one that would include so-called unenrolled preparers—those who are
IRS Temporarily Suspends Collection Enforcement on Certain Listed Transactions
In a letter to Rep. John Lewis, D-Ga., chairman of the House Ways and Means Committee’s Subcommittee on Oversight, IRS Commissioner Doug Shulman stated on July 6 that the IRS will suspend collection enforcement activities on certain listed transactions through Sept. 30. IRC § 6707A imposes penalties on taxpayers who
Chief Counsel Outlines Litigation Tactics for Innocent Spouse Cases
In response to the recent Tax Court decision in Porter, 132 TC no. 11 (2009) (Porter II), the IRS Chief Counsel’s office released a memorandum outlining IRS litigation tactics in innocent spouse cases (CC-2009-021). In Porter II, the Tax Court held that it would apply a de novo standard of
Guidance on Electing Not to Take 50% Bonus Depreciation
The IRS on Tuesday released Rev. Proc. 2009-33, providing guidance on how taxpayers can elect not to claim 50% bonus depreciation under IRC § 168(k)(1) but instead increase their credit limitation under section 38(c) and their AMT credit limitation under section 53(c). The revenue procedure gives guidance on what property
Report of Foreign Bank and Financial Accounts: Significant Revisions and Severe Penalties
In September 2008, the IRS website posted revisions to the Report of Foreign Bank and Financial Accounts (Form TD F 90-22.1) that surprised many practitioners. This article discusses new traps for the uninitiated created by these revisions and the new reporting requirements for certain taxpayers who previously may not have
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AUTO DEPRECIATION LIMITS UPDATED The IRS issued Revenue Procedure 2009-24 that provides 2009 inflation adjustments to the depreciation limitations and lease inclusion amounts for certain automobiles under IRC §§ 280F and 168. For passenger automobiles (other than trucks or vans) placed in service during calendar 2009, the 2009 depreciation limit
Time Limit for Equitable Relief Struck Down, De Novo Standard Applied
In a trio of cases this spring, the Tax Court widened the availability of equitable relief under IRC § 6015(f) for taxpayers with innocent spouse claims. In two cases, the court invalidated a Treasury regulation provision limiting to two years the period in which innocent spouses may request equitable relief
Correcting FICA Errors
Correcting an employment tax error that is discovered in the year in which the error occurs is generally a simple process. However, employers often discover such errors after the close of the calendar year in which they paid the wages to an employee. The process for correcting those errors is
QI No Cure for Related-Party Deal
The Tax Court reaffirmed its 2005 holding that use of a qualified intermediary in a section 1031 exchange of like-kind property does not bypass restrictions on such exchanges between related parties. In evaluating whether tax avoidance was a principal purpose of such a transaction for purposes of the exception to
FBAR Voluntary Disclosure Questions Answered
The IRS has answered 51 “frequently asked questions” (FAQs) about its voluntary disclosure and settlement option for previously unreported offshore financial accounts and entities and income from them. The six-month window for making disclosures under the program ends Sept. 23. Although IRS Commissioner Doug Shulman said the program can allow taxpayers
IRS Offshore Voluntary Compliance Program Questions
The information below includes questions that IRS Criminal Investigation special agents have asked some taxpayers participating in the IRS Offshore Voluntary Compliance program. Practitioners might want to document the facts as fully as possible in a detailed summary when submitting under the program. Those considering the Offshore Voluntary Compliance program
Ninth Circuit Rules on Tax Court Jurisdiction in Partnership Cases
The Ninth Circuit has held in a group of consolidated cases that the Tax Court has jurisdiction to decide in partner-level proceedings whether a partnership’s transactions were tax-motivated (Keller, No. 06-75466 (9th Cir. 6/3/09)). The case concerns the outstanding tax liabilities of 16 partners who invested in cattle partnerships that
Supreme Court Grants Cert. in Bilski Case
On Monday, the U.S. Supreme Court granted a writ of certiorari in the case of Bilski v. Doll, Sup. Ct. Dkt. No. 08-964. The Court has agreed to review the Federal Circuit’s earlier decision in the case and address the question of when business methods are eligible for patent protection.
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SPONSORED REPORT
Preparing clients for new provisions next tax season
As the 2025 filing season approaches, H.R. 1 introduces significant tax reforms that CPAs must be prepared to navigate. These legislative changes represent some of the most comprehensive tax updates in recent years, affecting both individual and corporate taxpayers. This report provides in-depth analysis and guidance on H.R. 1.
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