The Sixth Circuit Court of Appeals ruled in Carol J. Negron v. U.S., docket no. 07-4460, that the IRS annuity tables of IRC § 7520 provide a realistic and reasonable estate valuation of a state lottery prize paid as a lump sum. In so doing, it reversed a district court’s
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TOPICS / TAX
IRS practice & procedure
Magazine Article Not a Penalty Defense
The Tax Court upheld penalties against a corporation that ignored its CPA’s advice against claiming bonus depreciation on a used airplane. The corporation instead had relied on a magazine article anticipating a possible law change that would have permitted the deduction. Congress, however, failed to pass the provision. On March
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IRS ANNOUNCES LIEN RELIEFIn December, the Service said it would expedite processing of requests to subordinate a tax lien to another lien or discharge it in some cases where a home is being sold for less than the amount secured by a mortgage. See Announcement IR-2008-141. The IRS typically takes
Two Out of Three Not Good Enough
The Tax Court ruled that a taxpayer was not entitled to claim a theft loss where he failed to show he had no reasonable chance of recovering his stolen money during the tax year in question. From 1999 to 2001 Dominick Vincentini, a resident of Michigan, was involved with Anderson
Private Annuity Defers Gain
A taxpayer was permitted to defer capital gain when he transferred appreciated capital assets in exchange for a private annuity. The Tax Court held the arrangement met the requirements of Revenue Ruling 69-74, 1969-1 C.B. 43, and thus the capital gain could be deferred until the taxpayer began receiving payments
Worker Classification Still Troublesome
The Tax Court ruled that a worker was an employee rather than an independent contractor partly because he was paid a daily rate during the four years he worked for an energy company and he supervised other employees. The worker classification issue has been a headache for taxpayers and the
Requesting 9100 Relief
A taxpayer who fails to make a tax election by the due date for the election may not be out of luck. Certain extension and administrative relief options exist if the taxpayer can obtain “9100 relief” under Treas. Reg. §§ 301.9100-1 through -3. The drawback is that unless he or
Tax Court Can Look Outside Administrative Record in Determining Innocent Spouse Relief
The Eleventh Circuit has held that the Tax Court could consider evidence outside the administrative record when deciding on a taxpayer’s claim for innocent spouse relief (Neal, No. 06-14357 (11th Cir. 2/10/09)). The taxpayer had petitioned the IRS for equitable relief under IRC section 6015(f) because, unbeknownst to her, her
Late February 1099-B Mailings Will Compress Tax Season for Many
Some brokerage customers of Fidelity Investments won’t receive Forms 1099-B until after the newly extended Feb. 17 general deadline for sending out the information returns, the company said Thursday. Fidelity, the nation’s largest mutual fund company, asked for and received from the IRS an additional extension to the end
IRS Issues Further Guidance on Loss Corporations Acquired in Bailout
The IRS has issued a second notice (Notice 2009-14) that expands on, clarifies, and supersedes the guidance issued in Notice 2008-100 on the application of IRC § 382 to loss corporations whose instruments Treasury acquires pursuant to the Troubled Asset Relief Program (TARP) under the Emergency Economic Stabilization Act of
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COMMENTS SOUGHT ON REVISED SSTSThe AICPA released for comment an exposure draft of proposed revisions to Statements on Standards for Tax Services (SSTS). The revisions are intended to address changes in federal and state tax laws and new requirements for providing certain types of tax opinions. SSTS no. 1, Tax
Subsequent Deferrals Under Section 409A
Nonqualified deferred compensation plans must now comply with a vast set of new rules. The transition relief expired on Jan. 1, and the final regulations under IRC § 409A are now in effect. These rules include the subsequent deferral election rules, which could bring unpleasant surprises for employers and employees.
Partners’ Agreement Subject to At-Risk Rules
The Court of Federal Claims denied a taxpayer’s claim that the terms of his partner’s closing agreements with the government allowed him to use previously disallowed passive losses to offset nonpassive income. Lyman Bush was a limited partner in two partnerships, Lone Wolf McQuade and Cinema 84, which were among
Securities Trader Status Not Satisfied
The Tax Court ruled against a couple’s deduction of securities losses as ordinary rather than capital and against expenses as trade- or business-related, saying the taxpayers failed to qualify as securities traders and therefore were subject to the capital loss and itemized deduction treatment of investors. William Holsinger and Joann
Amazon Loses Round in N.Y. Nexus Fight
A New York state trial court dismissed Amazon.com’s challenge to a law that establishes sales tax nexus through in-state “associates” whose Web sites feature links to the online retailer. Amazon and another Web seller, Overstock.com, separately sued the state’s Department of Taxation and state officials last spring after New York
Automatic Penalty Assertions Begin for Delinquent Forms 5471
In December, the IRS posted to its Web site guidance encouraging taxpayers to submit delinquent Forms 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, before Jan. 1, 2009—the date on which the Service began to automatically assert appropriate penalties under IRC § 6038 on late-filed Forms
Accountant Workpaper Privilege Upheld by First Circuit
The U.S. Court of Appeals for the First Circuit on Wednesday upheld a U.S. District Court decision that the work-product privilege applies to certain accountant workpapers (Textron Inc., No. 07-2631 (1st Cir. 1/21/09)), affirming in part, vacating in part, and remanding 507 F. Supp. 2d 138 (D.R.I. 2007). Textron is
New Regs Govern Overseas Disclosure and Use of Taxpayer Information
Editor’s note: This article appears in the February 2009 issue of The Tax Adviser, the AICPA’s monthly journal of tax planning, trends and techniques. Sec. 7216 and the regulations thereunder were promulgated to set guidelines and impose restrictions on the use and disclosure of taxpayer information by tax return
Private Companies and FIN 48
The good news is that on Oct. 15, 2008, FASB deferred the effective date of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48), for all nonpublic companies for one year. The bad news is that the year is up already. Company and outside tax and financial
No Good Deed Goes Unpunished
A volunteer president of the board of directors of a nonprofit day care center was held personally liable for the day care’s payroll taxes and therefore was not entitled to a refund of the taxes he paid on behalf of the organization. The Seventh Circuit Court of Appeals rejected the
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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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