The Tax Court upheld the validity of temporary regulations requiring a partner to raise partner-level defenses to penalties in separate litigation after resolution of unified partnership proceedings. Andrew Filipowski created New Millennium Trading LLC in 1999 to generate a deductible loss through the use of foreign currency options. In 2005,
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IRS practice & procedure
First Circuit Vacates Textron Workpaper Privilege Decision
The First Circuit has vacated its January decision in the Textron case, and a full panel of First Circuit judges will rehear the case in June. The January decision (No. 07-2631 (1st Cir. 1/21/09)) had held that the work-product privilege could operate to prevent the disclosure to the IRS of
IRS Reverses Position on Eligibility of Intangibles for Like-Kind Exchange Treatment
The IRS Office of Chief Counsel has announced a change in its position on the use of certain intangible property in IRC § 1031 like-kind exchanges (CCA 200911006). Previously (in Technical Advice Memorandum 200602034 and Field Attorney Advice 20074401F) the IRS had decided that registered trademarks, trade names, newspaper mastheads,
International Tax Provisions Introduced and to Be Considered This Year
President Obama’s budget proposal for the 2010 fiscal year includes “certain international tax reform and enforcement measures,” but the only detail on this is the following one-line item from the associated revenue table: “implement international enforcement, reform deferral, and other tax reform policies.” This is estimated to raise $210 billion
TIGTA: Some Tax Shelter Promoters Not Disciplined
The IRS’ Office of Professional Responsibility (OPR) was unaware of a significant number of licensed tax practitioners who had been assessed penalties, enjoined by federal courts or criminally sentenced for promoting abusive tax shelters, the Treasury Inspector General for Tax Administration (TIGTA) found in an audit. As a result, the
Sixth Circuit Upholds Use of Life Tables for Lottery Lump Sum
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
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
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From The Tax Adviser
March 31, 2026
Current developments in taxation of individuals: Part 1
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Current Developments in Taxation of Individuals: Part 1
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