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
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IRS practice & procedure
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.
A Broker Is What a Broker Does
The Tax Court held that a woman’s work as an independent contractor for a real estate agency enabled her and her husband to deduct losses because they were incurred from a real property trade or business rather than a passive activity. According to the court, the taxpayers’ real estate activities
Timely Prosecution
A return filing date is not the only benchmark for measuring the six-year time limit within which the government must begin a prosecution for tax evasion under IRC § 7201. Criminal defendant Leonard Widman found that out when the U.S. District Court for the District of Connecticut denied his motion
IRS Sets Procedures for Tax Return Preparer Penalties
The IRS has issued internal memoranda setting forth procedures for consideration of tax return preparer penalties in taxpayer examinations. A memorandum by the Large and Mid-Size Business Division (LMSB) describes procedures for tax return preparer penalty cases, and two audit technique guideline memos by the Small Business/Self-Employed Division (SB/SE) explain
Student Loans Can Hold Tax Surprises
Due to rising tuition costs, the number and size of student loans have increased dramatically in recent years. Once the exclusive domain of college financial aid offices and hometown banks, education loans are now the subject of cable TV commercials and e-mail solicitations from major credit card companies. Many students
“Reasonable Cause” Requires Extraordinary Circumstances
I read with interest the article on “Representing Clients With Tax Delinquencies and Deficiencies” (“Tax Practice Corner,” April 09, page 65), as this is part of my practice. Of particular interest was the paragraph on abatement of penalties because that is often a key concern of delinquent clients. The authors
No Second Class of Stock
The Fifth Circuit Court of Appeals rejected an S corporation owner’s argument that the corporation’s payments to her father, one of the company’s founders, had created a second class of stock that had terminated the S election. The daughter had unsuccessfully sought by that reasoning to exclude from her gross
Tax Amnesty Programs and Voluntary Compliance Initiatives: A Way to Mitigate Declining State Revenues
Since 2000, more than half of the states have offered tax amnesty programs one or more times (see Federation of Tax Administrators, “State Tax Amnesty Programs” (July 2007)). The programs allow taxpayers to “come clean” and report and pay delinquent tax liabilities. They are popular with taxpayers because they provide
Administration’s International Tax Proposals Plan to Raise $210B Over 10 Years
President Obama released his plan to raise $198.3 billion from 2011–2019 by overhauling international taxes, which will affect multinational corporations. When combined with further international tax reforms that will be described in the administration’s full budget proposal, the proposed international tax reform package would raise $210 billion over the next
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SIXTH CIRCUIT UPHOLDS LIFE TABLES FOR LOTTERY LUMP SUMThe Sixth Circuit Court of Appeals ruled in Negron v. U.S. (No. 07-4460 (6th Cir. 1/28/09)) 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
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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
