In a recent legal memorandum (AM 2014-001), the IRS affirmed the potential for retailers to claim the Sec. 199 domestic production deduction when they produce and distribute advertising fliers under a cooperative advertising agreement with a printer. Under a cooperative advertising agreement, a vendor will provide an incentive for a
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Tax
IRS must reconsider OIC
The Tax Court holds that the IRS must fully consider an offer in compromise to promote effective tax administration. The Tax Court held that the IRS failed to adequately consider on public policy or equity grounds an offer in compromise (OIC) that a married couple had made, and it remanded
Tax Court snuffs out cigarette importer’s deductions
The Tax Court holds that under the qualified settlement fund rules in Sec. 468B, a cigarette importer could not deduct tobacco settlement obligations until they were paid. The Tax Court held that an accrual-basis cigarette importer was not entitled to deductions for accrued but unpaid obligations to the Tobacco Master
Supreme Court holds severance payments are subject to FICA
The case resolves a circuit split over the definition of “wages” and excludable severance payments. In a decision involving over $1 million in Federal Insurance Contributions Act (FICA) taxes paid, the Supreme Court held in an 8–0 decision that severance payments to terminated employees are taxable wages for FICA tax
Former Qwest CEO could qualify for tax refund from forfeited insider trading gain
The Court of Federal Claims holds on public policy grounds that the IRS could not deny a taxpayer convicted of insider trading a tax deduction for $44.6 million in forfeited stock gain. In a case involving a claim of right under Sec. 1341 and losses under Sec. 165, the Court
Home builder properly reported income under completed-contract method
Developers of upscale home communities could include common improvements and infrastructure in contract subject matter for the completed-contract method of recognizing income from the sale of homes. The Tax Court held that in deferring recognition of its home-sales income while the homes’ developments or phases were incomplete, a residential builder
Practitioners suspended or disbarred from practice before the IRS can prepare tax returns
The IRS has decided that, as a result of the recent decision preventing it from regulating unenrolled tax return preparers, disbarment or suspension from practice before the IRS cannot include a ban on tax return preparation or blocking an individual’s preparer tax identification number (PTIN). Therefore, the Service announced that
Sec. 501(c)(4) regulations will be reproposed following outpouring of public comments
The IRS received an overwhelming flood of comments in response to proposed regulations it issued last November on the rules governing the political activities of Sec. 501(c)(4) social welfare organizations. As a result, the IRS announced that it will repropose the regulations, after taking the comments into account, and will
AICPA has “deep concerns” about IRS voluntary certification of return preparers
Following the defeat in federal court of the IRS’s tax return preparer regulation program, IRS Commissioner John Koskinen has commented that the IRS should consider a voluntary certification program for tax return preparers. On Wednesday, the AICPA sent the commissioner a letter, expressing its “deep concerns” about such a program.
Tax lawyer: Code reform stymied by dysfunctional Congress
Passage of major tax reform legislation appears unlikely soon, partly because of partisan gridlock in Congress as bad as any in the past century and a half, a noted tax lawyer told the AICPA spring Council on Tuesday in Scottsdale, Ariz. “Now, the members aren’t even acting in their own
Notice clarifies midyear amendment of certain retirement plans post-Windsor
The IRS clarified that a qualified retirement plan will continue to be a qualified 401(k) or 401(m) safe-harbor plan if it adopts a midyear amendment to its plan to comply with the rules in Notice 2014-19 requiring qualified plans to conform to the Windsor decision (Notice 2014-37). A safe-harbor 401(k)
Commissioner calls for greater IRS funding
The IRS needs more money to effectively do its job, especially with its added responsibilities under the Patient Protection and Affordable Care Act. That was the message IRS Commissioner John Koskinen delivered to attendees at the American Bar Association Tax Section’s spring meeting in Washington on Friday. It was standing
Final rules govern tax treatment of distributions to pay accident or health insurance premiums
On Friday, the IRS finalized regulations that provide that distributions from qualified retirement plans to pay accident or health insurance premiums are taxable unless a statutory exclusion applies (T.D. 9665). However, arrangements where amounts are used to pay premiums for disability insurance to replace retirement plan contributions in the event
Businesses lagging in preparation for new health care laws
Many U.S. employers are lacking in preparation for—and awareness of—new health care laws, according to a survey. More than one-third (36%) of more than 800 corporate decision-makers said they are not very familiar with the requirements of the Patient Protection and Affordable Care Act, P.L. 111-148, according to a survey
Final rules on fiduciary fees are issued
The IRS issued final regulations on the controversial question of which costs incurred by trust and estates are subject to the 2% floor on miscellaneous deductions under Sec. 67(a) (T.D. 9664). The regulations will apply to tax years beginning on or after May 9, 2014. The final regulations retain from
Accounting method change procedures for sales-based royalties and vendor allowances are announced
Taxpayers who are adopting the rules for sales-based royalties and vendor allowances under Sec. 263A and Sec. 471 provided in T.D. 9652 were given new procedures for obtaining automatic consent to accounting method changes to conform to those rules (which apply to tax years ending on or after Jan. 13,
Proposed rules would amend definition of acquiring corporation in corporate reorganizations
On Tuesday, the IRS issued proposed regulations under Sec. 381 that in certain acquisitions would change which corporation succeeds to the tax attributes, including the earnings and profits (E&P), of the transferor or distributor corporation (REG-131239-13). In earlier, related proposed regulations under Sec. 312, the IRS clarified that, in certain
Tax owed on full sale price where taxpayer won’t provide cost basis information
The Eleventh Circuit Court of Appeals upheld a deficiency notice of more than $5 million against a taxpayer who reported adjusted gross income of $22,921 and taxable income of $13,221 on his late-filed 2006 return (Hoang, No. 13-14398 (11th Cir. 5/2/14), aff’g T.C. Memo. 2013-127). Diep Hoang’s 2006 tax return
IRS announces two-year FATCA enforcement transition period
Foreign financial institutions that make a good-faith effort to comply with the requirements of the Foreign Account Tax Compliance Act (FATCA) will benefit from lighter enforcement during 2014 and 2015, the IRS announced on Friday (Notice 2014-33). The IRS is treating those years as a “transition period” for the implementation
Accounting across borders
CPA firms are finding international services a booming business, based on responses to a recent AICPA Private Companies Practice Section (PCPS) survey. The survey examines practitioners’ interest in expanding to new markets and growing an international clientele, as well as firms’ top international challenges and needs.
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