In two decisions in 2013, Endicott, T.C. Memo. 2013-199, and Nelson, T.C. Memo. 2013-259, the Tax Court maintained a high hurdle that taxpayers must clear to show they are in the trade or business of trading in marketable securities rather than acting as investors. Aside from dealers in securities (those
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Tax
Final regs. issued on Sec. 382 ownership changes
On Oct. 22, the IRS released long-awaited final regulations on owner shifts and ownership changes under Sec. 382. The rules, contained in T.D. 9638, retain a taxpayer-friendly exception for small shareholders and provide a new anti-abuse rule. Sec. 382 limits a corporation’s use of net operating loss (NOL) carryovers and
Regs. permit midyear cuts in employer contributions to 401(k) plans
The IRS issued final regulations that permit employers to make midyear reductions or suspensions of safe-harbor matching or nonelective contributions to retirement plans in certain situations (T.D. 9641). To qualify for salary deferral, Sec. 401(k) plans must meet certain nondiscrimination rules that require non-highly compensated employees to participate in the
IRA-owned LLC’s payment to owner results in retroactive tax and penalties
The Tax Court held that compensation received by a taxpayer from a limited liability company (LLC) that was almost entirely owned by the taxpayer’s individual retirement account (IRA) resulted in several types of self-dealing prohibited transactions. Thus, the IRA owning the LLC automatically terminated as of the first day of the
Implementing the new tangible property regulations
Know the revised “repair regs.” and their implications for property acquisition, improvement, and disposition.
Claiming the small employer health insurance tax credit
Small businesses that offer health insurance to their employees should learn about this credit and claim it if they are eligible.
Work product protection and attorney-client privilege in an IRS audit
In Veolia Environnement North America Operations Inc., a U.S. district court reviewed the scope of the work product rule and the attorney-client privilege in the context of an IRS audit. The dispute arose out of an IRS audit of a $4.5 billion deduction for worthless stock claimed by Veolia Environnement
Settlement of workers’ comp claim partially excludable
The Tax Court permitted a taxpayer to exclude 10% of her settlement from an employment suit against her former employer, because that portion of the settlement was compensation for her physical injuries and physical sickness and was a reasonable estimate of the amount. Sec. 104(a)(1) excludes from income “amounts received
Penalty calculation properly based on erroneous credits, Tax Court holds
The Tax Court held that the amount of tax shown on a return was reduced by refundable credits, but not below zero, for purposes of calculating the Sec. 6662(a) accuracy-related penalty. The court reached that conclusion even though the taxpayers were not entitled to the credits they had claimed. The
Details of new myRA retirement savings vehicle revealed
Following up on announcement made by President Barack Obama in his annual State of the Union speech on Tuesday, the White House released details of a new retirement savings account to be made available to employees through their employers. These accounts, myRAs (presumably an abbreviation for “my retirement account”), which
Proposed rules address disguised sales and partnership liabilities
On Wednesday, the IRS issued proposed regulations on disguised sales of property to or by a partnership under Sec. 707 and the treatment of partnership liabilities under Sec. 752 (REG-119305-11). The IRS says the proposed regulations are designed to address “deficiencies and technical ambiguities” in the current regulations. Disguised sales
Simplified method offered for requesting extended time to make portability election
The IRS on Monday offered certain executors a simplified way to request an extension of time to make the “portability” election to transfer a deceased spouse’s unused estate tax exclusion to the surviving spouse (Rev. Proc. 2014-18). Executors of estates of spouses who died in 2011, 2012, or 2013 and
Final version of net investment income tax form released
Just in time for the start of tax season, the IRS has released the final version of Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, which will be used by individuals and trusts and estates to compute the new 3.8% tax and then to report the tax on Forms
Minimum essential coverage and shared-responsibility penalty rules provide transitional relief for individuals
Proposed regulations issued by the IRS on Friday answer a number of questions regarding the Sec. 5000A “individual mandate” under 2010’s health care reform legislation, including the definition of those government programs that do not provide minimum essential health care coverage (REG-141036-13). They also provide a hardship exemption for individuals
Guidance issued on accounting method changes under repair regs.
The IRS on Friday issued long-awaited guidance on accounting method changes under the so-called repair regulations, which govern the treatment of expenditures incurred in acquiring, producing, or improving tangible assets (Rev. Proc. 2014-16). Several sections of the repair regulations require taxpayers to secure the IRS’s consent before changing to an
District court says premium tax credits are available in federal health care exchanges
In a decision that aids the implementation of a key provision of 2010’s health care reform legislation, the federal district court for the District of Columbia held that the Sec. 36B premium tax credit is available to taxpayers who purchase health insurance through the 34 state health care exchanges that
Partnership basis rules proposed
The IRS on Wednesday issued proposed regulations providing guidance on the application of Sec. 704(c)(1)(C) added by the American Jobs Creation Act of 2004, P.L. 108-357 (AJCA), and the amendments to the mandatory basis adjustment rules of Sec. 743 in the AJCA. The proposed regulations would also conform the regulations
Swiss court stops handover of tax information to U.S.
A Swiss court has prevented the handover of information on U.S. account holders to the IRS by the Julius Baer Group Ltd., a Swiss bank (A v. Federal Tax Administration, A-5390/2013 (Fed. Admin. Ct. 1/6/14)). The IRS requested information from the bank on its customers who are U.S. citizens based
New procedures for reinstatement of tax-exempt status are introduced
Tax-exempt organizations that have had their tax-exempt status automatically revoked because they failed to file required annual returns for three consecutive years have new procedures for getting their exempt status reinstated, under guidance issued by the IRS on Thursday (Rev. Proc. 2014-11). Earlier guidance providing methods for reinstating exempt status
Tax Court allows discount of gift value for assumption of estate taxes
The Tax Court held that a gift’s fair market value (FMV) may be determined with reference to the recipient’s assumption of the potential Sec. 2035(b) estate tax liability, abandoning its precedent from McCord, 120 T.C. 358 (2003). Jean Steinberg, who was 89, entered into a binding agreement with her four
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