The IRS issued final regulations on sales-based royalties and vendor allowance rules under Sec. 263A and Sec. 471. The rules, which adopt the proposed regulations (REG-149335-08) issued in 2011 with some changes in response to comments, apply to tax years ending on or after Jan. 13, 2014. The sales-based royalty
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Partnership basis rules proposed
The IRS issued proposed regulations providing guidance on the application of Sec. 704(c)(1)(C) added by the American Jobs Creation Act of 2004 (AJCA), P.L. 108-357, and the amendments to the mandatory basis adjustment rules of Sec. 743 in the AJCA. The proposed regulations would also conform the regulations to account
Tax Court addresses “placed in service” date
The Tax Court recently held that an operational aircraft delivered and titled to a taxpayer late in December 2003 was not “placed in service” in 2003. Accordingly, the court rejected the taxpayer’s claim of a bonus depreciation allowance for 2003. The court’s decision hinged on whether the aircraft was available
IRS changes position on foster care payments despite court win
The U.S. District Court for the Southern District of Ohio held that payments received by a legal guardian to care for her handicapped adult son could not be excluded from income as qualified foster care payments under Sec. 131. According to the court, a foster care relationship did not exist
Trust materially participated in real estate business
In a case of first impression, the Tax Court held that a trust materially participated in its rental real estate business and therefore could deduct the losses it incurred in conducting those activities in 2005 and 2006 as losses from nonpassive activities (Frank Aragona Trust, 142 T.C. No. 9 (2014)).
Final rules issued on employment tax responsibilities of designated payer agents
Final regulations issued on Friday contain rules on the liability for employment taxes when an employer designates an agent under a “service agreement” to pay its employees and to satisfy its employment tax obligations instead of following normal IRS procedures to designate an agent (T.D. 9662). The new rules affect
Abuse victims who file separate returns are eligible for premium tax credit
Victims of domestic violence who are afraid or unable to contact their spouse to file a joint return may be able to claim the Sec. 36B premium tax credit using procedures announced by the IRS (Notice 2104-23). The new procedures, which apply to 2014 tax returns, will allow eligible taxpayers
Gambler’s luck turns in second trip to Tax Court
A taxpayer who consistently lost money playing the slots at two casinos in California was found not to have an actual and honest profit objective and could not deduct her gambling losses on Schedule C, Profit or Loss From Business (Sole Proprietor) (Chow, T.C. Memo. 2014-49). Because losses from gambling
New guidance clarifies tax treatment of bitcoin and other virtual currencies
While bitcoin and other virtual currencies are becoming more popular and have garnered a lot of attention in the media, the tax rules that apply to them have been unclear, including the basic question of whether they are treated as a currency or as property. The IRS on Tuesday issued
The Supreme Court rules severance payments are subject to FICA
In a decision involving over $1 million in FICA taxes paid, the Supreme Court on Tuesday held in an 8–0 decision that severance payments to terminated employees are taxable wages for FICA tax purposes (Quality Stores, Inc., No. 12-1408 (U.S. 3/25/14)). Justice Anthony Kennedy’s opinion overturned a decision of the
IRS clarifies: Electronic signatures permitted for Form 8879
Correcting an oversight, the IRS on Thursday updated the online version of Publication 1345, Handbook for Authorized IRS e-File Providers of Individual Income Tax Returns (rev. 3/20/14), to clarify that electronic signatures are permitted for Form 8879, IRS e-File Signature Authorization, as well as Form 8878, IRS e-file Signature Authorization
IRA rollover guidance issued: IRS will follow the Tax Court
To settle the question of whether the limitation on rolling over one IRA per year under Sec. 408(d)(3)(B) applies to taxpayers on an aggregate basis or on an IRA-by-IRA basis, the IRS announced it will follow the Tax Court’s recent decision in Bobrow, T.C. Memo. 2014-21, applying the rule on
IRS expands use of electronic signatures
With the updated version of IRS Publication 1345, Handbook for Authorized IRS e-File Providers of Individual Income Tax Returns (rev. 3/11/14), the IRS provides new methods for taxpayers to electronically sign Form 8878, IRS e-file Signature Authorization for Form 4868 and Form 2350, the e-file signature authorization form. Taxpayers can
New procedure permits automatic recognition of consolidated return filing status
The IRS announced that it will permit an affiliated group of corporations that did not file the required Form 1122, Authorization and Consent of Subsidiary Corporation to Be Included in a Consolidated Income Tax Return, for all of its subsidiaries, to be treated as if its subsidiaries had filed Form
Simplified employer health care coverage reporting announced
On Wednesday, the IRS released final regulations to implement simplified reporting requirements under the Patient Protection and Affordable Care Act, P.L. 111-148, which requires employers to report health care coverage information under Secs. 6055 and 6056 starting in 2015 (T.D. 9660 and T.D. 9661). Also Wednesday, the Department of Health
District court rules “parsonage allowance” unconstitutional
A U.S. district court in Wisconsin struck down the long-standing exclusion from gross income under Sec. 107(2) of a housing allowance paid to ministers as violating the Establishment Clause of the First Amendment. However, the court stayed its injunction of enforcement of Sec. 107(2) pending appeal of the case. The
Domestic production activities deduction disallowed
The Tax Court disallowed a corporate taxpayer’s domestic production activities deduction because, it determined, the taxpayer did not possess the burdens and benefits of ownership of the property produced. The court developed a nine-factor test of the burdens and benefits of ownership that it applied to the facts and circumstances
Take steps to meet the EITC due-diligence requirements
The IRS is scrutinizing returns that claim the earned income tax credit (EITC) and paying attention to return preparers who it suspects are filing inaccurate EITC claims. New due-diligence rules require practitioners to document more information and report it to the IRS with every return filed.
Safe harbor offered for allocating rehab credits
In the wake of an appellate decision denying allocations of Sec. 47 credits to investor partners in a historic rehabilitation project, the IRS issued guidance including a safe harbor for such allocations. The guidance, Rev. Proc. 2014-12, had been anticipated after the IRS won reversal of a Tax Court opinion
Religious exemptions from the health care individual mandate
The January 2014 Tax Practice Corner, “Calculating the Health Care Individual Mandate Penalty,” (page 54) outlined how the penalty under Sec. 5000A, enacted by the Patient Protection and Affordable Care Act of 2010 (PPACA), P.L. 111-148, is calculated. The column also listed individuals to whom the mandate does not apply,
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From The Tax Adviser
March 31, 2026
Current developments in taxation of individuals: Part 1
March 31, 2026
Current Developments in Taxation of Individuals: Part 1
March 6, 2026
