In a unanimous opinion written by Justice Sonia Sotomayor, the U.S. Supreme Court on Thursday held that funds from an inherited IRA were not retirement funds that were exempt from the debtor’s bankruptcy estate (Clark v. Rameker, No. 13-299 (U.S. 6/12/14), aff’g 714 F.3d 559 (7th Cir. 2013)). The Supreme
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Tax
New rules for providing written tax advice are finalized
The IRS issued final regulations under Circular 230, Regulations Governing Practice Before the Internal Revenue Service (31 C.F.R. Part 10), on the rules for practitioners to provide written tax advice and certain other related provisions (T.D. 9668), adopting the proposed regulations (REG-138367-06) issued in September 2012 with some modifications. The
IRS adopts “Taxpayer Bill of Rights”
The IRS on Tuesday released a “Taxpayer Bill of Rights” intended to better communicate to taxpayers their existing statutory and administrative protections. Modeled after the U.S. Constitution’s Bill of Rights and a document of the Organisation for Economic Co-operation and Development, the 10 broad provisions were announced at a news
Regs. tighten Form 5472 filing requirements
The IRS issued final (T.D. 9667) and proposed (REG-114942-14) regulations amending the rules for filing Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business. The final regulations adopt without change temporary and proposed regulations issued in 2011 eliminating
Regulations permit election of alternative simplified research credit on amended returns
On Monday, the IRS issued temporary regulations permitting taxpayers to elect the Sec. 41(c)(5) alternative simplified credit (ASC) on an amended return, as long as the taxpayer (or a member of its controlled group) did not make an election to use any other method of calculating the research credit on
The consequences of willful failure to pay payroll taxes
Employers are required to withhold payroll taxes from employees’ wages for the government’s account. This article examines what can happen when a responsible person fails to pay over these amounts.
What tax preparers need to know about digital currency
Not long ago, few people had heard of bitcoins or digital currency. Now, digital currency routinely makes the headlines. Retailers such as Overstock.com, some sellers on online marketplace Etsy.com, and many other businesses now accept bitcoins as payment. By December 2013, it had been estimated that more than 1 million
Cooperative advertising agreements and Sec. 199
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
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
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