Two district courts reached opposite conclusions on whether stock received by policyholders in connection with demutualization of insurance companies had a cost basis greater than zero. They agreed, however, that the “open transaction doctrine” did not apply. The first case is Dorrance, in the District of Arizona. The second is
Advertisement
TOPICS
Tax
Planning for “play or pay”
Near the end of 2012, the IRS issued proposed regulations (REG-138006-12) on the employer shared-responsibility provisions under Sec. 4980H enacted by the Patient Protection and Affordable Care Act, P.L. 111-148 (PPACA), sometimes referred to as the “play-or-pay” rules. The proposed regulations address many questions that prior IRS guidance had not
Potential income tax benefits for families with special needs children
As the number of children diagnosed with autism, Asperger’s syndrome, and other neurological disorders continues to skyrocket, the disruption it causes in the lives of all those concerned is unmistakable—as are the costs of providing care for the special needs child. As reported by the Autism and Developmental Disabilities Monitoring
Image rights create royalty payments
The Tax Court held that fees received by foreign professional golfer Sergio Garcia under an endorsement agreement should be treated as 65% royalty compensation and 35% personal service compensation, based on the facts and circumstances of the agreement. The court also held that Garcia’s U.S. image rights payments were royalties
Proposed Statement on Standards in Personal Financial Planning
This spring, following a two-year drafting process involving practitioners from across the AICPA, the AICPA Personal Financial Planning Executive Committee issued an exposure draft for public comment on a Proposed Statement on Standards in Personal Financial Planning Practice. The proposed statement addresses the responsibilities of AICPA members when providing personal
IRS extends suspension of examinations of “repair reg.” issues
The IRS updated its Large Business & Industry (LB&I) directive on the repair vs. capitalization issue that extends the suspension of field examinations (LB&I-04-0313-001) in keeping with its previous postponement of the effective date of the tangible property temporary regulations (T.D. 9564) (in amendments published Dec. 17, 2012) to tax
CPA’s nonfiling ruled inadmissible for abusive shelter promotion penalty
Evidence of a CPA’s failure to file and pay his own taxes was not properly admissible in determining his penalty for promoting an abusive tax shelter, the Fourth Circuit held. The appellate court thus vacated a $2.6 million penalty and liability verdict against CPA Robert Nagy and reversed and remanded
Automated substitutes for return drop by half
After increasing eightfold from fiscal 2002 to 2011, the number of returns generated by the IRS’s Automated Substitute for Return (ASFR) program fell by half in fiscal 2012, and tax assessments under the program decreased by 54% (see related graphic, “Automated Substitutes for Return Decline”). The ASFR program uses information
Global R&D incentives compared
The American Taxpayer Relief Act of 2012, P.L. 112-240, extended the research and development (R&D) credit under Sec. 41 for two years to cover qualified research expenditures paid or incurred on or before Dec. 31, 2013. Though U.S. business taxpayers welcomed the extension of this tax credit, the benefit is
Taxpayer can contest trust fund penalty where son tossed Letter 1153 into basement
A taxpayer successfully challenged the IRS’s filing of a notice of federal tax lien against him for a trust fund recovery penalty on the basis that he did not have an opportunity to contest the liability on which the assessment underlying the lien was based. The taxpayer argued he had
Supreme Court declines to hear Historic Boardwalk rehabilitation credit case
The U.S. Supreme Court on May 28 declined to hear an appeal of the Third Circuit’s decision denying historic rehabilitation credits for a state authority’s partnership with Pitney Bowes Inc. to redevelop the Atlantic City, N.J., historic Boardwalk Hall (Historic Boardwalk Hall, LLC, No. 11-1832 (3d Cir. 8/27/12), cert. denied,
Switzerland proposes allowing banks to resolve U.S. tax evasion cases
The government of Switzerland would allow its banks to disclose data about account holders to the U.S. Department of Justice, circumventing its own bank secrecy law, under a bill that will be introduced in the Swiss parliament. The bill aims to create a legal basis under Swiss law to resolve
Supreme Court resolves circuit split on creditability of U.K. tax
In a unanimous decision, the U.S. Supreme Court held that the United Kingdom’s windfall profits tax imposed on newly privatized businesses was creditable against U.S. taxes under Sec. 901 (PPL Corp., No.12-43 (U.S. 5/20/13)). In doing so, the Court reversed the Third Circuit’s decision (665 F.3d 60 (3d Cir. 2011))
IRS sends letters to taxpayers as it tries to close out inventory of Form 3520 processing issues
The IRS has recently notified the AICPA’s Foreign Trust Task Force that the IRS plans over the next few months to send out letters to taxpayers who filed Form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, or Form 3520-A, Annual Information Return
President names new acting IRS commissioner
President Barack Obama on Thursday named Daniel Werfel acting commissioner of the IRS. Werfel is currently the controller and acting deputy director of the Office of Management and Budget, a job that has included overseeing federal spending cuts mandated by the sequester. Werfel’s appointment as acting commissioner will take effect
IRS gives details of operations on furlough dates
To help taxpayers plan for the upcoming furlough dates on which the IRS will be closed (see “IRS Decides to Shut Down Completely on Furlough Dates”), the IRS issued a news release detailing how the shutdown days, the first of which is May 24, will affect operations (IR-2013-51). The other
Acting IRS commissioner out in tea party scandal
Speaking from the East Room of the White House on Wednesday evening, President Barack Obama announced the departure of Acting IRS Commissioner Steven Miller as a result of the ongoing scandal surrounding the IRS’s controversial methods for determining which organizations applying for Sec. 501(c)(4) status warranted further review. “We’re going
Justice Department opens criminal probe of IRS treatment of tea party groups
At a press conference in Washington on Tuesday, Attorney General Eric Holder announced that the Justice Department has opened a criminal probe of the IRS and its reported scrutiny of tax-exemption requests by groups with the words “tea party” or “patriot” in their names. “The FBI is coordinating with the
Final regulations for Sec. 336(e) elections are issued
On Monday, the IRS issued final regulations on the rules that apply when an election under Sec. 336(e) is made to treat the sale, exchange, or distribution of at least 80% of the voting power and value of a corporation’s stock (target) as a sale of all its underlying assets,
IRS will not seek taxpayer emails without a warrant
The IRS on Wednesday announced a new policy regarding how it will request emails from internet service providers (ISPs) (IRS Policy Statement 4-120). Under the new policy, the IRS will obtain a search warrant “in all cases when seeking … the content of email communications stored by the ISP.” In
Features
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
