In a big win for the IRS, the Tax Court refused to grant partial summary judgment to a partner who had conceded his tax shelter case on grounds other than valuation in an attempt to avoid the 40% gross valuation misstatement penalty under Sec. 6662(a) (AHG Investments, LLC, 140 T.C.
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Tax
Flight attendant cannot claim foreign earned income exclusion for wages earned in international airspace and U.S.
On Wednesday, the Tax Court held that a flight attendant who was a resident of Hong Kong and a U.S. citizen could not claim 100% of her wages were excludable under the Sec. 911 foreign earned income exclusion (Rogers, T.C. Memo. 2013-77). The court also upheld an accuracy-related penalty under
Employers have additional time to claim work opportunity tax credit
On Friday, the IRS announced that it was extending the time employers who want to claim the work opportunity tax credit (WOTC) have to file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit (Notice 2013-14). Form 8850 is usually due no later than 28 days after
Sec. 6708 regs. permit material advisers to request extension
On Thursday, the IRS issued proposed regulations under Sec. 6708 governing the penalty for failure of material advisers to provide lists of advisees (i.e., investors) in reportable transactions (as required by Sec. 6112), which applies if the advisers do not supply the lists to the IRS within 20 business days
Sequestration will lead to IRS cuts in services, enforcement, and tax-related payments
Now that sequestration has taken effect, the IRS has announced the following reductions in tax-related payments as a result of the Budget Control Act of 2011, P.L. 112-25. These reductions are effective beginning on March 1, 2013, until either the end of the government’s fiscal year (Sept. 30, 2013) or
All 2012 tax returns can now be filed with IRS
The IRS on Monday announced that it finished updating its processing systems and is now accepting all returns that include the 29 forms that were delayed by the late passage of the American Taxpayer Relief Act of 2012, P.L. 112-240. On Sunday, the IRS began accepting from e-file transmitters returns
The benefits of captive insurance companies
For many years, large corporations in this country have enjoyed many benefits from operating their own captive insurance companies. Most were established to provide coverage where insurance was unavailable or unreasonably priced. These insurance subsidiaries or affiliates were often domiciled offshore, especially in Bermuda or the Cayman Islands. The risk
Rules on use, disclosure of taxpayer information finalized
The IRS issued final regulations under Sec. 7216 that govern the circumstances in which tax return preparers can disclose or use certain limited tax return information (T.D. 9608). The regulations finalize with minor changes rules that were issued in 2010 as temporary and proposed regulations (T.D. 9478 and REG-131028-09). The
The basic framework of cross-border taxation
U.S. citizens are taxable on their worldwide income, with a credit or deduction for taxes paid on foreign income. The United States makes no distinction between earnings from business or investment activities within the United States and those outside its borders. Tax laws governing cross-border transactions are both arcane and
IRS regulation of tax return preparers struck down
A U.S. district court ruled that the IRS’s registered tax return preparer program exceeds its statutory authority and enjoined it from enforcing the regulations (Loving, No. 12-385 (D.D.C. 1/18/13)). In 2011 the IRS issued final regulations (T.D. 9527) making unenrolled return preparers (i.e., return preparers who are not CPAs, attorneys,
Donating and sharing paid time off
Hurricane Sandy highlighted the role of programs that allow employees to donate the value of their unused paid time off (PTO) from work or share it with fellow employees. Following are the main types of programs and their tax treatment. Standard PTO Charitable Donation Programs In this type of program,
Mandatory language for consents to disclose, use taxpayer information modified
In Rev. Proc. 2013-14, the IRS provided guidance to tax return preparers about the format and content of taxpayer consents to disclose and consents to use tax return information and modified the mandatory language required on each taxpayer consent. The guidance applies to individuals filing a return in the Form
Home Concrete decision offers limited guidance
In its Home Concrete decision last year, the Supreme Court limited the ability of Treasury, through regulations, to define the meaning of “omits from gross income” differently than the Court had previously construed. But due to plurality and concurring decisions with different analyses, only limited inferences can be made as to how
File now or file later
The U.S. District Court for the District of Massachusetts held that an estate was liable for a late filing penalty since its reliance on an accountant’s advice to file a late estate tax return rather than a timely estimated return was not reasonable cause for filing the return after the
Voluntary Classification Settlement Program expanded
The IRS significantly modified its Voluntary Classification Settlement Program (VCSP). In Announcement 2012-46, in effect until June 30, 2013, the IRS is temporarily permitting employers who have not filed Forms 1099 for their workers to participate in the program by paying a larger amount of past-due tax than under the
Proving fraud proves difficult for IRS
The Tax Court determined that the IRS was time-barred from assessing tax against the owner of several bankrupt entities for all but the last of several years at issue. Aside from the one year for which the taxpayer consented to extend the limitation period, the assessments were all outside the
Stockpiled delayed returns to be accepted on Sunday, online filing to start next week
Late Wednesday, the IRS announced that it will begin accepting from e-file transmitters stockpiled returns containing the 29 forms for which acceptance was delayed beginning on Sunday, March 3, at 7 a.m. ET (Quick Alerts for Tax Professionals (2/27/13)). E-file transmitters have been holding returns submitted with the delayed forms
Acting commissioner outlines IRS plans for sequestration
With mandatory government spending cuts looming, Acting IRS Commissioner Steven Miller sent a memo to all IRS employees on Thursday, outlining the agency’s plans in the event sequestration occurs as planned on Friday. He outlined spending cuts the IRS plans to make, including employee furloughs, but emphasized that the furloughs
2013 automobile depreciation limits released
The IRS on Monday issued the 2013 inflation adjustments to the depreciation limitations and lease inclusion amounts for certain automobiles under Sec. 280F (Rev. Proc. 2013-21). For passenger automobiles (other than trucks or vans) placed in service during calendar year 2013 to which 50% first-year bonus depreciation applies, the depreciation
IRS appeals decision striking down tax return preparer registration program
The IRS on Wednesday filed a Notice of Appeal to the United States Court of Appeals for the District of Columbia Circuit of the Jan. 18 district court decision that struck down the IRS’s registered tax return preparer program and enjoined it from enforcing the regulations (Loving, No. 1:12-cv-00385-JEB (D.D.C)
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From The Tax Adviser
March 31, 2026
Current developments in taxation of individuals: Part 1
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Current Developments in Taxation of Individuals: Part 1
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