The IRS has proposed amending existing regulations under Sec. 312 (effect on earnings and profits (E&P) of corporate distributions) and Sec. 381 (carryovers of tax attributes in certain corporate acquisitions) to clarify that in certain corporate reorganizations, the “acquiring corporation” succeeds to the full E&P account of the transferor corporation
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IRS finalizes regulations on Sec. 642(c) ordering rules for estates and trusts
The IRS issued final regulations (T.D. 9582) requiring that a provision in a trust, will, or local law that specifically indicates the source out of which amounts are to be paid, permanently set aside, or used for a charitable purpose must have an independent economic effect aside from income tax
IRS creates priority phone service for correspondence audits
The IRS on April 2 launched a new toll-free phone service for tax professionals to use when responding to correspondence examination telephone calls or letters. The IRS calls the new service the Practitioner Priority Service (PPS). Practitioners can call a toll-free number (866-860-4259) and select the correspondence examination option (option
Colorado’s “Amazon” law requiring out-of-state retailers to report sales held to be unconstitutional
The U.S. District Court for the District of Colorado has held that the Colorado law requiring out-of state retailers to report information about customers’ purchases to each customer and to the Colorado Department of Revenue (DOR) violated the Commerce Clause of the United States Constitution (Direct Marketing Ass’n v. Huber,
TIGTA recommends improvements to IRS cybersecurity system
The Treasury Inspector General for Tax Administration (TIGTA) reports that the IRS’s computer security response center is performing effectively, but further improvement is needed (TIGTA Rep’t No. 2012-20-019 (3/12/12)). Part of TIGTA’s mandate is to review the adequacy and security of IRS technology. From March through September 2011, TIGTA performed
Medical Center’s FICA refund claim dismissed as untimely
The First Circuit Court of Appeals dismissed a suit for refund of Federal Insurance Contributions Act (FICA) taxes Maine Medical Center mistakenly paid for its medical residents in the 2001 tax year, upholding a lower court determination that Maine Medical’s discovery requests were not warranted and that the information it
IRS launches third offshore voluntary disclosure program
With more than $4.4 billion collected in its 2009 and 2011 voluntary disclosure initiatives, the IRS in January announced its third program designed to encourage taxpayers with undisclosed offshore accounts to disclose them and fulfill related tax obligations (IR-2012-5). The new program, unlike the previous initiatives, has no deadline to
IRS wins second appeal of TIFD III-E
The Second Circuit Court of Appeals for a second time reversed the judgment of a district court against the IRS in the long-running Castle Harbour/TIFD III-E case involving the characterization of two foreign banks’ interests in a partnership. The Second Circuit again held that the foreign banks’ interests in the
Don’t neglect to elect, part III
As a follow-up to the June 2010 and January 2011 Tax Practice Corner columns “Don’t Neglect to Elect” and “Don’t Neglect to Elect, Part II,” here are elections available to estates, partnerships and individuals. ESTATES Estate tax portability election. As a result of the Tax Relief, Unemployment Insurance Reauthorization, and Job
Domicile and residency issues of non-U.S. taxpayers
If a donor or decedent is a U.S. citizen or domiciled in the United States, all gifts made and assets owned worldwide at death are subject to U.S. transfer tax in the absence of a relevant gift or estate tax treaty. In addition, even if a taxpayer has no connection
Innocent spouse is entitled to refund
The Tax Court recently found that a taxpayer who petitioned for relief under Sec. 6015(f) was not precluded from receiving a refund of money levied from a joint bank account. The court ruled that relevant Massachusetts law gave the innocent spouse a 50% ownership interest in the account. Thus, under
Better odds for pro gamblers’ business deductions
Recently, professional gamblers’ luck prevailed as the Tax Court changed directions on the deductibility of nonwagering business expenses. The Tax Court in Mayo (136 T.C. 81 (2011)) partially overruled its precedent, Offutt (16 T.C. 1214 (1951)). Offutt allowed the deduction of wagering losses only to the extent of winnings and
Homebuyer credit denied where former home still in use
A house that a married couple continued to use while trying to sell it was their principal residence during that period; therefore, they did not meet the timing requirement to qualify for an $8,000 first-time homebuyer credit when they purchased a new house, the Tax Court held. Francis and Maureen
More-generous innocent spouse rules proposed
In response to court decisions and the IRS’ claim that its experience applying equitable relief has given it new insight, the IRS issued a proposed revenue procedure changing the way it will treat requests for equitable innocent spouse relief under Secs. 66(c) and 6015(f) (Notice 2012-8). The three most significant
Side effects of cost segregation
Increased current cash flows and net-present-value savings from accelerated tax depreciation resulting from cost-segregation studies have been discussed in the JofA and other professional literature. But the initial cost-segregation decision can determine later tax side effects, both positive and negative. This article explores some of the tax benefits and drawbacks
Uncertain tax position documents not protected
The U.S. Court of Federal Claims held that a taxpayer had to produce documents requested by the IRS containing information about its tax reserve for uncertain tax positions reported in its financial statements and other information concerning tax advice. According to the court, since the taxpayer had relied on the
Prop. regs., rulings facilitate “longevity annuities”
The IRS issued proposed rules (REG-115809-11) that would permit IRA participants to enter into contracts for annuities that begin at an advanced age (often called longevity annuities), using a certain amount of their account balances without having these amounts count for calculating required minimum distributions from the IRAs under Regs.
Some tax-exempt organizations are receiving erroneous penalty notices; relief available
Practitioners are reporting that some tax-exempt organizations have received penalty notices from the IRS for late filing of Forms 990, 990-EZ, 990-PF, and 1120-POL, even though they received an automatic extension and filed during March, as instructed by the IRS. The IRS’s e-filing computer system was not available for filing
Court upholds IRS’s denial of college insurance fund’s application for tax exemption
An association of tax-exempt secondary schools and universities in Florida formed to pool insurance risk and obtain insurance for its members did not qualify for federal tax-exempt status because it fell under the prohibition against exemption for commercial-type of insurance companies in Sec. 501(m) (Florida Indep. Colleges & Universities Risk
IRS and OECD separately address transfer pricing issues
On Tuesday, the IRS announced a reorganization of its advance pricing agreement (APA), mutual agreement, and competent authority programs into one new program (IR-2012-38). All three programs dealt with transfer pricing rules, which determine how international transactions within a multinational company must be priced to ensure each country receives its
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FROM THIS MONTH'S ISSUE
Flip out with the latest Tech Q&A
The September Technology Q&A column shows how to create dynamic to-do lists with Excel's checkboxes and also how to set up multifactor authentication texts that don't rely on phones. Flip through both items and view a video walkthrough in our digital format.
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