Rev. Proc. 2013-19, issued Wednesday, delays the date that taxpayer consents to disclose and consents to use tax return information must contain the mandatory language recently issued in Rev. Proc. 2013-14. The original effective date of Jan. 14, 2013, has been moved back to Jan. 1, 2014. Taxpayer consents to
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Long-awaited final regs. issued on noncompensatory partnership options
On Monday, the IRS issued regulations (T.D. 9612) finalizing proposed regulations (REG-103580-02), which were issued in January 2003, on the treatment of certain call options, warrants, convertible debt, and convertible equity that are not issued in connection with the performance of services, i.e., noncompensatory partnership options. The final regulations apply
FAF to review standard on accounting for income taxes
The Financial Accounting Foundation (FAF) has chosen a 1992 standard focusing on accounting for income taxes as the subject of its next post-implementation review. FASB Statement No. 109, Accounting for Income Taxes, establishes standards for reporting the effects of income taxes in an organization’s financial statements. The standard is mostly
Court upholds injunction; IRS reopens PTIN system
The IRS announced on its Return Preparer Office Facebook page on Saturday that it has reopened its preparer tax identification number (PTIN) system for new applications and renewals. The announcement follows a clarification from the district court that struck down the IRS’s return preparer registration program, saying that the injunction
Telecommunication tower leases not subject to self-rental passive income rule
The Tax Court determined that a taxpayer’s rental income from the lease of land and telecommunication towers to his wholly owned S corporation was not subject to the “self-rental rule” of Regs. Sec. 1.469-2(f)(6). Accordingly, the court held, the IRS’s recharacterization of the income as nonpassive was inappropriate. The court,
Don’t neglect to elect, part 4
As a fourth installment in an occasional series, here are additional tax elections for estates, partnerships, and individuals. ESTATES Election to treat a revocable trust as part of an estate. Sec. 645 allows for an election to treat a qualified revocable trust (QRT) as part of a decedent’s estate for
Estate’s settlement payments not deductible
The Tax Court recently held that an estate’s settlement payment to one of its beneficiaries was not deductible since the payment lacked adequate consideration and was consistent with the decedent’s wishes expressed in her will. When computing its taxable estate, an estate can deduct a claim against it that represents
Effective date of tangible property regs. delayed
The IRS delayed the mandatory effective date of temporary regulations it issued in December 2011 governing whether tangible property expenses can be deducted or have to be capitalized (T.D. 9564). The temporary regulations originally were to apply to tax years beginning on or after Jan. 1, 2012. In response to
Tax cliff averted
Pulling back from the “fiscal cliff” at the 13th hour, Congress on New Year’s Day preserved most of the George W. Bush-era tax cuts and extended many other lapsed tax provisions. The new law brings a multitude of changes affecting both 2012 returns and, for the new year, tax planning,
Stopping tax identity theft: Practical advice for CPAs and clients
Tax return and other tax-related identity theft is a growing problem that CPAs can help their clients with—both in taking preventive actions and in correcting problems after an identity thief has struck. Tax return identity theft occurs when someone uses a taxpayer’s personal information, such as name and Social Security
Ninth Circuit agrees farming activity is partnership
The Ninth Circuit agreed with the Tax Court that a father-son farming and logging operation was a partnership for federal income tax purposes and that the father’s deduction of the bulk of the activity’s expenses on his individual return was not acceptable. William and Randal Holdner operated a farming activity,
Comments sought on COD reporting
In Notice 2012-65, the IRS asked for public comments on whether it should amend existing Regs. Secs. 1.6050P-1(b)(2)(i)(H) and (iv), which require applicable financial entities to issue Forms 1099-C reporting cancellation of debt (COD) income when a 36-month nonpayment testing period has expired. Under Sec. 6050P and its regulations, COD
IRS won’t follow Wandry
In Action on Decision 2012-004, the IRS stated it will not acquiesce to the Tax Court’s decision in Wandry, T.C. Memo. 2012-88, in which the court accepted a taxpayer’s use of a defined value formula clause. In Wandry, decided in March 2012, the taxpayers, Joanne and Albert Wandry, executed assignments and
Grouping passive activities
One technique for converting otherwise passive activities to nonpassive is grouping them and treating them collectively as a single activity, thereby combining the participation hours and improving a taxpayer’s ability to achieve the necessary hours for material participation. Regs. Sec. 1.469-4 provides general rules and limitations for grouping activities and
Individual health care mandate rules under Sec. 5000A proposed
The IRS released proposed rules for the Sec. 5000A shared-responsibility payment—the penalty or tax imposed on individual taxpayers who do not obtain minimum essential health care coverage beginning in 2014 (the controversial “individual mandate”) (REG-148500-12). The individual mandate was upheld by the Supreme Court last summer as a permissible exercise
Changes to rules on failure to file gain recognition agreements proposed
The IRS has issued proposed regulations to update the rules that apply to U.S. taxpayers that fail to file gain recognition agreements (GRAs) when they transfer certain property to foreign corporations in nonrecognition transactions (REG-140649-11). The proposed rules would change the standards under which transferors are required to recognize gain
IRS further delays acceptance of returns claiming Form 8863 education credits
On Monday, two days before the delayed Jan. 30 start of the 2013 filing season, the IRS announced a further delay in processing returns that contain Form 8863, Education Credits, which must be filed by people claiming the American opportunity and the lifetime learning tax credits (IR-2013-10). During testing, the
Proposed regs. would govern employment tax liability of third-party agents
On Friday, the IRS released proposed regulations under Sec. 3504 (acts to be performed by agents) that would govern the liability for employment taxes when an employer designates an agent under a “service agreement” to pay its employees and to satisfy all employment tax obligations (REG-102966-10). Such agents include payroll
IRS files motion to suspend injunction in return preparer regulation case
The IRS on Wednesday filed a motion in federal court to suspend an injunction that forbids it from continuing with its registered tax return preparer program, pending appeal of the case (Motion to Suspend Injunction Pending Appeal, D.D.C. 1/23/13). The IRS also indicated that it intends to file a Notice of
Updated forms, procedures issued for plan sponsors in IRS’s Voluntary Correction Program
On Thursday, the IRS announced that it was issuing updated procedures and forms for sponsors of retirement plans that intended to qualify under Secs. 401(a), 403(a), 403(b), 408(k), or 408(p), but that have not met these requirements for a period of time. The procedures govern the Employee Plans Compliance Resolution
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