On Thursday, the Tax Court upheld Regs. Sec. 1.152(a)(1), which requires that children be U.S. citizens at some time during the calendar year for which the children are claimed as dependents, as a valid interpretation of Sec. 152(b)(3)(A) (Carlebach, 139 T.C. No. 1 (2012)). The taxpayers and their six children
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American Institute of CPAs recommends changes to tangible property guidance
On July 16, 2012, the AICPA submitted a comment letter to the IRS recommending various changes and simplifications to the voluminous and complex regulations regarding the treatment of expenditures incurred in selling, acquiring, producing, or improving tangible assets (T.D. 9564 and REG-168745-03) and the revenue procedures governing the accounting method
Self-employed can deduct Medicare premiums, IRS Chief Counsel advises
Explaining a recent reversal of a long-held IRS stance, the Office of Chief Counsel advised IRS attorneys on Friday that self-employed individuals may deduct Medicare premiums from their self-employment income. Chief Counsel Advice (CCA) 201228037 clarifies an IRS position that previously has appeared only in instructions to Form 1040, U.S.
New rules aim to shut down certain outbound asset reorganizations
In Notice 2012-39, the IRS issued rules to govern certain outbound asset reorganizations involving the transfer of intangibles under Sec. 367(d) occurring on or after July 13, 2012, and that will apply instead of existing regulations (Temp. Regs. Secs. 1.367(d)-1T(c), (d), (e), and (g)). The IRS intends to issue regulations
Tax Court petition challenging a notice of deficiency suspends statute of limitation
The Eleventh Circuit overturned a Tax Court decision and held that a petition filed by taxpayers who had transferee liability for their corporation’s tax liability was a “proceeding in respect of the deficiency” under Sec. 6503(a)(1) that suspended the limitation period for assessment (Shockley, No. 11-13494 (11th Cir. 7/11/12), rev’g
Debtors’ taxes are not discharged in bankruptcy where tax return was filed late
A federal appeals court held that bankrupt debtors who filed their income tax return 17 months after their income taxes were assessed were not entitled to have those taxes discharged in the bankruptcy proceeding (In re Wogoman, No. CO-11-084 (B.A.P. 10th Cir. 7/3/12)). In doing so, the court considered what
IRS suspends repair/capitalization exams
In March, in a Large Business & Industry (LB&I) Directive (LB&I-4-0312-004), the IRS suspended current field examinations on the repair vs. capitalization issue to permit taxpayers to file accounting method changes under recently issued temporary regulations and revenue procedures. Taxpayers that are subject to the temporary regulations (T.D. 9564; see
Medical center’s FICA refund claim dismissed as untimely
The First Circuit Court of Appeals dismissed a suit for refund of 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 sought from the IRS
IRS looks into international activities
Many tax-exempt entities participate in the global economy by engaging in charitable or other exempt activities overseas and/or making foreign financial investments. These activities have drawn attention from the IRS and other federal agencies as they examine the flow of tax-exempt funds around the world. FOREIGN BANK ACCOUNTS The first
Independent contractors and the Section 530 safe harbor
In September 2011 the IRS announced a new voluntary classification settlement program (VCSP) providing partial relief from retroactive federal employment tax assessments for eligible taxpayers that agree to prospectively treat their workers, or a class or group of their workers, as employees (see “Tax Matters: IRS Offers Employee Reclassification Agreement,”
Tax Court disallows cost segregation of apartment building components
In a case exploring the extent of allowable cost segregation in depreciable rental real estate, the Tax Court held that all but a small handful of items identified by the building’s owner had to be depreciated over the life of the building. AmeriSouth, a limited partnership, bought an apartment complex
Tax planning for 2013
CPAs have an unprecedented opportunity to demonstrate their value in the following ways before the end of 2012, when the Bush-era tax cuts are set to expire, estate and gift tax exemptions are scheduled to shrink back to $1 million, and current proposals could diminish the planning advantages of grantor
Unmarried co-owners must allocate mortgage interest limits
The Tax Court held that, in calculating qualified residence interest, unmarried taxpayers must apply the debt limits for home acquisition and home equity loans to their total joint indebtedness on qualified residences rather than to each of their shares of the indebtedness. Sec. 163(h)(3)(A) permits taxpayers to deduct interest paid
New portability rules: A cure for incomplete estate planning
Many CPAs are involved in representing estates of decedents who died in 2011 and 2012. In dealing with such estates, it is important to focus on the new Code provisions allowing portability of the decedent’s unused lifetime gift and estate exclusion amount to the surviving spouse. A failure to do
Waitress’s lottery win shared with family ruled taxable gift
In Dickerson, the IRS prevailed when the Tax Court ruled that a waitress’s transfer of her winning lottery ticket to an S corporation with herself and family members as shareholders was a taxable gift. In 1999, a regular customer at a Waffle House restaurant in Alabama where Tonda Lynn Dickerson
Prop. regs. allow local lodging deduction
The IRS issued proposed regulations that permit employees to treat certain expenses paid or incurred for local lodging as deductible business expenses (REG-137589-07). Living expenses paid or incurred when not traveling away from home generally are considered nondeductible personal expenses under Sec. 262. The proposed regulations state that under certain circumstances,
Supreme Court affirms Home Concrete on overstated basis
The U.S. Supreme Court in a 5–4 decision affirmed the Fourth Circuit’s holding in Home Concrete & Supply, LLC, that a taxpayer’s overstatement of basis in property sold was not an omission from gross income for purposes of the extended six-year statute of limitation under Sec. 6501(e)(1)(A). The Supreme Court’s
Supreme Court upholds health care law
The U.S. Supreme Court on Thursday declared the mandate in Sec. 5000A, requiring U.S. citizens and legal residents to maintain minimum essential health coverage, to be a permissible exercise of Congress’s taxing powers under the Constitution (National Federation of Independent Business v. Sebelius, Sup. Ct. Dkt. No. 11-393 (U.S. 6/28/12)).
IRS releases new FAQs for Offshore Voluntary Disclosure Program, announces other rules
The IRS said Tuesday that it has collected more than $5 billion in its offshore voluntary disclosure programs (IR-2012-64), the third of which was announced in January this year. At the same time, it also released 55 questions and answers updated for the 2012 program. On Jan. 9, the IRS
Sample text for Sec. 83(b) election released by IRS
On Tuesday, the IRS released a ruling under Sec. 83(b), the election to include property received in connection with the performance of services in income in the year the property is received even if there is a substantial risk that the property will later be forfeited (Rev. Rul. 2012-29). The
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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
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