On Wednesday, the U.S. Supreme Court affirmed the Fourth Circuit’s decision in Home Concrete & Supply, LLC, which had ruled that the extended six-year statute of limitation under Sec. 6501(e)(1)(A), which applies when a taxpayer “omits from gross income an amount properly includible” in excess of 25% of gross income
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Tax
Taxpayers can deduct certain local lodging expenses under proposed rules
The IRS issued proposed regulations on Tuesday that permit employees to treat certain expenses paid or incurred for local lodging as deductible business expenses (REG-137589-07). Under Sec. 262(a), living expenses paid or incurred when not traveling away from home are considered nondeductible personal expenses. However, in certain circumstances, the proposed
Federal Circuit dismisses refund suit based on all-zero returns
A married couple who filed tax returns listing all income and tax due as “zero” were denied refunds in a decision by the U.S. Court of Appeals for the Federal Circuit (Waltner, No. 10-CV-225 (Fed. Cir. 4/19/12)). The court dismissed the couple’s tax refund suit for lack of jurisdiction, holding
Rules for reporting interest on deposits paid to foreign taxpayers are finalized
The IRS issued final regulations under Sec. 6049 outlining the rules requiring U.S. financial institutions to report interest payments to certain nonresident alien individuals of $10 or more per year paid after Dec. 31, 2012 (T.D. 9584). The IRS explained that the new rules are part of the process of
Proposed regs. would require E&P to be allocated to acquiring corporations in corporate reorganizations
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
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
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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
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Current developments in taxation of individuals: Part 2
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