Lindsey Modlich, J.D., LL.M., Director of Tax Controversy, Source Advisors, discusses the effects of the Little Sandy Coal Company, Inc. v. Commissioner decison in which the court held that the taxpayer failed the “substantially all” and process-of-experimentation tests of Sec. 41, denying them the federal income tax credit for increasing research activities.
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Tax
Petition was 11 seconds too late, Tax Court holds
The statutory period to electronically file a petition may be extended for system outages or general inaccessibility but not for errors or problems unique to the filer, the court explains.
IRS is time-barred from assessing gift tax
The Tax Court holds the taxpayer substantially complied with adequate-disclosure requirements via returns and documents submitted with an OVDP offer.
Guidance issued on consequences of certain state payments after 2022
The IRS issued guidance on the treatment of refunds of state or local taxes and certain other payments made by states made to individuals in 2023 and future years, including spillover payments made in 2023 under 2022 programs covered by IRS News Release IR-2023-23.
Businesses must e-file Form 8300 for $10,000+ cash payments in 2024
The new e-filing requirement, beginning in 2024, applies to businesses mandated to e-file certain other information returns, such as Forms 1099 series and Forms W-2.
Prevailing wage and apprenticeship requirements guidance issued
The IRS issued proposed regulations related to the increased tax credit or deduction amounts for clean energy facilities and projects if taxpayers satisfy certain prevailing wage and registered apprenticeship requirements.
Two-year reprieve granted from Roth catch-up requirement
Employees who participate in a Sec. 401(k) or similar retirement plan and whose prior-year Social Security wages were over $145,000 have been given a two-year reprieve from the new requirement that any catch-up contributions they make to the plan must be designated as after-tax Roth IRA contributions.
Prop. regs. require brokers to report digital asset sales and exchanges
Long-awaited proposed regulations, part of a broader effort by Treasury to close the tax gap and address tax evasion risks posed by digital assets, require brokers to report sales and exchanges of digital assets by customers.
Tax pros give mixed reviews to wait times, service on PPS line
Wait times increased about the same time as the IRS ended program that thwarted line-jumping services, say tax practitioners, who also questioned the training of new hires.
Guidance provided for electronic filing exemptions and waivers
In a notice issued Friday, the IRS provided guidance to persons filing certain returns on how to seek religious exemptions, hardship waivers, and other administrative exemptions provided by the IRS, from electronic filing requirements.
Location of millions of tax records uncertain, TIGTA says in IRS critique
A potential fraud issue exists because the IRS does not know the location of microfilm cartridges holding millions of business and individual tax records, a new TIGTA report shows.
Update on states moving ahead with PTETs
States continue to move ahead with implementing new passthrough entity taxes as a workaround to the $10,000 cap on the federal deduction of state and local taxes.
IRS issues guidance on requirements for home energy audits
The IRS provides requirements for home energy audits for taxpayers that want to claim the energy efficient home improvement credit, which taxpayers can rely on until proposed regulations are issued.
Proposed regulations update, revise consolidated return regulations
New proposed regulations would update the regulations to reflect 50-plus years of statutory changes, remove regulations and certain transition rules that no longer have practical application, and eliminate obsolete or incorrect terms and cross-references.
Prop. regs. identify monetized installment sales as listed transactions
The IRS disagrees with court decisions requiring notice-and-comment rulemaking to identify listed transactions, but said it is identifying monetized installment sales transactions as listed transactions in proposed regulations “to avoid confusion and ensure consistent enforcement of the tax laws throughout the nation to prevent disruption of the IRS’s ongoing efforts to identify and examine abusive tax shelters.”
2024 filing season could be paperless, IRS says
Treasury and the IRS announced Wednesday that by filing season 2024, taxpayers will be able to go paperless if they choose to do so. And by filing season 2025, the IRS will digitize all paper-filed returns when they are received.
Proof-of-stake validation rewards are income in tax year received
The IRS ruled that cash-method taxpayers who stake cryptocurrency native to a proof-of-stake blockchain and receive cryptocurrency validation rewards must include the fair market value of the rewards in gross income in the year they are received.
2023 tax software survey
CPAs assess how their return preparation products performed.
Line items
Penalty for underpayment of estimated corporate AMT waived for 2023 … National taxpayer advocate: A paperless IRS is possible … IRS revises actuarial tables to account for most recent mortality data … Update on states moving ahead with PTETs … A pandemic-era tax break that remains rife with abuse — the ERC
Drug patent litigation expenditures are held deductible
The origin-of-the-claim test in Gilmore controls, the Court of Federal Claims concludes.
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