CPA News Events Online : The Colorado Society of Certified Public Accountants

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Federal Tax Updates for the week of May 5, 2008:

1. IRS to continue its Political Activities Compliance Initiative (PACI) by issuing guidance on links to political websites – 2008 TNT 82-5, 4-28-08.
2. Proposed regulations issued on the suspension of the statute of limitations during a corporation’s proceeding to quash a designated or related summons – Reg-208199-91, 4-25-08.
3. IRS provides guidance on material advisers’ obligation to prepare and maintain lists for reportable transactions – Rev. Proc. 2008-20, 2008-20 IRB 1, 5-1-08.
4. LMSB memo provides agents with guidance on how to handle a preparer penalty case – LMSB04-0308-009, 4-13-08.
5. IRS announces relief for taxpayers with direct deposits of 2008 Economic Stimulus Payments into IRA accounts – Announcement 2008-44, 2008-20 IRB 1, 4-30-08.
5. U.S. citizens, living in Canada are subject to the AMT because of limited AMT foreign tax credits – Jamieson v. Comm., T.C. Memo 2008-118, 4-29-08.
6. Final regulations issued providing guidance on statute of limitation issues, John Doe and third-party summons – T.D. 9395, 4-29-08.
7. Fourth Circuit holds a leasein/leaseout (LILO) transaction provided no tax benefits because there was no current leasehold interest and no genuine indebtedness – BB&T Corporation v. U.S. No. 07-1177 (CA4), 4-29-08.
8. Treasury Inspector General Report says Taxpayer Advocate mishandles economic burden cases – TIGTA report 2008-10-088, 5-1-08
9. Massive return preparer penalty regulations will be issued in May – 2008 TNT 85-1, 5-1-08.
10. IRS is implementing a voluntary compliance program for exempt organizations later this year – 2008 TNT 84-6, 4-30-08.
11. TIGTA report shows IRS complying with levy guidelines - TIGTA report 2008-30-097, 4-15-08.
12. Tenth Circuit says Form 1040 complies with the Paperwork Reduction Act – Lewis v. Comm., No 07-9006, 4-29-08.

Federal Tax Updates for the week of April 28, 2008:

1. a) IRS Outlines 2008 Political Activities Compliance Project. [4/19]
b) IRS Political Activities Initiative Focuses on Web Site Links. [4/19]
c) IRS EO Division to Develop Commensurate-in-Scope Program on Charities. [4/23]
d) IRS Preparing for Compliance Checks on Colleges and Universities. [4/23] [All the above were reported in Tax Analysts’ Tax Notes Today 4/19 or 4/23]
2. Inclusion of Trust Corpus When Grantor Has Nonfiduciary Substitution Powers. (Rev. Rul. 2008-22; 2008-16 IRB 796)
3. Qualified Joint Venture Status Election Won't Result in Self-Employment Tax on Couple's Rental Income. (ILM 200816030, 4/21/2008)
4. Reporting, Withholding Requirements Not Applicable to Retail Promotion Payments. (LTR 200816027, 4/21/2008)
5. a) Supreme Court Denies Review of Murphy Decision. [See Marrita Murphy, 493 F.3d 170 (D.C. Cir. 2007) S Ct. Dkt. No. 07-802]
b) Whistleblower Organization Opposes Supreme Court's Cert. Denial. (Tax Analysts, 4/22/2008)
6. Medical and Disability Insurance Expense Deductions Denied. (Randall G. Knowles et ux. v. Commissioner, T.C. Summ. Op. 2008-40, 4/22/2008)
7. Jury Finds Cincinnati Bank Engaged in Abusive Tax Shelter Transactions. (Tax Analysts, 4/22/2008)
8. IRS Withdraws Proposed Regs on Capital Asset Exclusions for Accounts, Notes Receivable. (REG-109367-06,73 F.R. 21861, 4/23/2008)
9. Updated Guidance List Addresses Mortgage Premiums, Cellphones. (First Periodic Update of the 2007-2008 Priority Guidance Plan, Tax Analysts, 4/23/2008)
10. Court Orders Refund in Shelter Case, Finds Reg Invalid. (Carlos E. Sala et ux. v. United States, USDC Colorado, No. 1:05-cv-00636, 4/22/2008)
11. Proposed Regs Provide Guidance on Alternate Valuation Method Election for Estates (REG-112196-07) (Section 2032 -- Alternate Valuation) Doc 2008-9091; 2008 TNT 81-12
12. Wesley Snipes Sentenced to Three Years in Prison (Tax Analysts, 4/25/2008)

Federal Tax Updates for the week of April 21, 2008:

Commentary on recent federal tax developments of interest to all CPAs that answer tax questions and/or prepare returns.

Federal Tax Updates for the week of April 14, 2008:

1. Failed IRA rollover taxable, the 10% penalty applies and the IRC Sec. 6662 penalty applies - Atkin v. Comm., T.C. Memo 2008-93, 4-10-08.
2. Failure to participate in an Appeals conference eliminates the ability of a taxpayer to recover litigation costs - Covert v. Comm., T.C. Memo 2008-90, 4-8-08.
3. IRS reminds taxpayers that there are payment options for those who can’t pay their taxes in full by April 15 – IR-2008-056.
4. IRS releases Tax Gap Fact Sheet on penalty avoidance – FS-2008-19, 4-4-08.
5. Treasury Inspector General for Tax Administration (TIGTA) releases a report on interim results of the 2008 filing season – 2008-04-100, 3-31-08.
6. A noncompetition agreement isn’t a payment for goodwill and thus creates ordinary income – Muskat v. U.S., No. 1:06-cv-00030.
7. An extended due date falling on a Sunday gives the taxpayer until the next business day to timely file a return – IRS e-mail advice, 1-11-06, Tax Notes Today (TNT) 67-50, 4-7-08.
8. Reverse mortgage payments are subject to the IRS lien and levy – IRS e-mail advice, 8-30-07, TNT 67-58, 4-7-08.
9. The IRS must provide notice to a taxpayer before contacting the individual’s employer to verify wage and withholding information as part of the questionable refund program – ILM 200814008, 2-29-08.
10. TIGTA criticizes IRS policy on identity theft – 2008-40-086, 4-10-08.
11. The U.S. Justice Department launches a national crackdown on “Tax Defiers” – TNT 69-6, 4-9-08.
12. California Franchise Tax Board won’t appeal the LLC fee ruling and will shortly issue a notice about how to obtain a refund – Daily Tax Report (DTR) No. 66, p. H-1, 4-7-08.
13. S 2792 would provide relief to business travelers by permitting a deduction for a spouse’s expenses – S. 2792, 4-1-08.

Federal Tax Updates for the week of April 7, 2008:

1. IR-2007-68, Tax Analysts 2007 TNT 58-13
2. Gary Beecher, CA 9, No. 05-71894
3. Staff It Inc., CA 5, No. 06-20292
4. ILM 200712044, Tax Analysts 2007 TNT 58-16
5. LTR200712041
6. Robertson Strong & Apgar Architects PC, T.C. Summary Opinion 2007-48
7. Article by Carolyn Joy Lee, Tax Analysts 2007 TNT 59-46
8. Shirley B. Prebola, CA 2, No. 05-6953
9. Andy Biebl’s comments on Notice 2006-18, Tax Analysts 2007 TNT 60-33
10. William L. Rudkin Testamentary Trust, S Ct, No. 06-1286
11. REG-156779-06, 72 F.R. 15081
12. Affiliated Foods Inc, 128 T.C. No. 7
13. Linda D. Farmer, T.C. Memo. 2007-74
14. Brad Daniel Clarke, Sr., T.C. Summary Opinion 2007-52
15. ILM 200713023, Tax Analysts 2007 TNT 63-10
16. LTR 200713024
17. LTR 200713002

Federal Tax Updates for the week of March 31, 2008:

1. IRS Clarifies Contingent Fee Rules in September 2007 Revision to Circular 230 (Notice 2008-43, 3/26/08).
2. Chief Counsel Advice Clarifies Limitations of “Qualified Relative” Status for Taxpayers Making Use of Notice 2008-5, (CCA 200812024, 3/24/08).
3. $160,000 Payment Was a Taxable Bonus and Not a Nontaxable Gift (Larsen v. Commissioner, TC Memo 2008-73).
4. Assets in Family Limited Liability Company Interest Transferred Days Before Death Not Includable in Taxpayer’s Estate, (Mirowski v. Commissioner, TC Memo 2008-74, 2/27/08).
5. Release of Partner from Partnership Obligations in TEFRA Partnership Was a Partnership Item, Therefore Individual’s Refund Suit Was Dismissed (Bassing v. United States, Court of Federal Claims, 2008 TNT 56-16, 3/21/08).
6. Chairman of Hospital Board of Directors Held to Be A Responsible Person for Payroll Tax Purposes (Verret v. United States, 2008 TNT 57-32, US District Court, Eastern District of Texas, 3/24/08).
7. Taxpayer Denied Dependency Exemption, Head of Household Status, Child Credit and Earned Income Credit for Unrelated Children Living With Him (Marshall v. Commissioner, TC Summary 2008-31, 3/26/08).

Federal Tax Updates for the week of March 24, 2008:

1. IRS issues guidance on election for a qualified joint venture – IRS Website http://www.irs.gov/businesses/small/article/0,,id=177376,00.html, 3-15-08.
2. Douglas Schulman confirmed as IRS Commissioner by the Senate – Tax Notes Today (TNT) 52-1, 3-17-08.
3. IRS announces economic stimulus schedule and on-line calculator – IR-2008-44, 3-17-08.
4. IRS announces new employment tax page for exempt organizations – EO Update 2008-4, 3-13-08.
5. Income received from a bar was rental income, not trade or business income because the taxpayer’s name was on the liquor license because the true owner was a convicted felon – Monk v. Comm., T.C. Memo. 2008-64, 3-17-08.
6. Failure to take minimum required distributions doesn’t affect the calculation of the minimum required to be taken out in later years - LTR 200811028, 12-21-07.
7. Cancellation of debt income arises from the settlement of credit card debt - Payne Jr. et ux. v. Commissioner; T.C. Memo. 2008-66, 3-18-08.
8. IRS wants to pay $1.2 billion in unclaimed 2004 tax refunds, but time is running out – IR-2008-46, 3-19-08.
9. Losses from securities where there are misrepresentations of financial condition are not theft losses, but normal capital losses – ILM 200811016 – 6-22-07.
10. IRS to look at individual international returns as part of the 2008 National Research Program – Daily Tax Report No. 53, p. G-7.
11. 2007 IRS Data Book on tax filings, tax compliance and enforcement activity issued - http://www.irs.gov/taxstats/article/0,,id=168593,00.html, 3-14-08.

Federal Tax Updates for the week of March 17, 2008:

1. Reproposed Regs on Capitalization of Tangible Assets (REG-168745-03) (73 F.R. 12838-12867).
2. Controversy Over Performance-Based Compensation Letter Ruling - Tax Analysts, March 11, 2008.
3. Alternative LIFO Pooling Method for Resellers of Cars, Light Trucks (Rev. Proc. 2008-23; 2008-12 IRB 1).
4. State Payments to Caregivers Not Subject to Information Reporting (LTR 200810005).
5. Final Regs on Treatment of Losses From Abandoned Securities (T.D. 9386) (73 F.R. 13124-13125).
6. Safe Harbor Method of Accounting for Payroll Tax Liabilities (Rev. Proc. 2008-25; 2008-13 IRB 1).
7. Tax Division Chief Talks About Litigation Practice - Tax Analysts, March 14, 2008.
8. IRS Scam Alert Updates 'Dirty Dozen' List (IR-2008-41) March 14, 2008.
9. Supporting Organizations Guide Sheets, Explanations - Tax Analysts, March 14, 2008.

Federal Tax Updates for the week of March 10, 2008:

1. IRS Announces Nonacquiesence in Kohler Case, (Action on Decision, 3/3/08)
2. IRS Releases Guidance on Distributions from Plans Affected by Pension Protection Act of 2006 (Notice 2008-30, 3/6/08).
3. IRS Announces Limitations on Depreciation and Lease Inclusion Amounts for Autos and Trucks Subject to §280F(a) Limitations Placed in Service in 2008 (Revenue Procedure 2008-22, 3/4/08).
4. IRS Corrects Maximum Value of Vehicles for Cents per Mile Employer Valuation Method (Announcement 2008-15, 3/3/08).
5. IRS Clarifies Application of Shareholder’s Limitation on Deductions in Certain Cases for Donations of Appreciated Property by S Corporation in 2006 and 2007 (Revenue Ruling 2008-16, 3/3/08).
6. IRS Allows Entry of $1.00 of “False” Adjusted Gross Income for Filers Who Wish to Efile Under Notice 2008-28 (Revenue Procedure 2008-21, 3/3/08).
7. IRS Publishes Additional Information for Stimulus Payment Related Filings (http://www.irs.gov/irs/article/0,,id=177937,00.html , 3/5/08).
8. IRS Announces Overpayment and Underpayment Interest Rates for Second Quarter of 2008 (Revenue Ruling 2008-10, 3/4/08).
9. IRS to Automate Qualification for Reduced Fee for Installment Agreement for Some Taxpayers (IRS News Release IR-2008-033, 3/4/08).
10. Defendant in Criminal Tax Evasion Case Allowed to Argue Distribution was Return of Capital Even Though Neither Corporation Nor Defendant Intended Distribution to Be a Return of Capital (Boulware v. United States, United States Supreme Court, 2007-1 USTC ¶50,516, 3/3/08).
11. IRS Correction to Consistent Computational Error in Calculation of LIFO Was a Change in Accounting Method, Subject to §481 Adjustment (Huffman v. Commissioner, CA6, 2008 TNT 44-9, 3/5/08).
12. Medical Group Denied Charitable Contribution on Value of Goodwill (Derby v. Commissioner, TC Memo 2008-45, 2/28/08).
13. IRS Assessment of Tax Not Valid When IRS Failed to Verify 1099 Reporting After Reasonable Dispute of Validity by Taxpayer (Dyer v. Commissioner, TC Summary Opinion 2008-23, 3/3/08).

Federal Tax Updates for the week of March 3, 2008:

1. IRS provides guidance on how to request the “Economic Stimulus” payments – Notice 2008-28, 2008-10 IRB 1.
2. IRS begins mailing taxpayers a reminder to file a 2007 return to get the “Economic Stimulus” payment – IRS News Release IR 2008-28.
3. Deficit Restoration Obligation did not provide at-risk basis under IRC Sec. 465 – Hubert Enterprises, Incorporated v. Comm., T.C. Memo 2008-46.
4. IRS extends the e-file filing deadline for Form 4136 Credit for Federal Tax Paid on Fuels for eligible farmers and fishermen - IRS News Release IR 2008-24.
5. IRS permits a partnership to extend the deadline for making an IRC Sec. 754 election – LTR 200808022.
6. Small tax-exempt organizations can now get the “e-postcard” Form 990-N Electronic Notice for Tax-Exempt Organizations not Required to File Form 990- or 990-EZ on the IRS website – www.irs.gov – IRS News Release IR 2008-25.
7. The IRS didn’t abuse its discretion when it rejected an Offer-in-Compromise during the pendency of the taxpayers’ bankruptcy filing – Salazar v. Comm., T.C. Memo 2008-38.
8. Guidance on bundled trust fees for 2007 issued by the IRS in response to the Knight case – Notice 2008-32, 2008-11 IRB 1.
9. Treasury Inspector General for Tax Administration (TIGTA) soundly criticizes the IRS’ process for handling NOL carrybacks - Processing of Carryback Loss Claims Needs to Be Improved to Ensure Taxpayers Receive Accurate Refunds (Reference No. 2008-40-062).
10. The hybrid tax credit available to Honda owners begins to phase out in 2008 – IRS News Release IR 2008-23.
11. Taxpayer loses deductions for an MBA – Foster v. Comm., T.C. Summ. Op. 2008-22.
12. Distressed Asset Trust Transactions identified as a “Listed Transaction” – Notice 2008-34, 2008-12 IRB 1.
13. Crop insurance proceeds received when crops are destroyed can’t be deferred as income – Nelson v. Comm., 130 T.C. No. 5
14. IRS going after taxpayers with accounts in Liechtenstein – IRS News Release IR 2008-26.

Federal Tax Updates for the week of February 25, 2008:

Commentary on recent federal tax developments of interest to all CPAs that answer tax questions and/or prepare returns.

Federal Tax Updates for the week of February 18, 2008:

1. Economic Stimulus Package Signed and IRS Additional Guidance Provided: IRS News Release IR-2008-018, Fact Sheets FS-2008-15 and FS-2008-16, 2/13/08.
2. IRS Releases 2008 Values for Vehicles Eligible for Use of Cents per Mile Valuation Method (And Then Revises Them…): Revenue Procedure 2008-13, 2/11/08.
3. IRS Issues Final Regulations on Substitute Returns: Final Reg. § 301.6020-1, TD 9380, 2/13/08.
4. Revised Form 982 Released for Mortgage Debt Relief: News Release IR-2008-17, 2/12/08.
5. IRS Clarifies Impact of Like Kind Exchange or Involuntary Conversion Rules on GO Zone Property: Notice 2008-25, 2/11/08.
6. IRS Clarifies Methods of Electing Reduced Research Credit: IRS Advice Memorandum AM 2008-002, 2/11/08.
7. Certified Mail Receipt Given by Employee of Mail Packing Store Not Treated as Postmark Date for Filing of Tax Court Petition: Gibson v. Commissioner, CA10, 2008 TNT 31-15, 2/14/08.
8. IRS Did Not Abuse Discretion In Refusing to Withdraw Lien or Rejecting an Offer in Compromise: Scharringhausen v. Commissioner, TC Memo. 2008-26, 2/12/08.
9. Taxpayers’ Failure to File Returns and Pay Estimated Taxes Timely Constituted Material Breach of Offer in Compromise: West v. Commissioner, TC Memo 2008-30, 2/13/08.

Federal Tax Updates for the week of February 11, 2008:

1. Congress passes a stimulus package with rebates to taxpayers and enhanced depreciation and Sec. 179 provisions – Economic Stimulus Package Act of 2008
2. IRS issues rules on back-loading for Cash Balance Plan Conversions – Rev. Rul. 2008-7.
3. The Tax Court has the jurisdiction to review an IRS determ6. ination under IRC Sec. 6330 (notice and opportunity for hearing before levy) for frivolous return penalties – Callahan v. Comm., 130 T.C. No. 3.
4. Hazard insurance proceeds are subject to the IRS lien. Further, the IRS has priority over all other claims, except for attorneys’ fees for the attorneys who obtained the settlement - North Carolina Joint Underwriting Assoc. v. Dwight C. Long et al.; No. 7:06-cv-00028 (ED N.C., So. Div.)
5. IRS announces enhancements to on-line tools for taxpayers – IR-2008-14
6. IRS issues guidance on Refund Anticipation Loans and marketing other products in connection with income tax return preparation – Announcement 2008-7, 2008-5 IRB 379.
7. “Survivor” winner voted off the island, into jail. Richard Hatch’s conviction for filing false tax returns is affirmed – U.S. v. Hatch, No. 06-1902 (CA 1, 2008).
8. Why filing past-due returns is important – IRS issues a fact sheet discussing the rules – FS-2008-12.
9. Wesley Snipes convicted of failing to file tax returns, but not tax evasion – 2008 Tax Notes Today 23-3.

Federal Tax Updates for the week of February 4, 2008:

1. H.R. 5140, Would Provide Economic Stimulus Measures, Senate version likely to differ in some respects, compromise unlikely before end of February.
2. LTR 200804004 - Executive Incentive Awards Are Not Qualified Performance-Based Compensation because they could be paid upon severance without having achieved the performance conditions
3. United States v. H. Clark Ford III, CA10, No. 07-2162, Contempt for Failure to Comply With IRS Summonses
4. Peter Showler v. Commissioner, T.C. Summ. Op. 2008-8, Tax Court Upholds, in Part, IRS's Determinations on Individual's Expense Deductions
5. Rev. Proc. 2008-14; 2008-7 IRB 1, IRS Updates Accuracy-Related Penalty Guidance
6. Notice 2008-21; 2008-7 IRB 1, IRS Issues Transitional Guidance for New Pension Act Funding Rules, Benefit Restrictions. Section 430 -- Single-Employer Minimum Funding Standards; Section 436 -- Single-Employer Plans - Funding-Based Limits; Section 412 -- Minimum Funding
7. FS-2008-11, IRS Fact Sheet Outlines Eligibility Rules for Earned Income Tax Credit
8. Dwight S. Platt, T.C. Memo. 2008-17, Payments to Former Wife from Pension Distribution to Husband Included in His Income
9. Jozsef Balla, T.C. Memo. 2008-18, Sailor's Travel Expense Deductions for Mileage to Training Classes Allowed, Federal Meal and Incidental Per Diem not Applicable to Periods Aboard Ship Because Meals Furnished by Employer
10. T.D. 9378, 73 F.R. 5741-5744, Final Regs on Releases of Liens, Discharges of Property, Recognize Rights of Co-Owner
11. Estate of David B. Lease, T.C. Summ. Op. 2008-11, Auto Mileage Expense Deductions Allowed to and From Temporary Work Locations Outside “Local” Area, Unsubstantiated Meal Expenses Denied
12. Estate of Elizabeth S. Loree, USDC NJ, No. 2:07-cv-00312, 1/28/08 Estate Denied Refund; Alternate Valuation Must be Claimed on Original Return or Before Extended Due Date.

Federal Tax Updates for the week of January 28, 2008:

1. IRS Posts, then Removes, Updated Version of Circular 230 from Website, Circular 230, 1/25/08
2. Fees For Reimbursed Costs Not Required To Be Recognized As Costs Are Incurred, TAM 200803017, 1/22/08
3. Property Passing to Charitable Remainder Trust via Disclaimer Failed to Qualify for Charitable Deduction; Adjustment Clause for Other Transfer Was Respected, Christiansen Estate v. Commissioner, 130 T.C. No. 1, 1/24/08
4. Gambler’s Losses Allowed by Tax Court Despite IRS Objections to Documentation, Gagliardi v. Commissioner, TC Memo 2008-10, 1/24/08
5. White House and House Leadership’s Proposal for Economic Stimulus Package, White House Press Release, http://www.whitehouse.gov/news/releases/2008/01/20080124-4.html, 1/24/08

Federal Tax Updates for the week of January 21, 2008:

1. Supreme Court holds that the 2% floor applies to trustee fees in an IRS victory – Knight v. Comm., Sup. Ct. Dkt. No. 06-1286.
2. IRS touts its enforcement statistics in most recent release of enforcement information – Tax Notes Today (TNT) 13-10.
3. IRS revises the guidelines for issuing determination letters and rulings on exempt organizations – Rev. Proc. 2008-9.
4. The relief granted by application of the innocent spouse rules is not a tax abatement, but only administrative relief – ILM 200802030.
5. IRS permits an S corporation to make corrective distributions, thereby avoiding the creation of a second class of stock by erroneously making disproportionate distributions - LTR 200802002.
6. Four new items are added to the list of “frivolous tax positions” for purposes of the increased penalty for frivolous returns – Notice 2008-14.
7. There was no abuse of discretion where the IRS refused to compromise substantial tax obligations arising from a tax shelter - Bergevin v. Commissioner, T.C. Memo. 2008-6.

Federal Tax Updates for the week of January 14, 2008:

1. Procedures Revised for Issuing Letter Rulings (Rev. Proc. 2008-1; 2008-1 IRB 1)
2. IRS Releases Fact Sheet on Employment Taxes, Worker Classification (FS-2007-27)
3. IRS Bound by Bankruptcy Settlement; Attempt to Preserve Priority Tax Claim Invalid In re: Linda S. Sergent (United States Bankruptcy Court for the Eastern District of Kentucky)
4. Service Rules on Consequences of Disclaimed Trust Interest (LTR 200801009)
5. IRS Releases FAQs on Updated Return Information Disclosure Rules
6. IRS Provides Guidance on Allocation, Reporting of Prepaid Qualified Mortgage Insurance Premiums (Notice 2008-15; 2008-4 IRB 1)
7. National Taxpayer Advocate Reports 26 Serious Taxpayer Problems
8. Ninth Circuit Affirms Insurance Agent's Termination Payments Were Ordinary Income Charles E. Trantina et ux. v. United States (United States Court of Appeals for the Ninth Circuit)
9. Minister Liable for Self-Employment Tax David Vigil et ux. v. Commissioner (T.C. Summ. Op. 2008-6)
10. Fourth Circuit Affirms Gambler's Conviction for Filing False Returns United States v. Said Karim Hayez (United States Court of Appeals for the Fourth Circuit)
11. IRS Promotes Electronic Tax Return Filing as System Opens for Business
12. Chief Counsel Notice Cancellation the Result of IRS Controversy
13. IRS to Open Beijing Office

Federal Tax Updates for the week of January 7, 2008:

IRS Notices
1. Notice 2008-11, Clarification to Notice 2007-54 on §6694(a) Relief, 12/31/07
2. Notice 2008-12, Signing Returns Under New §6695, 12/31/07
3. Notice 2008-13, Interim Guidance on Complying with Revised §6694, 12/31/07
Final Regulations
1. TD 9375, Final Regulations on Disclosure and Use of Taxpayer Information Under §7216, 1/3/08
2. Related Revenue Procedure 2008-12 on Requirements for 1040 Series Forms Consents, 1/3/08
3. Related Notice of Proposed Rulemaking on Refund Anticipation Loans, Refund Anticipation Checks and Audit Insurance, 1/3/08
Private Letter Rulings
1. LTR 200752008, 200752009, 2007520010, 2007520011, Employees Granted Permission to Revoke §83(b) Election for Restricted Stock Issued in Error, 12/31/07
2. LTR 200752038, Late Rollover Permitted For Individual Whose Former Employer Failed to Inform Her of a Plan Loan Offset, 12/31/07
IRS Press Release
1. IR 2007-210, GM Vehicles Certified as Qualified Hybrid Vehicles, 12/28/07
Court Cases
1. Countryside Limited Partnership, TC Memo. 2008-3, 1/2/08
2. Ybarra v. Commissioner, TC Summary 2008-2, 1/3/08

Federal Tax Updates for the week of December 31, 2007:

1. Congress pays a flurry of tax related provisions late in the year–

a. Tax Increase Prevention Act of 2007
b. Mortgage Forgiveness Debt Relief Act of 2007
c. Energy Independence and Security Act of 2007
d. Prevent Taxation of Payments to Virginia Tech Victims
e. Families Act, and Technical Corrections Act of 2007

2. Court of Federal Claims finds that “Son of Boss” case has no economic substance – Jade Trading LLC v. U.S. No. 03-2164
3. IRS updates frivolous argument document – 2007 Tax Notes Today 247-10
4. IRS will assess FedEx $319 million in taxes and penalties for classifying owner-operators as independent contractors instead of employees – 2007 Tax Notes Today 249-03.

Federal Tax Updates for the week of December 17, 2007:

IRS Announcements:
1. IRS Notice 2008-1, Special Rules for Health Insurance Costs of 2-Percent Shareholder Employees
2. IRS Notice 2008-3, Mexico Single Rate Business Tax
3. Revenue Ruling 2007-72, Diagnostic Procedures
Tax Court:
1. Deese v. Commissioner, TC Memo 2007-362
2. Sita v. Commissioner, TC Memo 2007-363
3. Black v. Commissioner, TC Memo 2007-364
4. Alachew v. Commissioner, TC Memo 2007-365
5. Wanchek v. Commissioner, TC Memo 2007-366
6. Rector v. Commissioner, TC Memo 2007-367

Federal Tax Updates for the week of December 3, 2007:

Commentary on recent federal tax developments of interest to all CPAs that answer tax questions and/or prepare returns.

Federal Tax Updates for the week of December 10, 2007:

No rule or regulation prevents the IRS from abating the failure to file Form 5471 for reasonable cause – ILM 200748006 – 10-30-07
Tax return information can be disclosed by state authorities in a state tax proceeding – ILM 200748001 – 11-30-07
Transitional relief for corrections of non-qualified deferred compensation plans in operation pursuant to IRC Sec. 409A – Notice 2007-100 – 12-3-07\
Exempt status revoked for political activity – LTR 200748021 – 1-17-07
A minister’s failure to file Form 4361 or a comparable letter means the minister if subject to the Self-Employment Tax – Bennett v. Comm., T.C. Memo 2007-355, 12-3-07
The U.S. Supreme Court concludes that a railroad can challenge a state’s determination of the value of railroad property as a discriminatory determination of true market value – CSX Transportation Inc., v. Georgia State Board of Equalization – Sup. Ct. Docket 06-1287 – 12-5-07
Life insurance premiums paid by a partnership of S corporations owned by doctors are not deductible. However, the premium payments aren’t income to the doctors - V.R. DeAngelis M.D.P.C. & R.T. Domingo M.D.P.C. et al. v. Commissioner; T.C. Memo. 2007-360 – 12-5-07
IRS announces settlement with municipal bond attorneys – IR 2007-197 – 12-6-07
Gambling losses must be proven – the Tax Court won’t permit the use of the Cohan rule unless very specific circumstances are met – Hardwick v. Comm. T.C. Memo 2007-359 – 112-5-07
IRS issues Fall 2007 Statistics of Income Bulletin – IR 2007-195 – 11-20-07
Senate and House still fighting over the AMT patch – news reports

Federal Tax Updates for the week of December 3, 2007:

Commentary on recent federal tax developments of interest to all CPAs that answer tax questions and/or prepare returns.

Federal Tax Updates for the week of November 26, 2007:

IRS Rulings:
1. Revenue Ruling 2007-69
2. IRS News Release, IR-2007-190, Charitable Organization News Release
3. IRS News Release, IR-2007-191, Hybrid Vehicle Credit
4. IRS Notice 2007-47, Contribution and Benefit Base
Court Rulings:
1. Jelke v. Commissioner, CA11, 2007 TNT 223-35, 2007-2 USTC 60,552
2. Fickling v. United States, CA11, 2007 TNT 223-41
3. Pearson v. Commissioner, TC Memo 2007-341
4. Gazi v. Commissioner, TC Memo 2007-342
5. Kopty v. Commissioner, TC Memo 2007-343

Federal Tax Updates for the week of November 19, 2007:

Citations for this week:
1. AMT “Patch” with extenders passes the House, but Senate bill still in the works – Tax Notes Today (TNT) 219-1, 11-13-07.
2. IRS can’t provide significant Earned Income Tax Credit compliance without legislation or a substantial investment in enforcement – TNT 219-2 11-13-07.
3. Final Regulations on E-filing for large corporations and exempt organizations issued – TD 9363, 11-9-07.
4. IRS urges taxpayers to take advantage of the Saver’s credit - News Release IR 2007-187, 11-09-07.
5. 6th Circuit affirms Gerson case and the validity of Reg. 26.2601-1(b)(1)(i) – Gerson v. Comm., No 07a0448p.06 – 11-09-07.
6. IRS affirms that all accountable plan requirements must be met in too allowance payment plans – ILM 200745018, 11-9-07.
7. IRS decides it has the ability to assess a gross valuation misstatement penalty on an appraiser for post 5-25-07 valuations, and that the statute of limitations for such assessments is generally 3 years – AM 2007-0017, 10-31-07.
8. Birth of a second child is an unforeseen circumstance, thus permitting a reduced exclusion under IRC Sec. 121(c) – LTR 200745011, 11-9-07.
9/ IRS issues guidance on the new suspension of interest and penalty rules legislated by the Small Business and Work Opportunity Tax Act – Notice 2007-93, 11-13-07.
10. Real estate activities are passive, since the taxpayer couldn’t document the time spent providing services in the activity – Fendserson v. Comm., T.C. Summ. Op 2007-191, 11-13-07.
11. Son of Boss transactions are subject to a 6 year statute of limitations – Salman Ranch Ltd., v U.S. Fed Cl. Ct. No 06-503T, 11-9-07.
12. IRS provides guidance on electronic filing requirements for exempt organizations filing the new annual electronic return – T.D. 9366 – 11-14-07.
13. Proposed regulations issued on accounting method changes in reorganizations and tax-free liquidations – Reg-151884-03, 11-15-07
14. Exotic bird business is a profit-making venture – Knudsen v. Comm., T.C. Memo 2007-340, 11-15-07.

Federal Tax Updates for the week of November 12, 2007:

Citations for this week:

IRS Announces Adjustments to Pension Plan Limitations for 2008 (Notice 2007-87; 2007-45 IRB 966)
Newspaper's Exchanged Mastheads and Advertising, Subscriber Accounts Aren't Like-Kind Property (FAA 20074401F)
Gain From Sale of Property Isn't Income in Respect of Decedent (LTR 200744001)
Third Circuit Reverses Lower Court, Early Retirement Payments Subject to FICA Tax University of Pittsburgh v. United States (United States Court of Appeals for the Third Circuit) (No. 06-1276)
IRS Summons Partially Quashed Under Tax Practitioner Privilege Valero Energy Corp. v. United States (United States District Court for the Northern District of Illinois) (No. 06 C 6730)
IRS, States to Share Employment Tax Examination Results (IR-2007-184) IRS Releases Fact Sheet Detailing Its Questionable Employment Tax Practice Initiative (FS-2007-25)
Plan Distribution to Pay Child Support and Alimony Included in Income Jeanne E. Amarasinghe et al. v. Commissioner (T.C. Memo. 2007-333)
Olson Advises IRS to Anticipate Late Legislation, Tax Notes Today, 11/7/2007
Decision Entered by Court Based on Stipulation Michael L. Medkiff v. Commissioner (T.C. Memo. 2007-334)
Bankruptcy Court Sustains IRS Objections to Plan In re: Harold B. Packer et ux. (United States Bankruptcy Court for the District of New Hampshire)
White House Threatens Veto of AMT Patch, Extenders Bill, Tax Notes Today 11/8/2007

Federal Tax Updates for the week of November 5, 2007:

IRS Notice:
Notice 2007-9, October 29, 2007
IRS News Releases:
IRS News Release IR-2007-178, October 29, 2007, California Wildfire Disaster Relief
IRS News Release IR-2007-181, October 31, 2007, Honda Civic GX Compressed Gas Vehicle Certified for Alternative Fuel Motor Vehicle Tax Credit
Tax Court:
1. Giamelli v. Commissioner, 129 TC No. 14, October 30, 2007
2. PSB Holdings, Inc. v. Commissioner, 129 TC No. 15, November 1, 2007
3. Jones v. Commissioner, 129 TC No. 16, November 1, 2007
4. Blosser v. Commissioner, TC Memo 2007-323, October 29, 2007
5. Boltinghouse v. Commissioner, TC Memo 2007-324, October 29, 2007
6. Klein v. Commissioner, TC Memo 2007-325, October 30, 2007
7. Dowell v. Commissioner, TC Memo 2007-326, October 30, 2007
8. Thompson v. Commissioner, TC Memo 2007-327, October 31, 2007
9. Gonce v. Commissioner, TC Memo 2007-328, November 1, 2007
10. Myrick v. Commissioner, TC Summary Opinion 2007-184, October 29, 2007
11. Obiakor v. Commissioner, TC Summary Opinion 2007-185, October 31, 2007
12. Keene v. Commissioner, TC Summary Opinion 2007-186, November 1, 2007
13. Smith v. Commissioner, TC Summary Opinion 2007-187, November 1, 2007

Federal Tax Updates for the week of October 29, 2007:

Citations for this week:
1. Notice 2007-88, 2007-46 IRB 1 – IRS proposes revised accounting consent procedures.
2. LTR 200742010 - Donors contributing cash or property to an exempt organization in exchange for a deferred annuity contract won’t have income until the annuity payments start.
3. LTR 200742004 – Corporate payments in settlement of a class action securities lawsuit are deductible as ordinary and necessary business expenses.
4. Daily Tax Report – No. 205, p. K-1 – IRS announces the appeal of the ruling in U.S. v. Textron, Inc., D.R.I., No. 06-198.
5. 2007 Tax Notes Today 205-1 – IRS Commissioner indicates that the policy of restraint in seeking tax accrual workpapers will continue.
6. Notice 2007-86, 2007-46 IRB 1 – IRS extends transition relief for IRC Sec. 409A plans through December 31, 2008.
7. IR-2007-176 – The IRS will offer 1 day workshops for small and medium sized exempt organizations this winter and next spring.
8. Diaz v. Comm., T.C. Memo 2007-317 – No reimbursement of litigation expenses even when the taxpayer prevailed, because the documentation wasn’t provided prior to litigation.
9. T.D. 9361 – Final regulations issued under IRC Sec. 368(a) on asset and stock transfers after reorganization, continuity of interest and who’s a party to a reorganization.
10. LTR 200742026 – Daughter’s life expectancy can’t be used to determine the minimum required distribution for year’s after a widow’s death.
11. Daily Tax Report – No. 20, 4p. G-1 – IRS announces its strategy to close the “Tax Gap”.
12. Daily Tax Report – No. 206, p. G-5 – Ways and Means Chair Charles Rangel introduces the Tax Reduction and Reform Act of 2007.

Federal Tax Updates for the week of October 22, 2007:

The week ended October 19 saw a number of developments, including two notices and a revenue ruling effectively putting an end to abusive uses of whole life insurance to fund welfare benefit and VEBA plans for single employers. A private letter ruling explained how a self-directed IRA can make a loan to a church secured by a life insurance policy purchased and owned by the church with the self-directed IRA the beneficiary and the IRA owner the insured. A special report by a federal advisory panel offers 33 suggestions for improving ethical standards and operational controls in charitable organizations. In short, for those of us interested in federal income taxation, it was a week like all weeks…

Citations for this week:

1 . Information Release 2007 -162
2. Gavin Polone v. Commissioner, CA 9
3 . LTR 200741016
4 . David L. Samuel v. Commissioner, T.C. Memo. 2007-312
5. 2007 TNT 201-1, Tax Notes Today (Tax Analysts)
6. 2007 TNT 201-2, Tax Notes Today (Tax Analysts)
7. REG-140206-06, (72 F.R. 58781-58787); REG-114125-07, (72 F.R. 58787-58790)
8. Notice 2007-85; 2007-45 IRB 1
9. Department of Revenue of the Commonwealth of Kentucky et al. v. George W. Davis et ux. (United States Supreme Court) (No. 06-666)
10. Notice 2007-83; 2007-45 IRB 1; Notice 2007-84; 2007-45 IRB 1; Rev. Rul. 2007-65; 2007-45 IRB 1
11. Rev. Proc. 2007-66; 2007-45 IRB 1; IR-2007-171
12. 2007 TNT 203-29, Tax Notes Today (Tax Analysts)

Federal Tax Updates for the week of October 15, 2007:

IRS Releases:

1. Revenue Procedure 2007-62
2. PLR 200740002
3. IRS Information Letter 2007-0036

Court Cases:
1. Proctor v. Commissioner, 129 TC No. 12
2. Diffee v. Commissioner, TC Memo 2007-304
3. Universal Marketing, Inc. v. Commissioner, TC Memo 2007-305
4. Nolan v. Commissioner, TC Memo 2007-306
5. Keating and Shearer v. Commissioner, TC Memo 2007-309

Federal Tax Updates for the week of October 8, 2007:

Citations for this week:

Notice 2007-76, 2007-40 IRB 735 – IRS delays the effective date on the guidance for debit cards and similar cards for transportation fringe benefits.
Announcement 2007-87, 2007-40 IRB 753 – IRS announces proposed regulations dealing with the requirements to meet the supporting organization requirements.
PLR 200739004 – An early termination of a charitable remainder unitrust isn’t a act of self-dealing.
TIGTA Report 2007-40-176 – TIGTA criticizes IRS oversight of E-file providers.
Fain v. Comm., 129 T.C. No. 11 – Right to intervene in an innocent spouse case survives the spouse’s death.
2007 TNT 191-7 – IRS focusing on worker classification and data mining to enhance employment tax compliance.
TIGTA Report 2007-30-174 – IRS estate tax collection process still has room to improve.
IR 2007-163 – IRS announces new allowable living expense standards
FS 2007-23 – The IRS reminds taxpayers that income from on-line auctions (or regular auctions for that matter) is taxable.
LMSB-04-0707-049 – The “producer’s” deduction under IRC Sec. 199 is a Tier 1 issue for LMSB.
U.S. v. Hiley, No. 3:07-cv-01353 – Court enforces a summons by the IRS based upon a Canadian government request under the terms of the U.S.-Canada tax treaty.
Mootz v. Comm., T.C. Memo 2007-303 – The IRS didn’t abuse its discretion when it rejected an Offer in Compromise because the taxpayer had demonstrated an ability to pay the liability in full.
TIGTA Report 2007-40-187 – Success! Or so says TIGTA of the IRS filing season.

Federal Tax Updates for the week of October 1, 2007:

This week we report over a dozen different developments, including an important modification of the U.S. – Canadian Tax Treaty, Congressional and IRS efforts to help homeowners facing foreclosure and adverse tax consequences, a decision of the 9th Circuit Court of Appeals that disallowed valuation discounts for a Family Limited Partnership, and denial of exempt status to a sperm bank . . . for reasons you have to hear to believe.

Citations for this week:
1. Canadian Treaty Protocol – Tax Analysts Article 9/24/07
2. Licenses are not sales for FSC calculation - TAM 200738015
3. Valuation of Façade Easements - ILM 200738013
4. Waiver of IRA 60 Day Rollover Denied - LTR 200738027 Waiver of IRA 60 Day Rollover Granted – LTR 200738028
5. Taxation of Debt Relief for Foreclosures – Tax Analysts Article 2007 TNT 184-2 IRS Webpage With Information Re: Taxation of Foreclosures - 2007 TNT 181-3
6. United States v. Jerome Gippetti , CA 3, No. 06-3801
7. Richard S. Cotler v. Commissioner , T.C. Memo. 2007-283
8. Norman C. Eckersley et ux. v. Commissioner, T.C. Memo. 2007-282
9. New Filing Instructions for Organizations Receiving Motor Vehicle, Boat, and Airplane Donations - Notice 2007-70
10. Estate of Virginia A. Bigelow et al. v. Commissioner, CA9, No. 05-75957
11. Extension Denied to Document Success-Based Fees - LTR 200737035
12. Foreign LLC Granted Extension to Elect Partnership Status - LTR 200737042
13. No Exempt Status for Sperm Donor Organization - LTR 200737044

Federal Tax Updates for the week of September 24, 2007:

IRS Private Letter Rulings
PLR 200737049, Released 9/19/07 (contrast with PLR 200736036)
IRS News Release
IR 2007-159, 9/17/07, Home Foreclosure News Release
Court Cases
1. Leahy v. Commissioner, 129 TC No. 8, 9/17/07
2. Richard Edwin and Eva Ruth Elder v. Commissioner, TC Memo 207-281, 9/17/07
3. Eckersley v. Commissioner, TC Memo 2007-282, 9/18/07
4. Cotler v. Commissioner, TC Memo 2007-283, 9/19/07
5. Hawkins v. Commissioner, TC Memo 2007-286, 9/20/07
6. Murphy v. IRS, CA-DC, 2007 TNT 181-6, 9/14/07
7. Estate of Bigelow v. Commissioner, CA9, (2007-2 USTC ¶60,548 affirming TC Memo 2005-65), 9/14/07
8. Hospital Services Association of Northeastern Pennsylvania v. United States, Court of Claims, 2007 TNT 181-7, 9/14/07

Federal Tax Updates for the week of September 17, 2007:

Commentary on recent federal tax developments of interest to all CPAs that answer tax questions and/or prepare returns.

Federal Tax Updates for the week of September 10, 2007:

Commentary on recent federal tax developments of interest to all CPAs that answer tax questions and/or prepare returns.

Federal Tax Updates for the week of September 3, 2007:

Final Regulations
IRS Eliminates Need for RICs to List Out Income By Country on 1099s, TD 9357, (08/24/07)
Proposed Regulations
IRS Proposes Offsets for NOL Carrybacks, Rev. Rul. 2007-53, T.D. 9355, Proposed Regulations, NPRM REG-118886-06, Revoked Rev. Rul. 78-369 (08/24/07)
IRS Rulings
Net Operating Loss From Estate Does Not Offset ESBT Income, CCA 200734019, (Published 08/27/07, written 05/21/07)
Residence Must Be Totally Destroyed for §121(d)(5)(A) to Apply, CCA 200734021, (Published 08/27/07, written 05/23/07)
IRS News Releases
IRS Warns of Yet Another Phishing Scam, IR 2007-148
IRS Announces Limited Relief for Certain Disaster Impacted Areas, IRS News Releases in Ohio, Oklahoma and Wisconsin
Court Cases
1. IRS Denied Access to Tax Accrual Workpapers Due to Applicability of Work Product Privilege, United States v. Textron, United States District Court for Rhode Island, 2007 TNT 169-1
2. Second Circuit Remands Case to Tax Court on Analysis of Applicability of Reasonable Cause Exception to §6662 Valuation Penalty, Estate of Thompson v. Commissioner, 2007 TNT 165-7, CA2, affirming in part, remanding in part TC Memo 2004-174
3. Husband and Wife Barred from Arguing Inconsistent Position to Get Ordinary Deduction for Securities Losses, Arberg and Quinn v. Commissioner, TC Memo 2007-244
4. IRS Successful in Claiming Individual is an Independent Contractor and Subject to Self-Employment Tax, Jones v. Commissioner, TC Memo 2007-249
5. Trading Losses For Taxpayer With Significant Liquid Assets Did Not Create Situation Where IRS Should Have Ceased Collections Activity, Salmassi v. Commissioner, TC Memo 2007-261

Federal Tax Updates for the week of August 27, 2007:

1. Marrita Murphy requests an en banc reconsideration of her case – TNT 162-2 (8-21-07)
2. Fraud penalties assessed for underreporting income by cashing checks and other “badges” of fraud – Haney v. Comm., TC Memo 2007-238 (8-20-07)
3. Punitive damages in a wrongful death suit are taxable because the state statute doesn’t limit recovery to only punitive damages – Benavides v. U.S. No. 06-40526 (Fifth Circuit, 8-17-07)
4. Updated list of Time-Sensitive Acts that may be postponed – Rev. Proc. 2007-56
5. A trust does not materially participate for IRC 469 purposes where the designated trustees aren’t really fiduciaries – Tam 200733023 (8-17-07)
6. Down payment assistance organization’s exempt status is revoked – LTR 200733031 (8-17-07)
7. Proposed Regulations issued for Asset-Over Partnership Mergers – Prop. Regs. 1.704-3 and 4; 1.737-2
8. Phone Excise Tax Refunds are still available – IR 2007-144 (8-21-07)
9. TIGTA finds 8 million returns filed unnecessarily – 2007-40-130 (8-17-07)
10. IRS reminds large and mid-size corporations of the obligation to file their returns electronically – IR 2007-146 (8-23-07)
11. Taxpayer information is still at risk, despite IRS efforts to protect it – DTR No. 164, p. G-3
12. Proposed regulations issued on the tax treatment of payments from qualified plans for medical or accident insurance – Reg-148393-06 72 F.R. 46421-46426 (8-20-07)
13. On-line travel company’s state tax war rage on – Pitt County, N.C. v. Hotels.com LP, ED N.C., No. 4:06-CV-30-BO (8-12-07) and Nassau County, N.Y., v. Hotels.com LP, ED N.Y. No 06 CV 5724 (ADS (WDW) (8-17-07)

Federal Tax Updates for the week of August 20, 2007:

Federal tax developments of note during the week ended August 17th included a wide variety of topics. Most urgent, for some taxpayers, would be two Notices identifying "transactions of interest" that will require disclosure on Form 8886 to avoid penalties under Section 6707A. The IRS continues to prune the ranks of tax exempt organizations, revoking tax exempt status for two charities, a day care center, a social club, and a down payment assistance corporation. Finally, the week saw a husband granted “innocent spouse relief” from a joint tax liability even though he knew when he signed the return that the tax would not be paid timely. And there’s more, so be sure to listen.

Federal Tax Updates for the week of August 13, 2007:

TIGTA
IRS Vulnerable to Social Engineering, TIGTA Report (TIGTA Reference Number: 2007-20-107), 7/20/07
Regulations
Final Regulations Under Section 6655, TD 9347, 8/7/07 Proposed Regulations for Cafeteria Plans, NPRM REG-142695-05, replacing and updating temporary regulations pulled last week
IRS Releases
Notice 2007-60, Section 355 transaction relief
IRS News Releases
Toyota - IR 2007-2007-139, 8/6/07 Ford - IR 2007-140, 8/6/07 Teachers and §409A - IR 2007-142
Court Cases
Schwab v. Commissioner, 9th Circuit 2007 TNT 150-11 affirming Tax Court
Mayo Foundation for Medical Education v. United States, United States District Court for Minnesota, 2007 TNT 153-7
Hubbard v. United States, United States District Court for the District of Columbia, 2007 TNT 153-8
Domulewicz v. Commissioner, 129 TC No. 3, Son of BOSS, "affected item" on partnership exam
Juell v. Commissioner, TC Memo. 2007-219
Smith v. Commissioner, TC Memo 2007-221, collection due process

Federal Tax Updates for the week of August 6, 2007:

Commentary on recent federal tax developments of interest to all CPAs that answer tax questions and/or prepare returns.