Federal Tax Update Podcast

Current Federal Tax Developments for the week of March 16, 2020: Waiting for Relief

• President declares emergency over COVID-19, directs Treasury to provide relief--and now we are waiting.
• HR 6201 passes the House and moves on to the Senate, containing a few tax provisions mainly related to mandatory sick leave provision rule
• AICPA letter issued to IRS regarding the informal §199A guidance the agency has issued
• HDHPs are allowed to pay for COVID-19 testing and treatment without jeopardizing ability of insured to make HSA contributions.
• Dropping a tax document in the mailbox turns out not to be a good idea, as USPS postmark was after the private postmark date on envelope.

Copyright 2020, Kaplan, Inc.

Current Federal Tax Developments for the week of March 9, 2020: Sometimes Too Late Really is Too Late:

• IRS denies a taxpayer's request to make a late mark to market election under §475(f)
• Loss limits for passive activities, basis and at-risk also limit self-employment loss use
• Revenue Procedure grants relief for filing some information returns for certain foreign trusts

Copyright 2020, Kaplan Financial Education

Current Federal Tax Developments for the week of March 2, 2020: Late Filing

• Taxpayer who voluntarily exited OVDI program ended up with very poor result.
• Illnesses of corporate officers not found to give reasonable cause for late filing of S corporation returns.
• Supreme Court refuses to review Ninth Circuit ruling upholding IRS regulation that only items listed in §7502 can be used to prove timely filing.

Copyright 2020, Kaplan, Inc.

Current Federal Tax Developments for the week of February 24, 2020: Meals and Entertainment After TCJA

• Proposed regulations can be relied upon in the interim, as well as continued reliance on Notice 2018-76
• Separate invoicing rule for food/beverage first released in Notice 2018-76 is also in the proposed regulations
• Definition of entertainment stays similar to older definition, but does not include business meals
• Adopts Notice 2018-76 rules for business meals
• Detailed guidance on meals related exceptions to 50% disallowance found at §274(e)

Copyright 2020, Kaplan, Inc.

Current Federal Tax Developments for the week of February 17, 2020: The Week of Fortnite and Schedule 1

• IRS urges tax professionals to make use of multi-factor authentication
• V-bucks and Roblox removed from list of convertible virtual currencies on FAQ
• Challenge to validity of regulations on disclosing basis in appraisal found wanting by the Tax Court

Copyright 2020, Kaplan, Inc.

This week we look at:

• Regulations implementing changes to FAVR and cents-per-mile methods finalized by IRS
• OIRA finishes review of final §163(j) regulations, starts review of additional proposed regulations
• Tax Court finds that language in deed fails to comply with regulations for qualified conservation easements
• Form 1023 now goes fully online--but only after 90 days when applicants can still use paper

Copyright 2020, Kaplan, Inc.

This week we look at:

• Special agent in charge of Los Angeles CID talks about their potential use of the virtual currency question on Schedule 1, Form 1040.

• Taxpayer wins on claim LLC was not a sham, but finds the result is actually worse when court rules amounts paid to law firm were start-up expenses under §195 TAM rules that taxpayer did not have an intangible related to synergistic benefits that could be written off.

• Taxpayer could not use claim of right provision under §1341(a) to claim a deduction related to gain recognized in prior year when trustee of grantor sold stock that trustee was barred from selling by the trust agreement.

• IRS and taxpayer agree that a regulation on the books since 2001 mandates a result different from what the court had arrived at when agreeing with IRS position on §7502(a) and late filed returns asserted originally in the case.

Copyright 2020, Kaplan, Inc.

Current Federal Tax Developments for the week of January 27, 2020: Real Soon Now

• IRS can use sample of transactions to carry burden for §165(c) kickbacks/bribery issues per CCA
• IRS gives IRA custodians relief on RMD notices for 2020--but it means IRA owners may get bad advice about required distributions
• Treasury indicates that guidance on excess distributions on termination deduction is “just around the corner.”
• Microsoft denied assertion of privilege for most documents prepared by outside accounting firm in transfer pricing case

Copyright 2020, Kaplan, Inc.

Current Federal Tax Developments for the week of January 20, 2020: Relief Week

• IRS expands rules excluding from income discharge of certain student loan debt
• Did the IRS just endorse a SALT workaround? Or maybe not…
• Small partnership late filing relief revenue procedure still in effect despite repeal of TEFRA provision
• Tax Court found taxpayer’s petition was more likely than not filed timely

Copyright 2020, Kaplan, Inc.

This week we look at:

• A look at the interaction of qualified plans and post-70 ½ deductible IRA contributions under the SECURE Act.

• A date change in the final version of the SECURE Act related to the kiddie tax.

• An ESOP is found to be disqualified from inception due to both issues in its plan document and in operation of the plan.

• IRS announces e-file start dates, with business returns now being accepted.

• Two cases look at the timing of the required IRS supervisor review of proposed penalties in an exam.

Copyright 2020, Kaplan, Inc.

This week we look at:

• Case from the Archive: Taxpayer Shows How to Win When the IRS Claims Your Business is a Hobby

• Taxpayers who have SFR prepared won’t see a §199A deduction in the SFR 2020

• Auto mileage rates issued at the last minute

• Charitable contributions of virtual currency guidance issued by IRS in FAQ

• Taxpayers can’t raise substance over form argument since the taxpayer picked the form

• Final Qualified Opportunity Fund regulations issued by the IRS

• IRS issues updated guidance on withholding on pensions

Copyright 2020, Kaplan, Inc.

This week we look at:

• §199A final regulations – a pre-tax season package that had to be quickly understood
• 2019’s year end tax bills – comes in three parts, along with a good portion of the government’s full appropriations package
• The IRS’s fascination with tax basis capital, and the profession’s reaction to the same
• §199A FAQ – so we’ll have fewer sub-regulatory guidance items, but that doesn’t mean it all gets reviewed like regulations. Or, perhaps, be careful what you wish for…
• States looking to extend their tax reach, but in a case with limited application SCOTUS did find there are some limits
• Additional items beyond the top five…

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of December 23, 2019: A Tax Bill for the Holidays

• Further Consolidated Appropriations Act, 2020 signed into law on December 20, 2019
  • SECURE Act
    • The good: Delay in required beginning date for plan distributions, later plan adoption date, etc.
    • The bad: Death of the stretch IRA
  • Extenders apply retroactively - so there are some amended returns that will be needed
  • Tax-exempt version of the parking lot tax is gone, but the for profit version is still around

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of December 16, 2019: The Sound of Silence

• IRS does not have the discretion to waive repayment of advance premium credit
• Employer who reimburses employee when transit card fails to function has to include amount in wages per CCA
• IRS issues more proposed regulations on state tax issues and charitable contributions, but remains silent on passthrough tax issues
• IRS grants relief from use of tax basis capital account on partnership K-1s for one year

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of December 9, 2019: Bring in the Forms

• Final version of 2020 Form W-4 released Final versions of 2019 Forms 1040, 1040-SR, Schedules 2 and 3 released
• Shortly thereafter, final version of Schedule 1 released still containing question about virtual currency
• Relief for provision of Forms 1095-B and C
• Detailed guidance issued for IRS agents on BBA audit procedures

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of December 2, 2019: Horses and Hobbies

• Commissioner rules that insurance payments for pyrrohite damage does not require Forms 1099
• Horse business found not to be a hobby, losses allowed
• IRS updates per diem rules for TCJA, following similar update for auto mileage rules

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of December 2, 2019: Horses and Hobbies

• Commissioner rules that insurance payments for pyrrohite damage does not require Forms 1099
• Horse business found not to be a hobby, losses allowed
• IRS updates per diem rules for TCJA, following similar update for auto mileage rules

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of November 25, 2019: Back to the FAQ

• IRS discusses information security responsibilities and risks for tax professionals
• Rental section added to IRS’s §199A FAQ page on website
• Final regulations issued on anti-clawback estate/gift tax provisions
• Only one penalty applied to taxpayer that was both the owner and beneficiary of a foreign trust

Copyright 2019 Kaplan, Inc.

Current Federal Tax Developments for the week of November 18, 2019: Upcoming Features

• Significant TCJA guidance to be issued by end of January 2020
• PLR allows advisory fees to be paid out of an annuity without trigger taxable income to owner
• IRS announces enforcement program for syndicated conservation easement programs
• IRS updates auto mileage rulings for changes made by TCJA
• IRS found to have attempted to assess tax on Son of BOSS after all statutes had expired

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of November 11, 2019: Indexing Week

• Federal Circuit shoots down previously successful taxpayer argument that limited maximum FBAR penalty
• IRS publishes the 2020 inflation adjusted numbers
• Proposed regulations issued to revise the life expectancy tables for required minimum distributions
• Retirement plan numbers for 2020 issued by IRS

Copyright 2019 Kaplan, Inc.

Current Federal Tax Developments for the week of November 4, 2019 Both a Home and an Investment

• Wisconsin fails in attempt to look to sublease to tax software sales based on computers sold to be used in the state

• IRS agrees that taxpayer qualifies for both §121 and §1031 for the sale of a former home destroyed by fire

• Draft Form 1065 and K-1 instructions released by the IRS

Copyright 2019 Kaplan, Inc.

This week we look at the following:

• California rules on tax issues for directors that have meeting in California

• Chief Counsel’s office gives guidance on use of secured email exchanges

• §280E found not to represent an excessive fine even if the Tax Court doesn’t completely agree on why

• Interim guidance issued to Appeals employees on BBA partnership regime

• Whistleblower cannot force IRS to reopen an audit that he claimed was woefully inadequate

Copyright 2019 Kaplan, Inc.

Current Federal Tax Developments for the week of October 21, 2019: The Details are in Forms (and Instructions)

• Agents directed to grant relief in certain WOTC situations
• Form 1120-S instructions disclose 3 new statements to be required on K-1s for 2019
• Social security inflation adjusted 2019 numbers officially released
• Second draft of Form 1065 Schedule K-1 asks for additional information about disregarded entity partners
• TAS’s request for a delay while taxpayers facing loss of passport seek assistance denied by IRS

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of October 7, 2019: Virtual Currency and Taxes

• IRS expands IP PIN program to 10 more states

• Question on virtual currency transactions will be on Schedule 1, Form 1040 and 1040SR, along with release of more draft instructions

• Hard forks of virtual currencies are taxable events per IRS and the rule appears to apply retroactively

• Additional set of FAQs added for taxation of virtual currencies to IRS website

Copyright 2019 Kaplan, Inc.

Current Federal Tax Developments for the week of October 7, 2019

• Pennsylvania cites Wayfair in providing for sales only based income tax nexus
• Taxes on investment real estate under IRC §164 - no $10,000 limit?
• Drafts of 2019 Forms 1065, 1120-S and related K-1s released by IRS
• Proposed regulations for ALEs using individual coverage HRAs released

Copyright 2019 Kaplan, Inc.

Current Federal Tax Developments for the week of September 30, 2019: Rentals and the Safe Harbor

• IRS releases final version of §199A rental safe harbor
• Special per diem rates that take effect on October 1, 2019 released
• Tax Court does not accept imprisonment and lack of access to what might be deductible expense documentation as reasonable cause for late filing.

Copyright 2019 Kaplan, Inc.

Current Federal Tax Developments for the week of September 23, 2019: Zombie Power of Attorney

• IRS releases final and new proposed regulations on §168(k) bonus depreciation
• Settlement offer to be sent to 200 taxpayers under exam for microcaptive structures
• Government shutdown causes IRS to lose ability to extend statute taxpayer had already agreed to extend
• Power of attorney not used by son nevertheless left him authorized to act for father, barring claim for extended statute
• CPA ordered to turn over tax returns of client based on two factor test

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of September 16, 2019: §451 Week

• Students learns real life lesson on taxation of prizes, and we get a tax history lesson
• Proposed regulations issued for advance payments under TCJA §451(c)
• Proposed regulations issued for §451(b) revenue conformity added by TCJA

Copyright 2019 Kaplan, Inc.

Current Federal Tax Developments for the week of September 9, 2019: But I Promise, Really!

• IRS release instructions to 2019 §199A simple deduction form with additional informal guidance
• Memorandum discusses what does and does not qualify as having made a payment to a retirement plan
• Relief granted to file the second copy of the Form 3115 late for an automatic method change, but at a cost
• Activities failed to count as rentals, could not be combined into rental activity by real estate professional
• A flawed S election uncovered during due diligence for sale of the corporation

Copyright 2019 Kaplan, Inc.

Current Federal Tax Developments for the week of September 3, 2019: No Horse, No Business

• Tax Court finds that taxpayer did not have a trade or business of raising/showing horses since she didn’t have a horse
• Tax Court rejects IRS’s “step in the shoes” theory for gifted partnership interest with interest from debt-financed distribution received by donor
• IRS accepts court’s revision of IRA beneficiary, surviving spouse allowed to treat IRA as her own
• Coffeehouse was not a §501(c)(3) charitable organization
• Notice of deficiency sent to addresses used on returns found to be sent to last known address

Copyright 2019 Kaplan, Inc.

Current Federal Tax Developments for the week of August 26, 2019: Watching Paint Dry Doesn’t Count

• Taxpayer found both to have chosen the accrual method and to be required to use it as well
• §451 proposed regulations exit OIRA review
• Taxpayers records found to overstate hours by 150 hours, not qualified as a real estate professional
• IRS issues formal memo changing position on ability to claim foreign tax credit on certain French taxes

Copyright 2019 Kaplan, Inc.

Current Federal Tax Developments for the week of August 19, 2019: George M Would Be Proud...

• Taxpayer “wins” on a Cohan style case, but things don’t really go well

• Qualified plan distribution is part of taxable income for the taxpayer even if the taxpayer doesn’t cash the check

• An estate cannot avail itself of the economic disability tolling of the statute of limitations (and it wouldn’t have mattered anyway).

• IRS to send out estimated tax penalty refund checks to 400,000 taxpayers

Copyright 2019 Kaplan, Inc.

This week we look at:

• Kansas releases out of state seller rules that have no de minimis levels
• Memorandum holds that partial denial of earned income tax credit can lead to loss of all credit for following two years
• Tennessee court finds that Boyle rule still applies, taxpayer cannot rely on preparer to efile extension
• New online tax withholding estimator released by IRS, second revised Form W-4 follows shortly after
• Revised third-party contact rules released prior to Taxpayer First Rule change that takes effect August 15, 2019

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of August 5, 2019: About that Bitcoin...

• IRS sends out 10,000 letters on cryptocurrency, including some demanding a response
• Relief granted on three bonus depreciation elections for year that includes September 28, 2017
• Draft Schedule K-1 for Form 1120S revised to change §199A information reporting
• Letter ruling holds a partial deduction allowed for DNA tests requested by an individual
• Organization not operated exclusively for charitable purpose, §501(c)(3) status revoked retroactively
  
  

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of August 5, 2019: About that Bitcoin...

• IRS sends out 10,000 letters on cryptocurrency, including some demanding a response
• Relief granted on three bonus depreciation elections for year that includes September 28, 2017
• Draft Schedule K-1 for Form 1120S revised to change §199A information reporting
• Letter ruling holds a partial deduction allowed for DNA tests requested by an individual
• Organization not operated exclusively for charitable purpose, §501(c)(3) status revoked retroactively
  
  

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of August 5, 2019: About that Bitcoin...

• IRS sends out 10,000 letters on cryptocurrency, including some demanding a response
• Relief granted on three bonus depreciation elections for year that includes September 28, 2017
• Draft Schedule K-1 for Form 1120S revised to change §199A information reporting
• Letter ruling holds a partial deduction allowed for DNA tests requested by an individual
• Organization not operated exclusively for charitable purpose, §501(c)(3) status revoked retroactively
  
  

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of August 5, 2019: About that Bitcoin...

• IRS sends out 10,000 letters on cryptocurrency, including some demanding a response
• Relief granted on three bonus depreciation elections for year that includes September 28, 2017
• Draft Schedule K-1 for Form 1120S revised to change §199A information reporting
• Letter ruling holds a partial deduction allowed for DNA tests requested by an individual
• Organization not operated exclusively for charitable purpose, §501(c)(3) status revoked retroactively
  
  

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of August 5, 2019: About that Bitcoin...

• IRS sends out 10,000 letters on cryptocurrency, including some demanding a response
• Relief granted on three bonus depreciation elections for year that includes September 28, 2017
• Draft Schedule K-1 for Form 1120S revised to change §199A information reporting
• Letter ruling holds a partial deduction allowed for DNA tests requested by an individual
• Organization not operated exclusively for charitable purpose, §501(c)(3) status revoked retroactively
  
  

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of August 5, 2019: About that Bitcoin...

• IRS sends out 10,000 letters on cryptocurrency, including some demanding a response
• Relief granted on three bonus depreciation elections for year that includes September 28, 2017
• Draft Schedule K-1 for Form 1120S revised to change §199A information reporting
• Letter ruling holds a partial deduction allowed for DNA tests requested by an individual
• Organization not operated exclusively for charitable purpose, §501(c)(3) status revoked retroactively
  
  

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of August 5, 2019: About that Bitcoin...

• IRS sends out 10,000 letters on cryptocurrency, including some demanding a response
• Relief granted on three bonus depreciation elections for year that includes September 28, 2017
• Draft Schedule K-1 for Form 1120S revised to change §199A information reporting
• Letter ruling holds a partial deduction allowed for DNA tests requested by an individual
• Organization not operated exclusively for charitable purpose, §501(c)(3) status revoked retroactively
  
  

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of August 5, 2019: About that Bitcoin...

• IRS sends out 10,000 letters on cryptocurrency, including some demanding a response
• Relief granted on three bonus depreciation elections for year that includes September 28, 2017
• Draft Schedule K-1 for Form 1120S revised to change §199A information reporting
• Letter ruling holds a partial deduction allowed for DNA tests requested by an individual
• Organization not operated exclusively for charitable purpose, §501(c)(3) status revoked retroactively
  
  

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of August 5, 2019: About that Bitcoin...

• IRS sends out 10,000 letters on cryptocurrency, including some demanding a response
• Relief granted on three bonus depreciation elections for year that includes September 28, 2017
• Draft Schedule K-1 for Form 1120S revised to change §199A information reporting
• Letter ruling holds a partial deduction allowed for DNA tests requested by an individual
• Organization not operated exclusively for charitable purpose, §501(c)(3) status revoked retroactively
  
  

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of August 5, 2019: About that Bitcoin...

• IRS sends out 10,000 letters on cryptocurrency, including some demanding a response
• Relief granted on three bonus depreciation elections for year that includes September 28, 2017
• Draft Schedule K-1 for Form 1120S revised to change §199A information reporting
• Letter ruling holds a partial deduction allowed for DNA tests requested by an individual
• Organization not operated exclusively for charitable purpose, §501(c)(3) status revoked retroactively
  
  

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of August 5, 2019: About that Bitcoin...

• IRS sends out 10,000 letters on cryptocurrency, including some demanding a response
• Relief granted on three bonus depreciation elections for year that includes September 28, 2017
• Draft Schedule K-1 for Form 1120S revised to change §199A information reporting
• Letter ruling holds a partial deduction allowed for DNA tests requested by an individual
• Organization not operated exclusively for charitable purpose, §501(c)(3) status revoked retroactively
  
  

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of August 5, 2019: About that Bitcoin...

• IRS sends out 10,000 letters on cryptocurrency, including some demanding a response
• Relief granted on three bonus depreciation elections for year that includes September 28, 2017
• Draft Schedule K-1 for Form 1120S revised to change §199A information reporting
• Letter ruling holds a partial deduction allowed for DNA tests requested by an individual
• Organization not operated exclusively for charitable purpose, §501(c)(3) status revoked retroactively
  
  

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of August 5, 2019: About that Bitcoin...

• IRS sends out 10,000 letters on cryptocurrency, including some demanding a response
• Relief granted on three bonus depreciation elections for year that includes September 28, 2017
• Draft Schedule K-1 for Form 1120S revised to change §199A information reporting
• Letter ruling holds a partial deduction allowed for DNA tests requested by an individual
• Organization not operated exclusively for charitable purpose, §501(c)(3) status revoked retroactively
  
  

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of July 29, 2019: 1982 Tax Form Nostalgia

• IRS releases final regulations on §501(c)(4) notice
• Taxpayers who paid certain French taxes may have refund opportunities
• Six new compliance initiatives announced by IRS
• Minor relief granted to file superseding returns to some CPAR covered partnerships
• IRS releases a new draft version of Form 1099-NEC for the first time in 38 years

Copyright 2019 Kaplan, Inc.

Current Federal Tax Developments for the week of July 22, 2019: The Short-Lived 1040 Postcard

• Taxpayer who failed to file a signed Form 8332 with his return was denied the dependency exemption even though he eventually got a signed form
• IRS updates list of allowed preventive care for high deductible health plans
• IRS debuts new Form 1040-SR and revises Form 1040 to get rid of the postcard on draft 2019 forms the agency released

Copyright 2019 Kaplan, Inc.

This week we look at:

• Taxes-Security-Together Checklist for tax professionals issued by the IRS

• Tax Court found that taxpayer was victim of a bookkeeping error and had sent IRA rollover contribution to custodian, late rollover allowed

• IRS discovers 31 years after the fact that a typo fix never was picked up in the Code of Federal Regulations

• Frequently asked questions page issued to explain TCJA change to §704(d) partner basis limits on charitable deductions and foreign taxes

Copyright 2019, Kaplan, Inc.

Update for the week of July 8, 2019. This week we look at:

• The Taxpayer First Act of 2019, signed into law on July 1, 2019

• The Supreme Court decides one trust due process case is enough for a single term

• IRS proposed a change in MEP to allow a solution to the one bad apple problem

• IRS goes back to issuing guidance via website FAQs, this time for QOFs

• Employers will be able to truncate SSNs on W-2s given to employees--but not right away

• IRS finalizes regulations barring partnerships from using disregarded entities to put partners on the payroll

Copyright 2019 Kaplan Professional Education

Current Federal Tax Developments for the week of July 1, 2019:

• IRS issues notice to advisers regarding what to do in the event of a data breach
• IRS official confirms a §199A trade or business can include both commercial and residential rental
• Taxpayer found Tax Court didn't believe his vehicle logs
• Transaction found to be substantially similar to a listed transaction

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of June 24, 2019: SCOTUS Just Says No

• Proposed regulations issued on qualified agricultural cooperatives

• US Supreme Court rules mere residence of beneficiary not enough to all state to tax entire income of trust

• Taxpayer had a proper claim of right situation when she paid ½ of wages paid back by ex-spouse

• IRS finalizes non-resident alien ESBT regulations

Copyright 2019, Kaplan, Inc.

This week we look at:

• IRS to stop faxing transcripts, only mail them to taxpayer’s address of record

• Final regulations issued for state tax credit donations and new way to report credit as tax paid

• IRS finalizes regulations creating two new HRAs

Copyright 2019, Kaplan, Inc.

This week we look at

• S corporation status lost when SMLLC shareholder adds a new interest holder

• Tax Court does not accept author’s attempt to treat a portion of her income as not self-employment income

• IRS releases employer tables and worksheets for TCJA-aware draft Form W-4

• TIGTA finds that LB&I imposes accuracy-related penalties at lower rate than does SE/SE

• Envelope used to file Tax Court petition lacked postmark, taxpayer could not explain delivery much later than would be expected for timely mailed document

This week we look at

• Evangelizing did not give rise to charitable deduction for most expenses

• DC Circuit agrees with Tax Court that failure to disclose basis of asset doomed $33 million contribution

• Taxpayers lose nearly $1 million of basis due to lack of old documents

• IRS tries one more time to develop a W-4 for the TCJA era

Copyright 2019, Kaplan, Inc.

This week we look at:

• Virtual currency guidance promised by IRS Commissioner

• HSA numbers for 2020 released by IRS

• Auto depreciation limits for 2019 released by IRS

• House passes retirement reform bill, would drastically cut back on the use of stretch IRAs

• Assistant US Attorney warns preparers about criminal exposure when they don’t raise enough issues about loans

Copyright 2019, Kaplan, Inc.

This week we look at:

• Review Wolters Kluwer IRS response and other issues

• IRS releases a new worksheet for computing tax when there are 25% or 28% gains

• Tax Court finds IRS did not have authority to find Medicare difficulty payments nontaxable in Notice 2014-7

• CA10 agrees with Tax Court that S corporation cannot accrue wages on participants

• Taxpayer materially participated in activity under facts and circumstances test

Copyright 2019, Kaplan, Inc.

This week we look at:

• Wolters Kluwer CCH systems suddenly taken offline due to malware issue

• GAO criticizes security of e-file providers and software developers

• IRS updates maximum vehicle values for cents-per-mile and FAVR

• IRS clarifies redemptions treated as dividends taxation when paid during post-termination transition period

• Deduction for Connecticut estate taxes must be reduced by portion allocable to state’s gift taxes added back paid in 3 prior years

• My boss ordered me to do it doesn’t work for trust fund penalty even when the boss is an agent of a federal agency

Current Federal Tax Developments for the week of May 6, 2019: Fragile: Handle with Care - S Corporations

• Taxpayer’s marriage forces repayment of advance PTC, unfairness is not a defense

• State tax refundable credit in excess of taxes is taxable income to taxpayer

• IRS expands determination letter to cover a limited number of existing plans

• LLC operating agreement adoption terminates S election

Copyright 2019, Kaplan, Inc.

This week we look at:

• Taxpayer finds expense can’t be assigned to business based on best result

• IRS greatly expands the FAQ on Section 199A, including a major surprise to many on handling S corporation shareholders

• IRS updates the EPCRS program to add more self-correction options

• Chief Counsel Email holds that using a PEO does not allow a partner to be treated as the employee of partnership

Copyright 2019, Kaplan, Inc.

This week we look at the following

• Draft forms issued to be used to report §199A deduction on 2019 returns

• Proposed regulations address NRA potential current beneficiaries of ESBTs that are also grantor trusts

• Memorandum address impact of §318 attribution rules on §1372 and self-employed health insurance deduction

• Second (and maybe final) set of proposed regulations on opportunity zone issues

• Ninth Circuit decides IRS regulations did remove the ability to use common law mailbox rule to prove timely filing

Copyright 2019, Kaplan, Inc.

This week we review where we stand on TCJA guidance at the end of the first TCJA tax season.

• §199A - Mainly Post-Final Regulation Issues
• §163(j) - Proposed Regulations Out, Awaiting Final Regulations
• Depreciation - Will the Retail Glitch Get Fixed? And When?
• SALT - Soon to be released final regulations on state tax credits and then what
• §461(j) - Limit on business losses - where’s the guidance
• Other areas

Copyright 2019, Kaplan, Inc.

Current Federal Tax Developments for the week of April 8, 2019: SALT and the Home Office

• IRS sends proposed regulations on §199A for cooperatives to OIRA for review

• PMTA outlines intereaction of home office and SALT cap

• Trade or business definition for instructions in Form 461 issue identified by IRS

• Second Circuit reverses Tax Court decision that found a tax “black hole”

Copyright 2019 Kaplan, Inc.

Current Federal Tax Developments for the week of April 1, 2019: Tax Benefit Rules and Refunds

• Electric vehicle credits for GM vehicles to begin one year phase out

• IRS gives formal guidance on treatment of state income tax refunds following the TCJA $10,000 cap

• SALT workaround regulations and related notice sent to OIRA

• IRS changes requirements to obtain EIN, requires responsible person to have SSN or ITIN

• Final regulations published on reportable transaction law modifications from 2010

Copyright 2019 Kaplan, Inc.

This week we look at:

• QBI and disallowed passive losses

• Minister’s housing allowance ruled to be acceptable under the U.S. Constitution

• Pilot had no profit motive for business related to vintage World War II aircraft

• IRS suspends two Revenue Rulings related to active trade or business issues under §355

• Relief from underpayment of estimated tax penalty expanded by IRS

Copyright 2019 Kaplan, Inc.

Current Federal Tax Developments for the week of March 18, 2019: Technicalities and Glitches

• Software glitches in the first years under TCJA

• Lump sum social security benefits are part of MAGI for the premium tax credit

• Safe harbor statements have to be signed and then attached to electronically filed returns as a PDF

• Taxpayer’s mistake in listing old address on tax return proves costly

• Tax Court rejects no harm, no foul view with regard to penalties for filing an S corporation return late

Copyright 2019 Kaplan, Inc.

This week we talk about the following:

• Look at some items causing confusion over §199A on discussion forums as returns are prepared

• Treasury announces changes in temporary regulations and subregulatory guidance

• Recipients of sexual harassment and sexual abuse settlements with confidentiality clause allowed to deduct legal fees

• Gambling loss triggered by impulse control problem side effect of prescribed drug not a casualty loss

• Proposed regulations issued for FDII and GILTI

• IRS no longer plans to issue regulations to bar post-retirement lump-sum distributions from defined benefit plans

• Partnerships required to add tax basis disclosures given until March 15, 2020 to provide information to IRS

Copyright 2019 Kaplan, Inc.

Current Federal Tax Developments for the week of March 4, 2019: Tax Refunds and the 2019 Tax Returns

• A look at the special rules under §111 for tax benefit and how it impacts state tax refunds from 2018 returns

• No Fifth Amendment defense against assertion that taxpayer is trafficking under §280E

• IRS grants extension of time to file returns for farmers and fishermen

• Tax Court looks at the application of the penalty review process to automated exams

• IRS gave insufficient notice that a third party would be contacted for information

Copyright 2019 Kaplan, Inc.

This week we look at:

• State found to illegally discriminate against federal law enforcement retirees due to tax break for state law enforcement retirees

• IRS decides expanded availability of meal delivery means fewer meals are truly for the convenience of the employer

• IRS acquiesces in case regarding meals for hockey teams

• Politico points out loophole that may exist for owners of co-op shares with regard to $10,000 tax limitations

• Looking at options beyond the safe harbor for rentals under §199A

Copyright 2019 Kaplan, Inc.

This week we look at:

• Fix for auto depreciation quirk added by TCJA released by IRS

• A subtrust qualified as a conduit trust for IRA distribution purposes

• AICPA asks for relief from potential impact of syndicate rules on small business tax relief

• Form 1065 instructions add a requirement for certain partnerships to disclose negative tax basis

• Checkbox added for when basis calculation required with Form 1040 and situations where it is required expanded by IRS

Copyright 2019 Kaplan, Inc.

This week we look at:

• Situations where an employer can recover HSA funds from employee accounts

• IRS decides taxpayers can use Rev. Proc. 2018-60 even if currently using an impermissible method of accounting

• Taxpayer reasonably relied on CPA's advice and escapes penalties

• Airline passenger discovers he can't sue the TSA for his lost tax paperwork

Copyright 2019 Kaplan, Inc.

This week we look at:

• IRS delays end of faxing transcripts after Chair and ranking minority member of Senate Finance Committee send a joint letter requesting a delay

• Taxpayers could not avoid NOL carryforward election they claimed they were unaware of

• IRS publishes corrected version of §199A regulations, changes one word some see as potentially important

• Article discusses risks to marijuana businesses from electing small business inventory relief added by TCJA

Copyright 2019, Kaplan, Inc.

This week we look at:

• Reported IRS backlog of unanswered letters that arrived during the shutdown

• IRS publishes information on impact of shutdown on matters before the Tax Court

• W-2 wages Revenue Procedure made final at same time §199A final regulations come out

• More thoughts on the §199A final regulations

Copyright 2019, Kaplan, Inc.

This week we look at:

• New York State Publishes Its Wayfair Guidance, Demanding Immediate Compliance
• Trust Case Going to US Supreme Court
• Sequestration Does Not Apply to Minimum Tax Credit
• Proposed Safe Harbor for Rental as a Trade or Business Under §199A
• Final Regulations Are Out - §965 and, the Big One, §199A
• IRS Grants Limited Waiver of Underpayment Penalties

Copyright 2019 Kaplan Professional Education

This week we look at:

• IRS reopens IVES and user-fees based programs

• Advisers need to be sure to check syndicate rules to assure entity not subject to §163(j) rules

• Treat of realtors revised in second draft version of portion of Publication 535

• Filing season to start January 28, refunds are going to be issued

• Address to file gift tax returns has changed, estate tax return address to change in July

Copyright 2019, Kaplan, Inc.

This week's developments:

• IRS Notice gives guidance to tax-exempt organizations on excess compensation tax

• Outgoing W&M Chairman publishes discussion paper on TCJA technical corrections

• §199A final regulations still sitting at OIRA

Copyright 2019, Kaplan, Inc.

This week we look at:

• Loan Adviser Found Not Liable to Repay in FINRA Treated as Ordinary Income from Debt Forgiveness

• IRS Raises Values Dramatically on Vehicles Eligible for Cents-Per-Mile and Fleet-Average Valuation Rules

• Safe Harbor Issued on Charitable Contribution Credits Related to a Trade or Business

• Revenue Procedure Issued to Deal with ADS Issues for Electing Farm and Real Property Businesses

• IRS Publication Indicates Real Estate Agents/Brokers and Insurance Agents/Brokers are in a Specified Service Trade or Business

• Proposed Regulations on Treating Sale of Partnership Interest as Effectively Connected to US Trade or Business

• IRS Announces Plan to Issue Regulations on Two Special Enforcement Matters Under CPAR, as Well as CPAR Final Regulations

• Annual Disclosure Revenue Procedure Updated by IRS

Copyright 2018, Kaplan, Inc.

This week we look at:

• Just prior to the one year anniversary of TCJA, we finally get a Joint Committee staff Blue Book.on the law

• Tax credits for purchases of Teslas are being phased-out during 2019

• MFP payments found in IRS memorandum to be taxable income and part of self-employment income

• Auto mileage rates for 2019 issued by the IRS

• A management company that managed a marijuana dispensary was subject to the deduction disallowance rules of §280E

• A limited amount of additional information released by the IRS on excess loss and NOL rules under TCJA

Copyright 2018, Kaplan, Inc.

This week we look at:

• IRS releases more proposed regulations

• Lack of documentation dooms deduction for taxpayers

• §199A final regulations sent to OIRA for review

• Guidance issued on valuing employer-provided parking for parking lot tax

• Relief given for some tax-exempt organizations first filing Form 990-T to pay parking lot tax

• Taxpayers who were out of the country for much of the period of nonpayment still found to be responsible persons

Copyright 2018, Kaplan, Inc.

This week we look at the following items:

• Wisconsin passes its version of an optional passthrough tax to get around SALT limits, but with a twist

• Guidance released on Section 81(i) stock elections

• Taxpayer finds you still need some documentation to claim cellular phone expenses

• IRS fails to persuade Court that a taxpayer had changed its accounting method

• A brief revisit to the Section 451(b) automatic change revenue procedure

• Taxpayer warned about filing Tax Court petition primarily to delay collection

Copyright 2018, Kaplan, Inc.

This week we look at:

• Proposed anti-clawback regulations issued

• Final §263A negative amount regulations issued

• §163(j) proposed regulations leave OIRA (finally), last step before publication

Copyright 2018, Kaplan, Inc.

This week we look at the following items:

• IRS publishes 2019 inflation adjusted figures

• IRS notes increase in breaches of systems of tax return preparers in 2018

• Filing and deposit date relief announced for victims of California wildfires

• IRS email discusses application of due diligence preparer penalties

Copyright 2018 Kaplan Professional Education

This week we look at the following items:

• §163(j) proposed regulations due this week

• IRS releases final TCJA due diligence regulations

• Country singer found not to operate night club for a profit

• Foreign earned income denied when taxpayer did not show his abode was outside the United States

Copyright 2018 Kaplan Professional Education

This week we look at the following items:

• Inflation-adjusted retirement plan numbers for 2019 released

• IRS publishes draft Form 990-T and instructions with details on the parking lot tax

• Students lose at DC Circuit in attempt to claim travel deductions

• A Blue Book on TCJA may be coming soon

• A taxpayer is denied relief from liability for tax due on a joint return the court finds she didn’t file

Copyright 2018, Kaplan, Inc.

This week we look at the following items:

• Court finds IRA and plan balance received in divorce not protected in bankruptcy

• Interest limitation proposed regulations (except for passthroughs) heads to OMB

• Connecticut crumbling foundation relief clarified to also create NOLs that can be carried back in 2018

• PTIN renewal opened up by the IRS

• OMB announces plans for guidance on TCJA loss limitation rules--but not planned to be out until June 2019

• Taxpayer denied innocent spouse relief.

Copyright 2018 Kaplan Professional Education

This week we look at the following items:

• A pastor had taxable income from pastoral donations

• IRS grants filing and payment relief related to Hurricane Michael

• A taxpayer could not apply payment where the IRS had levied the account

• Initial Qualified Opportunity Zone proposed regulations issued

Copyright 2018, Kaplan, Inc.

This week we look at the following items:

• IRS issues SIFL rates for second half of 2018

• Information letter discusses more issues with the SALT workaround regulations

• Business meals will remain 50% deductible despite TCJA law changes

• ECPRS program updated by the IRS Market discount not subject to TCJA revenue conformity rule

• §457 plan not required to offer hurricane relief distributions

Copyright 2018, Kaplan, Inc.

This week we look at the following items:

• Wall Street Journal reports IRS will issue guidance allowing 50% deduction for business meals

• IRS issues guidance on credit for paying employees on FMLA leave

• Moving expenses incurred in 2017 but reimbursed in 2018 ruled to be excludable from the employee’s income

• Special per diem rules, including high/low amounts, updated by the IRS

• IRS agent found to qualify as an innocent spouse when given what turned out to be a misleading response by soon to be ex-spouse

Copyright 2018, Kaplan, Inc.

This week we look at the following items:

• Tax Court allows a taxpayer to try and prove reasonable reliance on indirect legal advice

• Updated safe harbor explanations for plan distributions issued by IRS

• IRS delays major revision to Form W-4 to 2020

• Relief announced for victims of Hurricane Florence

Copyright 2018, Kaplan, Inc.

This week we look at the following items:

• South Dakota enacts remote seller law to implement Wayfair decision beginning November 30

• Colorado tests the limits of Justice Kennedy’s holdings in Wayfair

• Even though records were imperfect, Tax Court finds the taxpayer was a real estate professional

• Opportunity Zone regulations at OMB, expected out around the end of the month

• IRS rules math error procedures can be used even after refunds are issued

Copyright 2018, Kaplan, Inc.

This week we look at the following items:

• South Dakota to hold a special session so the state can begin to take advantage of their victory in the Wayfair case
• Taxpayer who withdrew IRA funds based on a notice of intent to levy cannot escape 10% additional tax
• IRS clarifies the application of the proposed SALT regulations leading to a bevy of questions
• IRS memorandum concludes seismic fees for offshore drilling must be amortized and cannot be treated as intangible drilling costs
• President issues an Executive Order for DOL and Treasury to consider certain changes to retirement plans
• Tax Court disagrees with the IRS’s view on how §1291(c) gains interact with six year statute

Copyright 2018, Kaplan, Inc.

This week we look at the following items:

• Taxpayers creating multiple entities to try and avoid double taxation of C corporation income find their plan fails
• IRS issues SALT workaround regulations and affect both new and pre-existing state tax credit programs
• Modifications made to automatic accounting method revenue procedure to deal with S corporation revocations under special TCJA rule
• Guidance provided on applying the rules to compute UBTI separately for each trade or business

Copyright 2018, Kaplan, Inc.

This week we look at the following items:

• Taxpayers creating multiple entities to try and avoid double taxation of C corporation income find their plan fails
• IRS issues SALT workaround regulations and affect both new and pre-existing state tax credit programs
• Modifications made to automatic accounting method revenue procedure to deal with S corporation revocations under special TCJA rule
• Guidance provided on applying the rules to compute UBTI separately for each trade or business

Copyright 2018, Kaplan, Inc.

This week we look at the following items:

• Oregon Supreme Court rules no physical presence required to be subject to corporate income tax
• Idaho sends out notices to retailers that it’s moving forward with affiliate rule for collecting sales tax
• IRS prevails over AICPA on question of issuing credential for unenrolled tax preparers
• AICPA sends comments to the IRS and Treasury on S corporation and Section 461(l) issues following TCJA

Copyright 2018, Kaplan, Inc.

This week we look at the following items:

• Proposed regulations for 965 are issued, others on state and local tax workarounds submitted to OMB
• Majority of states that impose a sales tax now have published post-Wayfair remote seller collection requirements and start dates
• Proposed regulations on which taxpayers may rely issued on bonus depreciation
• Automatic accounting method change guidance issued for TCJA small business accounting methods
• 529 plan revised guidance to deal with TCJA and other recent changes
• Guidance issued on additional contributions allowed to ABLE accounts by TCJA changes

Copyright 2018, Kaplan, Inc.

This week we look at the following items:

• First 199A regulations are sent to OMB for review
• Minnesota tests whether lower limits than South Dakota will work under Wayfair
• Utah enacts South Dakota limits for remote sellers
• Another US District Court agrees that the IRS’s own regulations limit the FBAR willfulness penalty amount
• Taxpayer stuck with transferee liability after entering into transaction to sell corporation

Copyright 2018, Kaplan, Inc.

This week we look at the following items:

• Two state supreme courts restrict their states’ ability to tax trusts
• IRS issued PMTA on willfulness for FBAR penalty
• Forfeitures now can be used to fund QMACs and QNECs
• IRS discusses the impact on taxable wages of a payroll tax examination
• Many exempt organizations will no longer have to file Schedule B with Form 990
• Proposed regulations issued on due diligence expansion to head of household status added by TCJA

Copyright 2018 Kaplan Professional Education

This week's update includes discussions of the following topics:

• More Wayfair fallout
  • North Dakota out of state seller collections required beginning October 1
  • South Carolina to use South Dakota minimums for out of state sellers
  • Wisconsin will use the South Dakota minimums for the October 1 out of state seller start
• IRS updates security guidance for tax professionals
• Trusts and Estates will get to deduct trustee fees and other Section 67(e) expenses following TCJA
• IRS sticks to its position on prepaid real estate taxes when questioned by NJ Attorney General
• IRS employee indicates the agency accepts that the back door Roth contribution is legal

Copyright 2018, Kaplan, Inc.

This week's update includes discussions of the following topics:

• More Wayfair fallout
  • North Dakota out of state seller collections required beginning October 1
  • South Carolina to use South Dakota minimums for out of state sellers
  • Wisconsin will use the South Dakota minimums for the October 1 out of state seller start
• IRS updates security guidance for tax professionals
• Trusts and Estates will get to deduct trustee fees and other Section 67(e) expenses following TCJA
• IRS sticks to its position on prepaid real estate taxes when questioned by NJ Attorney General
• IRS employee indicates the agency accepts that the back door Roth contribution is legal

Copyright 2018, Kaplan, Inc.

This week we look at the following items:

• States take various actions regarding forcing out of state sellers to collect tax
  • Louisiana looks to adopt its law to fit within Justice Kennedy’s outline of acceptable protections for interstate commerce
  • Alabama, though not a member of SSUTA, will begin requiring collection on October 1
  • Wisconsin, an SSUTA member but without a de minimis limit, will also want collections on October 1
  • New Jersey adopts a law that duplicates South Dakota and adds marketplace provisions
• IRS LB&I Division announces five new compliance campaigns
• IRS agent wonders if a preparer penalty could be assessed directly against an equity holder who did not otherwise violate Section 6694

Copyright 2018, Kaplan, Inc.