Source: https://www.currentfederaltaxdevelopments.com/?offset=1547233705534
Timestamp: 2019-04-20 04:57:21+00:00

Document:
In the full draft revision (January 7, 2019) of Publication 535, the IRS removed the language that had previously included real estate agents and insurance agents as specified service trades or businesses from the full publication.
In News Release IR-2019-01 the IRS announced that it will begin processing tax returns this year on January 28, 2019 and, despite the partial government shutdown, will issue refunds that may be due on returns filed this year.
The day before moving from Chairman of the House Ways and Means Committee to the ranking member of the committee, Rep. Kevin Brady released a discussion draft of the technical corrections to the Tax Cuts and Jobs Act.
Normally I’d not not worry much about a document issued by the ranking minority member of the committee, but in this case it does outline what a principal author of TCJA now believes needs to be fixed. Time will tell how many of these changes make it into law.
The IRS has issued Notice 2019-9, a 92-page document that gives, in a question and answer format, information on the application of the tax on excess compensation of certain employees of tax-exempt organizations under IRC §4960, added by the Tax Cuts and Jobs Act.
In Notice 2019-8 the IRS has set the maximum values for 2018 for employer provided vehicles under which the cents per mile method (Reg. §1.61-21(e)) or fleet-average valuation rule (Reg. §1.61-21(d)) may apply.
Consistent with the substantial increase in the dollar limitations on depreciation deductions under section 280F(a), as modified by section 13202(a)(1) of the Act, the IRS and the Treasury Department intend to amend Treas. Reg. § 1.61-21(d) and (e) to incorporate a higher base value of $50,000 as the maximum value for use of the vehicle cents-per-mile and fleet-average valuation rules effective for the 2018 calendar year. Further, the IRS and the Treasury Department intend that the regulations will be modified to provide that this $50,000 base value will be adjusted annually using section 280F(d)(7) for 2019 and subsequent years.
In Revenue Procedure 2019-12 the IRS released a set of safe harbor rules that apply to C corporations and certain passthrough entities that receive a state tax credit for amounts paid to organizations qualified under §170(c).
The procedure was issued in response to proposed regulations issued in 2018 that will apply to charitable contributions made by individuals after August 27, 2018. In such cases, an individual must reduce any charitable contribution claimed by any state tax credit received for making the contribution exceeds 15% of the contribution amount.
In the case of Connell v. Commissioner, TC Memo 2018-213, the taxpayer (who was employed by Merrill Lynch) attempted to classify the amount of a loan that was forgiven as part of a Financial Industry Regulatory Authority’s (FINRA) decision in a dispute he had with Merrill Lynch as a capital gain.
The taxpayer had been a financial adviser since 1974. In 2009 when he discovered that Smith Barney, with whom he was then associated, was going to be acquired by Morgan Stanley, he decided to look for other employment opportunities. The best offer he received was from Merrill Lynch which he accepted.
On January 7, 2019 the IRS issued a revised draft version of the publication that returns to the position taken in the proposed regulations. Click here to go to that story.
The draft copy of the §199A section of Publication 535 released by the IRS on December 19, 2018, in describing what is a specified service trade or business has language in it that does not track what was found in the proposed regulations released in August. The issue involves whether “services performed in the field of brokerage services” includes services performed by real estate agents, real estate brokers, insurance agents, etc. or is limited to the brokerage of financial products.
The IRS has issued the final version of regulations for the new centralized partnership audit regime (CPAR) that will apply to tax returns for partnership tax years beginning after December 31, 2017. This set of final regulations completes the regulations on CPAR. Separate sets of final regulations that deal with the election out of the CPAR regime and the partnership representative had previously been released.
Handling the transition to ADS depreciation for certain property of electing farming and electing real property businesses.
The IRS has updated its annual disclosure revenue procedure (Revenue Procedure 2019-9). Proper disclosure can prevent imposition of various penalties imposed on taxpayers (IRC §§6662(b)(2), (h), (i) and (j)) and on tax preparers (IRC §6694).
Rental Trade or Business Example in Blue Book: Does It Really Tell Us Anything?
The Blue Book released by the Joint Committee on Taxation contains an example on page 24 that is meant to illustrate what constitutes a trade or business for purposes of §199A using a rental as the basis for the example. Given that one of the major concerns expressed about the application of §199A is when a rental qualifies for the deduction, the insertion of this example initially appears to be welcome news.
However, at least for now, it is not clear if the example found in the Blue Book clarifies matters or simply creates additional questions.
In Notice 2019-6 the IRS announced its intention to issue proposed regulations to deal with “special enforcement matters” under the centralized partnership audit regime (CPAR). Special enforcement matters are defined at IRC §6241(11), a provision added by the Consolidated Appropriations Act of 2018 as part of the technical corrections to the CPAR partnership audit regime that was created by the Bipartisan Budget Act of 2015 and which will first be effective for partnership tax years beginning in 2018.
A business does not have to have title to marijuana to be engaged in trafficking in controlled substances, triggering the denial of deductions under IRC §280E, the Tax Court ruled in Alternative Health Care Advocates et al. v. Commissioner, 151 TC No. 13.
IRC §280E bars deductions, other than those for the cost of sales, to businesses that traffic in items considered controlled substances by federal law. The fact that certain states have legalized the sale of marijuana in some situations does not change that federal tax result.
Requiring the buyer of a partnership interest to withhold 10% of the purchase price unless the buyer certifies the buyer is not a foreign person.
The Joint Committee on Taxation has released the General Explanation Of Public Law 115-97, better known as the Blue Book on TCJA (JCS-1-18).
The 457 page document contains the staff’s explanation of the provisions in last year’s Tax Cuts and Jobs Act. Blue Books for prior laws have often been referenced and consulted by the IRS in developing guidance, as well as being referred to by advisers when dealing with matters not yet covered by IRS guidance.

References: §4960
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