Source: http://www.beliveaulaw.net/2011/08/
Timestamp: 2017-02-22 13:01:37
Document Index: 596680740

Matched Legal Cases: ['§ 53', '§ 197', '§ 6330', '§ 6335', '§ 1', '§ 1']

August, 2011 | The Beliveau Law Group - Attorneys at Law
Department of Labor targets misclassification of workers In its fiscal year 2012 budget request, the Department of Labor (DOL) is asking for $46 million to combat worker misclassification through a new multi-agency initiative that would include the DOL’s Wage and Hour Division, the Office of Federal Contract Compliance Programs (OFCCP), the Occupational Safety and Health Administration (OSHA), the Office of the Solicitor, and the Employment and Training Administration. The DOL’s “Misclassification Initiative” is aimed at boosting federal and state efforts to enforce labor violations resulting from worker misclassification, as well as deterring violations.
Filed Under: Employment Law ArticlesDraft forms for Form 706 for 2010 Decedents released The IRS has released Draft Form 706 and Draft Instruction 706 for decedents who died within the 2010 calendar year.
Filed Under: Estate Planning ArticlesNinth Circuit upholds formula producing larger gifts for charity after valuation challenge Anne Y. Petter (“Taxpayer” or “Anne”) transferred membership units in a family-owned LLC partly as a gift and partly by sale to two trusts and coupled the transfers with simultaneous gifts of LLC units to two charitable foundations. The transfer documents include both a dollar formula clause —which assigns to the trusts a number of LLC units worth a specified dollar amount and assigns the remainder of the units to the foundations—and a reallocation clause—which obligates the trusts to transfer additional units to the foundations if the value of the units the trusts initially receive is finally determined for federal gift tax purposes to exceed the specified dollar amount. Based on an initial appraisal of the LLC units, each foundation received a particular number of units. But after an Internal Revenue Service (“IRS”) audit determined that the units had been undervalued, the foundations discovered they would receive additional units. Everyone agrees that the Taxpayer is entitled to a charitable deduction equal to the value of the units the foundations initially received. But is the Taxpayer also entitled to a charitable deduction equal to the value of the additional units the foundations will receive? The Tax Court answered that she was. The Appeals Court agreed.
Filed Under: Estate Planning Articles, Tax ArticlesIRS changes position on two year rule for equitable innocent spouse relief Notice 2011-70 expands the period within which individuals may request equitable relief from joint and several liability under section 6015(f) of the Internal Revenue Code. Specifically, this notice provides that the Internal Revenue Service will consider requests for equitable relief under section 6015(f) if the period of limitation on collection of taxes provided by section 6502 remains open for the tax years at issue. If the relief sought involves a refund of tax, then the period of limitation on credits or refunds provided in section 6511 will govern whether the IRS will consider the request for relief for purposes of determining whether a credit or refund may be available. This notice also provides certain transitional rules to implement this change.
Filed Under: Tax ArticlesIRS issued revised Circular 230 The updated Treasury Department Circular 230 (Rev. 8-2011) is now available online. According to IRS, Circular 230 was revised to reflect the new return preparer oversight program and other changes.
Filed Under: General PostsGuidance issued on how executors can elect to have carry over basis rules apply for deaths occuring in 2010 The Internal Revenue Service issued guidance on the treatment of basis for certain estates of decedents who died in 2010. The guidance assists executors who are making the choice to opt out of the estate tax and have the carryover basis rules apply. Form 8939, the basis allocation form required to be filed by executors opting out of the estate tax, is due Nov. 15, 2011. Under the guidance issued, an executor must file Form 8939, Allocation of Increase in Basis for Property Acquired from a Decedent, to opt out of the estate tax and have the new carryover basis rules apply. The IRS expects to issue Form 8939 and the related instructions early this fall.
Filed Under: Estate Planning ArticlesSummer 2011 Newsletters Elder Law Newsletter (PDF)
Filed Under: NewslettersHow do you calculate a participant’s required minimum distribution from a defined contribution plan? In its Employee Plan News, June 22, 2011, IRS discusses how to calculate a participant’s required minimum distribution (RMD) from a defined contribution plan.
Filed Under: Tax ArticlesAgreements with creditors didn’t shield president from trust fund recovery penalty The Court of Appeals for the Fourth Circuit, affirming the district court, has held in Newbill v. U.S. that the president, treasurer, and majority shareholder of a construction company was liable for the trust fund recovery penalty under Code Sec. 6672. He was a responsible person, and agreements that gave creditors joint control over the company’s accounts didn’t shield him from the penalty.
Filed Under: Tax ArticlesPrivate foundation’s receipt of note from founder’s corporation won’t be self-dealing In PLR 201129049, IRS has privately ruled that a private foundation’s holding of a promissory note and its receipt of promissory note payments from its founder’s corporation after the period of estate administration terminations won’t be treated as acts of self-dealing subject to the Code Sec. 4941(a) excise tax. IRS concluded that the transactions will meet all of the requirements of the “estate administration exception” in Reg. § 53.4941(d)-1(b)(3).
Filed Under: Tax ArticlesIRS rules no abatement of first-tier excise tax penalty on private foundation’s undistributed income In a Technical Advice Memorandum (TAM) 201129050, IRS has determined that the first-tier excise taxes due under Code Sec. 4942 on a trust’s undistributed income for the years at issue shouldn’t be abated under Code Sec. 4962 because the trust failed to establish that it acted with reasonable cause and not with willful neglect.
Filed Under: Tax ArticlesCharitable transfers of non-voting common stock aren’t split-interest transfers In PLR 201129033, IRS has privately ruled that transfers of non-voting common stock by a donor or his spouse to charity will be transfers of the entire interest in the property, not a nondeductible split-interest under Code Sec. 2522(c), reasoning that the non-voting common stock was a separate property interest from the other class of stock in the corporation. Additionally, IRS found that the value of the charitable gifts for Code Sec. 2512 purposes equals that of the gift tax charitable deduction under Code Sec. 2522.
Filed Under: Estate Planning ArticlesNo special use recapture on transfer of farmland to limited liability company or lease of farmland In four identical private rulings, IRS has concluded that neither trusts’ transfers of farmland to limited liability companies (LLCs) in exchange for interests in the LLCs, nor the LLCs’ lease of the farmland to a partnership, will trigger recapture of special use valuation.
Filed Under: Tax ArticlesTransfer of debt instruments for nonrecourse “loan” was disguised sale In Landow, TC Memo 2011-177, the Tax Court has determined that a 90% “loan transaction program” was in fact a taxable sale of the debt instruments that purportedly collateralized the loan. The Court also rejected the taxpayer’s argument that he should qualify for nonrecognition of gain under Code Sec. 1042, noting that the fact that the debt instruments were ultimately sold by the “lender” was irrelevant since the operative sale for Code Sec. 1042 purposes was from the taxpayer to the lender.
Filed Under: General PostsNoncompete covenant connected with any stock acquisition is Sec. 197 intangible The First Court of Appeals in Recovery Group, Inc., (CA 1 7/26/2011) 108 AFTR 2d ¶ 2011-5114, confirmed the Tax Court when it determined that a covenant not to compete, entered into in connection with the acquisition of a portion of the stock of a corporation that is engaged in a trade or business, is considered a “section 197 intangible,” within the meaning of I.R.C. § 197(d)(1)(E), regardless of whether the portion of stock acquired constitutes at least a “substantial portion” of such corporation’s total stock.
Filed Under: Tax ArticlesContinental Airlines could not recover pension distributions paid to pilots’ ex-spouses, despite “sham” divorces Continental Airlines in Brown v. Continental Airlines, Inc., (2011, CA5) 2011 WL 2780505 was not entitled to recover pension plan distributions that were paid to the ex-spouses of a group of divorced plan participants, even though the payments were made on account of alleged “sham” divorces, since ERISA does not authorize plan administrators to consider the subjective intentions or good faith underlying a divorce.
Filed Under: General PostsTax Court approves valuation of homes and paintings The Tax Court in Estate of Mitchell, TC Memo 2011-94, rejected IRS’s deficiency determinations and found that an estate properly determined the fair market value of the decedent’s real property and two paintings he had owned.
Filed Under: Estate Planning Articles, Tax ArticlesChief Counsel Notice formally reverses litigation position on two-year window for equitable innocent spouse relief A new Chief Counsel Notice (CCN), cc-2011-017 “Change in Litigating Position on the Two-Year Deadline to Request Section 6015(f) Equitable Relief”, formally reverses IRS’s litigation stance on the issue of whether an individual may request equitable relief under Code Sec. 6015(f) more than two years after IRS first acted to collect the liability from the individual. The CCN explains why IRS reversed course, and how litigators should apply IRS’s new position, namely that it will consider a request for equitable relief if it was filed with IRS during the Code Sec. 6502 period of limitation on collection or, for any credit or refund of tax, within the Code Sec. 6511 period of limitation. [Read more…]
Filed Under: Tax ArticlesIRS Reminds Taxpayers that the Aug. 31 Deadline Is Fast Approaching for the Second Special Voluntary Disclosure Initiative of Offshore Accounts IRS has warned U.S. taxpayers hiding income in undisclosed offshore accounts that they are running out of time to take advantage of the soon-to-expire 2011 Offshore Voluntary Disclosure Initiative (OVDI), which will expire on Aug. 31, 2011.
Filed Under: Tax ArticlesIRS revises Notice 2011-53 IRS has revised Notice 2011-53 which provides the phased implementation of the Foreign Account Tax Compliance Act (FATCA) rules that expand the information reporting requirements imposed on foreign financial institutions (FFIs) and impose withholding, documentation, and reporting requirements with respect to certain payments made to specified foreign entities. The revised Notice provides that a withholding agent’s Code Sec. 1472(a) withholding obligations for payment to a non-financial foreign entity with respect to amounts described in Code Sec. 1473(1)(A)(i) (U.S.-source FDAP payments), will begin on Jan. 1, 2014.
Filed Under: Tax ArticlesIRS reissues guidance on processing tax payment extension requests based on undue hardship IRS’s Small Business/Self-Employed (SB/SE) Division has reissued interim guidance for directors on the procedures for processing Form 1127, Applications for Extension of Time for Payment of Tax Due to Undue Hardship.
Filed Under: Tax ArticlesAugust 15, 2011: Estate Planning Presentation Attorney David M. Beliveau will be presenting to Route 128 Practitioners Form
Filed Under: Events & SeminarsIRS has issued an Attorneys Audit Technique Guide for auditors reviewing attorney returns IRS recently released a comprehensive Attorneys Audit Technique Guide (ATG) for auditors to use in reviewing returns of attorneys. It pinpoints the problem areas that IRS agents are instructed to probe for, explains in detail how attorney audits should be conducted, and lists the types of documents that should be requested and examined.
Filed Under: Tax ArticlesPLR 201128011, the IRS has ruled that a reformation of a grandfathered generation skipping transfer trust will not trigger adverse tax consequences In PLR 201128011, IRS has privately ruled that no adverse income or transfer tax consequences will result from reformation of a grandfathered generation-skipping transfer (GST) tax trust.
Filed Under: Estate Planning ArticlesIn PLR 201128017, certain contracts issued by life insurance company to investment account owners are annuity contracts In PLR 201128017,IRS has privately ruled that contracts offered by a life insurance company to certain investment account owners that obligate the company to pay a benefit if a customer’s account falls below a specified value, are annuity contracts under Code Sec. 72. Accordingly, any such benefits paid to the customers will be considered “amounts received as an annuity,” and the fees paid by the customers for the contracts will be factored into their investment in the contracts for Code Sec. 72(b) purposes.
Filed Under: Tax ArticlesIn Zapara v. Comm, Court orders IRS to credit taxpayer with amount lost by its failure to timely sell seized stock In Zapara v Comm (CA 9 7/18/2011) 108 AFTR 2d ¶ 2011-5084 , the IRS appealed Tax Court’s ruling to the Court of Appeals for the Ninth Circuit. This appeal presented the question, inter alia, of whether the Tax Court had jurisdiction in a hearing conducted pursuant to 26 U.S.C. § 6330 to review the Internal Revenue Service’s failure to comply with its statutory mandate under 26 U.S.C. § 6335(f). The Appeals Court conclude that it did and affirmed the judgment of the Tax Court. [Read more…]
Filed Under: General PostsPromises, Promises: Revisiting the Case of Mary Sable (3rd Cir.) Review of the Third Circuits view on promissory notes purchased from family members: [Read more…]
Filed Under: Elder Law ArticlesAARP’s new study shows huge tolls on family caregivers The AARP has published Valuing the Invaluable 201:1 Update The Growing Contributions and Costs of Family Caregiving showing huge tolls on family caregivers. The 2009 estimated economic value of family contributions was approximately $450 billion.
Filed Under: General PostsTax Court reaffirms that it has jurisdiction to hear whistleblower claims denied by the IRS In Kasper, the tax court reaffirmed its decision in Cooper v. Commissioner, 135 T.C. 70 (2010), each Whistleblower Office letter that denies a whistleblower claim is a determination within the meaning of sec. 7623(b)(4), I.R.C. The Tax Court has jurisdiction to review the matter, because it is a final administrative decision.
Filed Under: Tax ArticlesWarrants issued to shareholder not treated as “exercised” for Sec. 382 purposes In PLR 1126002 IRS has privately ruled that warrants issued from a parent corporation to a shareholder as part of an exchange for the shareholder’s stock in the parent won’t be treated as exercised on the date of the exchange under Code Sec. 382(l)(3)(A)(iv) and Reg. § 1.382-4(d)(2). The shareholder also won’t be treated as owning any stock in the parent for purposes of Reg. § 1.382-3(j)(3)’s cash issuance exception immediately before the parent’s subsequent issuance and sale of common stock to independent investors in order to raise capital.
Filed Under: Tax ArticlesIRS issues proposed regulations regarding Ex Parte Communications Between Appeals and Other Internal Revenue Service Employees Notice 2011-62 provides a proposed revenue procedure that will update Rev. Proc. 2000-43, 2000-2 C.B. 404, which provides guidance regarding ex parte communications between Appeals and other Internal Revenue Service functions.
Filed Under: Tax ArticlesIRS formally ends gift tax probe of 501(c)(4) contributors On July 7, IRS announced on its website that it will no longer pursue the issue of whether the gift tax applies to contributions made to Code Sec. 501(c)(4) social welfare organizations. An accompanying memo from IRS’s Deputy Commissioner for Services and Enforcement formalizes the decision with instructions to IRS personnel to stop pursuing the issue. IRS’s decision to throw in the towel on the issue comes in the wake of withering criticism from Congressional Republicans that the gift tax probe was a reversal of long-standing policy and was politically motivated.
Filed Under: General PostsAre you keeping an eye on your company’s cash? Do you regularly monitor your company’s cash accounts? You should. Even if you leave the job to your bookkeeper or accountant, you should stay aware of where the cash is going and how the spending is approved. Along with inventory “shrinkage,” theft or improper expenditures of cash are among the chief sources of loss for small companies.
Periodically, you hear about a huge loss caused by an employee who’s been quietly embezzling cash for years. But many smaller cases are never noticed. And it’s not always employees at fault. In fact, the vast majority of employees are scrupulously honest and loyal. Outsiders can be stealing your cash too, by submitting false or inflated invoices that are paid without proper review. [Read more…]
Filed Under: Articles, Tax ArticlesWhat to do with your 401(k) savings when you change jobs If you change jobs you may have an important decision to make – what to do with your 401(k) plan. You’ll have several choices. Unfortunately, the easiest choice is the worst choice: that is, to take a distribution from the old plan and put it in the bank. It may be tempting, because who couldn’t use some extra cash. But if you do, you’ll owe taxes on the balance and usually a 10% penalty as well. You’ll lose the benefits of future tax-deferred growth on your savings. And if you spend the money, you’ll have to start from scratch in saving for retirement. Instead, consider three options.
Roll over your balance into an individual retirement account (IRA). This avoids immediate taxes and lets your savings continue to grow tax-deferred. It also gives you maximum flexibility for future investments. You even have the flexibility to later convert into a Roth IRA. Be sure to ask for a “trustee-to-trustee” transfer to avoid any short-term tax risk. [Read more…]
Filed Under: Articles, Tax ArticlesIRS increases mileage rates The IRS has increased the standard mileage rates to be used for computing the deductible costs of operating a vehicle for business or for driving for medical or moving reasons. The new rates will apply to driving from July 1, 2011, through December 31, 2011.
The revised rates are 55.5¢ per mile for business driving and 23.5¢ for medical and moving driving. The rate for charitable driving is fixed by law and remains at 14¢ per mile.
The rates for the first half of 2011 (January 1 through June 30, 2011) are unchanged: 51¢ per mile for business driving and 19¢ per mile for driving for medical or moving reasons.
Filed Under: Articles, Tax ArticlesTake time to check your withholding for 2011 Have you taken the time to check your income tax withholding for 2011? It’s true that there were no major changes in tax rates or deductions for this year. However, there are still several reasons why you might want to adjust your withholding.
For example, if you’ve bought a house for the first time, the deductible mortgage interest could cut your taxable income. That means you might need less tax withheld from your paycheck every month. Or if you refinanced last year, your interest deduction could be lower and you might want more dollars withheld. [Read more…]
Filed Under: Articles, Tax ArticlesAnimal lovers win court case If you provide care for stray or feral animals in your home for an IRS-approved charity, you may be able to take a tax deduction for your out-of-pocket expenses. A recent U.S. Tax Court judge ruled that a taxpayer who fostered feral and stray cats in her home could deduct amounts she spent for food, veterinarian bills, litter, and other unreimbursed expenses incurred to help the charity in its mission.
An important requirement for such expenses to be deductible: the taxpayer must keep records of the expenses, and if they exceed $250, the charity must provide a contemporaneous written acknowledgment of the expenses as a charitable donation. The Humane Society hopes to get the word out on this case, stating that thousands of members do volunteer work such as this and spend their own money to support the mission of local animal shelters and rescue groups.
Filed Under: Articles, Tax ArticlesAre unemployment benefits taxable? Unemployment compensation can provide a welcome buffer while you’re transitioning to a new job. But with the help comes a tax effect, because the benefits provided under federal or state laws are usually includable in your income in the year you receive them.
As a result, depending on the amount of unemployment benefits you expect to receive, you may want to complete Form W-4V, Voluntary Withholding Request, to have federal income tax withheld from your benefits. The withholding rate is generally 10%. You can also ask the unemployment office to withhold state income tax. [Read more…]
Filed Under: Articles, Tax ArticlesMake the right pricing decision In business, making pricing decisions is always tough – and even more so when the economy is slow and sales are slipping. It’s tempting to cut prices hoping to generate higher sales volume. But sometimes that just produces lower margins on a low volume. What do you do if you’re being squeezed by cost increases? Can you increase prices in a slow economy? How do you respond if your customers complain? Can you justify holding prices steady if your competitors cut their prices?
There are no easy answers, but running through a three-step process can help you make the right decision. [Read more…]