Source: https://www.currentfederaltaxdevelopments.com/?offset=1500999402712
Timestamp: 2018-01-21 14:36:36
Document Index: 513580606

Matched Legal Cases: ['§468', '§468', '§448', '§170', '§501', '§501', '§501', '§1362', '§1362', '§1']

Appeals to Begin Offering Web-Based Conferences in Pilot Program
The IRS Office of Appeals announced in News Release IR-2017-122 that will begin a pilot program using web-based conferencing software to offer a virtual conference option for taxpayers and representatives. This option will be in addition to the current conferencing options.
Currently taxpayers and representatives can meet with an Appeals Officer:
Through a video conference system located at a limited number of local IRS offices.
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Taxpayer Had to Report Unemployment Benefit Income Even Though He Later Repaid the Benefits
The concept of a “claim-of-right” can be confusing for both taxpayers and tax professionals. In the case of Yoklic v. Commissioner, TC Memo. 2017-143, a taxpayer did not include unemployment benefits received in 2012 in income because the state agency administering the benefits (Arizona’s Department of Economic Security (DES)) had determined he was not entitled to the benefits, and Mr. Yoklic repaid those benefits in 2013.
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Executive Order Does Not Relieve Taxpayers of Shared Responsibility Penalties for 2016
On January 20, 2017, newly inaugurated President Donald Trump signed Executive Order Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal, directing agencies to exercise the authority and discretion permitted to them by law to reduce burdens imposed by the Affordable Care Act. As well, shortly thereafter the IRS announced that it would accept tax returns where taxpayers did not indicate whether they had qualifying health insurance.
Many clients took this to mean that the penalties for failure to maintain health insurance that provided minimum essential coverage by individuals and the shared responsibility payments that are imposed on applicable large employers (ALEs) who fail to provide affordable minimum essential coverage to their employees would not apply for 2016. However, in information letters INFO 2017-10, INFO 2017-0013, and INFO 2017-0017 the IRS noted that the order did not actually change the law, and that the penalties will still apply to those taxpayers unless they meet another exception.
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4980H, 5000A
IRS Email Explains Limits to Use of Form 941-X for Prior Year Errors in Federal Income Tax Withholding
July 15, 2017 by Ed Zollars, CPA
In emailed advice (Chief Counsel Email 201727008), the IRS Chief Counsel’s office discussed the limitation on the use of Form 941-X, specifically looking at what qualifies as “administrative error” for which the Form 941-X can be used to address issues on prior year’s payroll tax reports related to federal income tax withheld.
People do make mistakes, and at time those errors involve payroll tax issues, including tax withholding. Form 941-X was created to allow employers to deal with some errors—but the form has very specific limitations on its use. As a practical matter, once a year has ended and the employee has been given a W-2, the consequences of, say, overwithholding or underwitholding federal income taxes gets “passed on” to the employee since that number is claimed as a credit on the employee’s own income tax return.
July 15, 2017 /Ed Zollars, CPA
Election to Currently Deduct Future Landfill Cleanup Costs Under §468 Not Limited to Accrual Basis Taxpayers
July 11, 2017 by Ed Zollars, CPA
IRC §468 allows electing taxpayers who, among other things, operate landfills to claim a current deduction for costs that will be incurred once the landfill is closed to clean up the site. But the IRS argued in the case of Gregory v. Commissioner, 149 TC No. 2 that this election was restricted to taxpayers who used the overall accrual method of accounting for tax purposes.
IRC §448’s language allows a deduction to a taxpayer who elects the application of the provision. The taxpayers argued that nowhere in the statute did Congress restrict the taxpayers who could make this election to those using the overall accrual basis of accounting and that, based on the plain language of the statute, they should be allowed to take a deduction for such future clean-up costs regardless of the fact they reported their income and deductions generally on the cash basis of accounting.
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July 11, 2017 /Ed Zollars, CPA
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Failure to Report Basis of Property Donated Fatal to Charitable Contribution
Details matter when claiming a charitable deduction under IRC §170—and failing to follow all of the requirements will most often trigger a complete disallowance of the deduction. That’s true even of a claimed $33 million deduction in the case of RERI Holdings I LLC v. Commissioner, 149 TC No. 1.
In this case the LLC, being taxed as a partnership, purchased a remainder interest in property for $2.95 million in March 2002. In August 2003, the LLC assigned its interest to a university, a §501(c)(3) organization. The Form 1065 reported a noncash charitable contribution of $33,019,000 from this donation.
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IRS Issues Final Regulations on Streamlined Applications for §501(c)(3) Exempt Organization Status
June 30, 2017 by Ed Zollars, CPA
The IRS has adopted as final regulations the proposed regulations issued in June of 2014 that allowed for a streamlined application for tax-exempt status under IRC §501(c)(3) in T.D. 9819. These same regulations were issued in 2014 as temporary regulations which, with the issuance of the same regulations in final form, are now withdrawn.
The streamlined application process takes place entirely online, with the organization filling in Form 1023-EZ online at http://www.pay.gov.
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June 30, 2017 /Ed Zollars, CPA
IRS Begins Issuing PTINs Without Charge, But Reserves Right to Charge Later
June 24, 2017 by Ed Zollars, CPA
The IRS has begun again issuing PTINs after suspending such issuance immediately losing the ability to charge fees for PTINs in the case of Steele, et al v. United States, (US DC District of Columbia). The announcement, along with a series of Q&As on the issue, was posted to the IRS website (“IRS Reopening Preparer Tax Identification Number (PTIN) System”).
The IRS is not charging for a PTIN issuance at this time, but the Q&As reserve the possibility that those receiving a “free” PTIN at this time might be required to pay for it later.
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June 24, 2017 /Ed Zollars, CPA
IRS Addition of Payroll Tax Liability That Was Subject of OIC to Going Concern Value of Business Was Not Reasonable
In the case of W. Zintl Construction, Inc. v. Commissioner, TC Memo 2017-119 the taxpayer in question was a corporation with a rather significant unpaid payroll tax liability ($6,563,263 to be exact). The corporation was seeking an offer in compromise with regard to these taxes. The IRS settlement officer (SO) determined that the offer was not to be accepted. In doing so he considered the going concern value of the business as a whole and then added back the underlying payroll tax liability.
The taxpayer took its case to the Tax Court, arguing that a going concern value should not be used against the business itself, as opposed to that of the owner of the business. The Tax Court disagreed with this view, but also determined the settlement officer had improperly computed the going concern value when he added back to that value the payroll tax liability.
Corporation's Activities and Costs Render Rental Not §1362 Passive Income
If a S corporation has any accumulated earnings and profits, its S status is at risk due to “excess passive income” if it incurs such income for three straight years under IRC §1362(d)(3). While rentals can generate such passive income, a rental does not provide such passive income if it is deemed to be derived in the active trade or business of renting property (Reg. §1.1362-2(c)(5)(ii)(B)(2)). In PLR 201725022, the taxpayer asked the IRS to find that the rental income being received by a C corporation would not be treated as “passive income” if the corporation elected S status.
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