Scacpa's Weekly Federal Tax Update

Lynn Nichols Federal Tax Update Podcast January, 16 2019, Episode 29 Listen as Lynn Nichols provides commentary on 5 Items pertaining to current developments in U.S. tax law. This week’s topics include: IRS Releases Final Instructions for Business Interest Expense Form The IRS has released final instructions for Form 8990, “Limitation on Business Interest Expense Under Section 163(j),” which helps taxpayers calculate the amount of business interest expense to deduct and the amount to carryforward to the next year.     [www.irs.gov . . . Form 8990, 1/2/2019]   OMB Reverses IRS’s Stance on Sequestering AMT Credits The Office of Management and Budget has determined that corporations with alternative minimum tax credits are entitled to full refunds under the Tax Cuts and Jobs Act, reversing the IRS’s position. [Tax Notes Today; 1/8/2019, Article by Emily L. Foster]   Bankruptcy Court Can’t Determine Tax Liability of Non-Debtors A U.S. Bankruptcy Court has dismissed for lack of jurisdiction a complaint se

Lynn Nichols Federal Tax Update Podcast January, 8 2019, Episode 28 Listen as Lynn Nichols provides commentary on 4 Items pertaining to current developments in U.S. tax law. This week’s topics include: IRS Offers Interim Explanation of New EO Compensation Tax Tax-exempt organizations that could be subject to a new tax on executive compensation paid to their highest-paid employees have gotten answers to some of their questions. [Tax Notes Today; 1/2/2019, Article by Fred Stokeld]   Guidance Issued on Excess Executive Comp Tax for Exempt Orgs The IRS has issued interim guidance (Notice 2019-9) on the section 4960 excise tax on excess remuneration and excess parachute payments made by an exempt organization to a covered employee. The interim guidance, to be followed up by proposed regulations, defines terms under the code section and explains how to report and pay the excise tax. [Notice 2019-9; 12/31/2019]   American Bankers Association Seeks Guidance on Integrated HRAs The American Bankers Association h

Lynn Nichols Federal Tax Update Podcast October 15, 2018, edition Listen as Lynn Nichols provides commentary on 4 Items pertaining to current developments in U.S. tax law. This week’s topics include: IRS Reproposes Parts of Partnership Audit Regs to Reflect Technical Corrections The IRS has issued proposed regulations implementing the centralized partnership audit regime, withdrawing and reproposing parts of earlier proposed rules to reflect changes made by the Technical Corrections Act of 2018. [REG-136118-15; 8/13/2018]   Partnership Audit Rules Make Clear It’s ‘Go Big or Go Home’ Reproposed regs on the partnership audit rules make clear that the IRS doesn’t have to prove that a partnership item would actually affect someone’s tax liability to be within the scope of the rules. [Tax Notes Today; 8/15/2018; Article by Stephanie Cumings]   Bank Deposits Analysis Showed Couple Had Unreported Income The Tax Court, in a summary opinion sustaining accuracy-related penalties, held that the IRS properly used

Lynn Nichols Federal Tax Update Podcast October 08, 2018, edition Listen as Lynn Nichols provides commentary on 9 Items pertaining to current developments in U.S. tax law. This week’s topics include: Measly Offer in Compromise Doesn’t Prevent Approval of Levy on Home The Eighth Circuit affirmed a district court decision that upheld an IRS levy on an individual’s home to satisfy her half million-dollar tax liability, finding that the individual was incorrect in her belief that reg. section 301.6334-1(d)(1) provided that the court couldn’t approve the levy until the IRS responded to her $1,000 offer in compromise. [ Brabant-Scribner, Debora; CA 8; No. 17-2825; 8/17/2018]   Non-Grantor Trusts Still Useful in TCJA Planning Although Treasury effectively shut down tax avoidance strategies that used multiple trusts to take advantage of the new passthrough deduction, setting up at least one non-grantor trust is likely allowed and could still have numerous benefits. [Tax Notes Today; 8/21/2018; Article by Eric

Lynn Nichols Federal Tax Update Podcast October 02, 2018, edition Listen as Lynn Nichols provides commentary on 6 Items pertaining to current developments in U.S. tax law. This week’s topics include: New Loss Limitation Hard to Calculate, Interpret With Other Rules The main focus of discussions on the Tax Cuts and Jobs Act has been the Section 199A passthrough deduction, but less talked about is a loss limitation that could have consequences for start-ups and real estate projects. [Tax Notes Today; 8/27/2018; Article by Eris Yauch]   Combat-Zone Contractors Qualify for Foreign Earned Income Exclusion Contract support for the military in designated combat zones may now qualify for the foreign earned income exclusion because of a change in the tax home requirement under the Bipartisan Budget Act of 2018. [IR-2018-173; 8/24/2018]   Stock Transfer Under Divorce Decree Won’t Affect S Corp Tax Status An S corporation won’t be considered to have a second class of stock in violation of federal tax rules solely

Lynn Nichols Federal Tax Update Podcast August 20, 2018, edition Listen as Lynn Nichols provides commentary on 8 Items pertaining to current developments in U.S. tax law. This week’s topics include: Final Regs Provide Substantiation Rules for Charitable Contributions The IRS has issued final regulations on the substantiation and reporting rules for charitable contributions at various monetary thresholds and for donated clothing and household items. The final regs also address the new definitions of qualified appraisal and qualified appraiser for noncash contributions and recordkeeping requirements for all cash contributions. [T.D. 9836; 7/27/2018]    Tax Court Correctly Dismissed Employment Tax Liability Challenge The Eighth Circuit held that the Tax Court properly dismissed on jurisdictional grounds an attorney’s claim that he did not owe additional employment tax on payments he received as the sole owner and officer of an S corporation, finding that because there was no actual controversy involving a

Lynn Nichols Federal Tax Update Podcast August 13, 2018, edition Listen as Lynn Nichols provides commentary on 8 Items pertaining to current developments in U.S. tax law. This week’s topics include: IRS Likely to Trounce 199A Trust Planning Strategy Wealth planning advisers eager to help their clients take advantage of the new passthrough deduction by setting up multiple non-grantor trusts to claim multiple deductions may soon have to undo all that effort. [Tax Notes Today; 7/23/2018; Article by Jonathan Curry]   Group Fails to Meet Operational Test; Exempt Status Revoked The IRS revoked the tax-exempt status of a group that promoted tourism and improved the conditions of the tourism business environment of a particular area, finding that the group wasn't operated exclusively for charitable purposes. [LTR 201829015; 1/16/2018; rel. 7/20/2018]     IRS May Rely On, but Not Adopt, Grouping Rules in 199A Regs The IRS may look to the passive activity loss grouping and material participation rules when dr

Lynn Nichols Federal Tax Update Podcast August 06, 2018, edition Listen as Lynn Nichols provides commentary on 5 Items pertaining to current developments in U.S. tax law. This week’s topics include:   Commitment Fees Paid on Revolving Credit Agreement May Be Deducted In field attorney advice, the IRS concluded that a taxpayer may deduct quarterly commitment fees it paid on its revolving credit agreement in the tax year in which they were incurred. [Tax Notes Today; FAA 20182502F, 4/11/2018, rel.6/26/2018.]     Widow Who Didn’t Face Economic Hardship Denied Spousal Relief The Tax Court denied a widow innocent spouse relief from joint tax liabilities with her late husband who unbeknown to her had failed to pay their taxes, finding that it was not unfair to hold her liable for the taxes because it did not cause her economic hardship and the tax payments were funded by her husband’s life insurance proceeds. [Hale, Kimberly R. v. Commissioner; No. 18664-14; No. 10262-15; T.C. Memo. 2018-93, 6/26/2018]    

Lynn Nichols Federal Tax Update Podcast July 23, 2018, edition   We are back after a short hiatus! Listen as Lynn Nichols provides commentary on 8 Items pertaining to current developments in U.S. tax law. This week’s topics include: How to Decide Whether an S Corp Is a Corporation In news analysis, Marie Sapirie discusses whether Treasury has the authority to say that an S corporation isn’t a corporation for purposes of the carried interest provision in the Tax Cuts and Jobs Act. [Tax Notes Today; 7/16/2018, Article by Marie Sapirie      IRS to Issue Regs on Suspension of Miscellaneous Itemized Deductions The IRS has announced its intention to issue regulations clarifying how newly enacted section 67(g), which eliminates miscellaneous itemized deductions for tax years beginning after December 31, 2017, and before January 1, 2026, affects the deductibility of some expenses that are incurred by estates and non-grantor trusts. [Notice 2018-61; 2018-31 IRB 1; 7/13/2018]      IRS Drops Donor Disclosure Req

Lynn Nichols Federal Tax Update Podcast July 16, 2018, edition   We are back after a short hiatus! Listen as Lynn Nichols provides commentary on 8 Items pertaining to current developments in U.S. tax law. This week’s topics include: OUR PROGRAM THIS WEEK INCLUDES . . . . . .   Termination of S Corp Election Inadvertent The IRS ruled that a company will be treated as continuing to be an S corporation from the date its subchapter S election was inadvertently terminated when a trust became an ineligible shareholder, provided some conditions are met. [LTR 201824003; 10/27/2017, rel. 6/15/2018] (FIVE LIKE THIS IN SAME WEEK ! ! !) IRS Scraps Leveraged Partnership Rules, Keeps Bottom-Dollar Ban The IRS is reverting to old rules on leveraged partnerships in response to an executive order calling for the removal of burdensome regulations, but bottom-dollar guarantees didn’t make the cut. [Tax Notes Today; June 19,2018, article by Eric Yauch] IRS Proposed Disguised Sales Regs Would Reinstate Prior Regs The IRS h

Lynn Nichols Federal Tax Update Podcast June 25, 2018, edition   Listen as Lynn Nichols provides commentary on 7 Items pertaining to current developments in U.S. tax law. This week’s topics include: OUR PROGRAM THIS WEEK INCLUDES . . . . . . Foundation's Set-Aside Request Approved The IRS approved a private foundation's request to set aside funds to restore a historic theater, concluding a set-aside is appropriate because the foundation's grant is part of a grant-matching program with the public charity that owns the theater. [LTR 201823010; 3/14/2018, rel. 6/8/2018 Mitigation May Apply to Allow Taxpayers to Carryback NOLs In emailed advice, the IRS concluded that mitigation could apply to allow taxpayers to carry back net operating losses to closed years when examination of an open year led to the disallowance of a carry forward of a different NOL and revealed the taxpayers’ errors in carrying forward the NOLs without making the election to waive the carryback period. [ECC 201823004; 1/19/2018, rel. 6/

Lynn Nichols Federal Tax Update Podcast June 12, 2018, edition   Listen as Lynn Nichols provides commentary on 6 Items pertaining to current developments in U.S. tax law. This week’s topics include: OUR PROGRAM THIS WEEK INCLUDES . . . . . .   Standard Mileage Rates Guidance Reflects TCJA Changes The IRS has issued guidance on the optional 2018 standard mileage rates to reflect amendments to sections 67 and 217 made by the Tax Cuts and Jobs Act. [Notice 2018-42; 2018-24 IRB 1; 5/25/2018]   Rollover of Plan Distribution From Estate Is Tax-Free The IRS ruled that a distribution from a decedent’s estate to the surviving spouse will be treated as having come directly from the decedent's retirement plan and that the spouse, who was eligible to roll over the amount to her own IRA, won’t have to include the funds in her gross income. [LTR 201821008, 2/2/2018, rel.5/25/2018     Unclaimed IRAs Handed Over to States Subject to Withholding Interests in a retirement account paid to a state unclaimed property fun

Lynn Nichols Federal Tax Update Podcast May 29, 2018, edition   Listen as Lynn Nichols provides commentary on 6 Items pertaining to current developments in U.S. tax law. This week’s topics include: OUR PROGRAM THIS WEEK INCLUDES . . . . . .   IRS Noncommittal on Whether Taxpayers Can Rely on Proposed TCJA Regs Guidance on several changes under the 2017 tax law will be issued this summer, but whether taxpayers can rely on that guidance for tax positions is uncertain. [Tax Notes Today, 5/14/2018, Article   Existing Guidance Helpful for Addressing Section 199A Issues Existing code sections are being consulted while Treasury develops new rules on the application of the passthrough deduction.  [Tax Notes Today, 5/14/2018, Article   Termination of S Corp Election Inadvertent The IRS ruled that a company will be treated as continuing to be an S corporation from the date its subchapter S election was inadvertently terminated when a trust became an ineligible shareholder, provided the trust files an electing

Lynn Nichols Federal Tax Update Podcast May 24, 2018, edition   Listen as Lynn Nichols provides commentary on 7 Items pertaining to current developments in U.S. tax law. This week’s topics include: OUR PROGRAM THIS WEEK INCLUDES . . . . . .   IRS Denies Tax-Exempt Status to Natural Gas Promoter The IRS denied tax-exempt status to an organization established to support the natural gas industry after concluding the organization operates in a commercial manner and benefits its founder and other insiders. [LTR 201818018; 2/6/2018, rel. 5/4/2018]     IRS Denies Exemption to Farmers Market The IRS denied tax-exempt status to an organization that operates a farmers market because it provides services for the convenience of vendors instead of improving the business conditions of its farmers market community. [LTR 201818017; 2/7/2018, rel. 5/4/2018]     Tax Court Says Burden Is on Partnership in Penalty Challenge It’s up to partnerships to prove they don’t owe penalties in legal challenges, even though the in

Lynn Nichols Federal Tax Update Podcast May 15, 2018, edition   Listen as Lynn Nichols provides commentary on 7 Items pertaining to current developments in U.S. tax law. This week’s topics include: OUR PROGRAM THIS WEEK INCLUDES . . . . . . IRS Announces Healthcare Tax Credit Relief for Some Small Employers The IRS has announced the release of guidance that provides relief for some small employers that wish to claim the small business healthcare tax credit for 2017 and later years. [ IR-2018-108, 4/27/2018 Healthcare Tax Credit Relief Given to Some Small Employers The IRS has provided relief for an eligible small employer that properly claimed or claims a section 45R credit for all or part of a tax year beginning after December 31, 2015, but that for all or part of the remainder of the credit period has a principal business address in a location in which a qualified health plan through a Small Business Health Options Program exchange is not available. [Notice 2018-27, 4/27/2018]       Doctor’s Patient S

Lynn Nichols Federal Tax Update Podcast May 7, 2018, edition   Listen as Lynn Nichols provides commentary on 5 Items pertaining to current developments in U.S. tax law. This week’s topics include: OUR PROGRAM THIS WEEK INCLUDES . . . . . .   Appeals Filed in ‘Devastating’ Clergy Housing Allowance Decision A group of ministers has joined the government in appealing a court decision on the parsonage housing allowance that they say could impose a tax burden on many churches and harm their communities. [Tax Notes Today; 4/23/2018; Article by Fred Stokeld] Government Urges Court to Allow Minister Rental Allowance Exclusion In a brief for the Seventh Circuit, the government urged the court to reverse a decision that held unconstitutional section 107(2), which allows ministers to exclude from income a rental allowance paid to them as part of their compensation, arguing that the exclusion has a secular purpose and effect and doesn’t violate the Establishment Clause. Clergy Argue Rental Allowance Exclusion Is Con

Lynn Nichols Federal Tax Update Podcast April 16, 2018, edition   Listen as Lynn Nichols provides commentary on 6 Items pertaining to current developments in U.S. tax law. This week’s topics include: OUR PROGRAM THIS WEEK INCLUDES . . . . . . IRS Fact Sheet Outlines Options for Taxpayers Who Can't Pay What's Owed The IRS has advised individuals who can't pay all of their tax bill to file their return on time and pay as much as possible, which will help reduce penalties and interest, and to seek options provided by the IRS if they can't pay at all. [FS-2018-8; 4/13/2018]                                                                                                                                                                                                        Student Loan Repayments to Doctors Are Excludable From Income In a legal memorandum, the IRS concluded that cash awards made under a state’s student loan repayment program are excludable from the recipients’ gross income under section 108(f)(

Lynn Nichols Federal Tax Update Podcast April 16, 2018, edition   Listen as Lynn Nichols provides commentary on 6 Items pertaining to current developments in U.S. tax law. This week’s topics include: OUR PROGRAM THIS WEEK INCLUDES . . . . . . Partnership Denied $1.8 Million Deduction for Easement Donation The Tax Court, declining to impose a penalty, held that a land development partnership wasn’t entitled to a $1.8 million charitable contribution deduction for the donation of a conservation easement, finding that the easement was donated with the expectation of receiving a substantial benefit and that the value of the easement was zero. [Wendell Falls Development LLC et al. v. Commissioner; No. 3494-14; T.C. Memo. 2018-45, 4/4/2018]   Reconstruction of Mileage Logs Falls Short of Substantiation Rules The Tax Court, sustaining an accuracy-related penalty, held that an attorney with multiple law offices wasn’t entitled to a deduction for his business-related vehicle expenses, finding that his attempt to

Lynn Nichols Federal Tax Update Podcast April 2, 2018, edition   Listen as Lynn Nichols provides commentary on 10 Items pertaining to current developments in U.S. tax law. This week’s topics include: OUR PROGRAM THIS WEEK INCLUDES . . . . . . Economic Analysis: A Spreadsheet to Calculate the New Passthrough Deduction In economic analysis, Martin A. Sullivan discusses the difficulties new section 199A presents to owners of passthrough businesses. [Tax Notes Today; 4/2/2018; Article by Martin A. Sullivan]   Interest Deductibility Guidance Settles Unanswered Questions The IRS released expected initial guidance on business interest expense limitations that address several questions for which practitioners had been clamoring for answers since the new tax law was enacted, but they yearn for more. [Tax Notes Today; 4/3/2018; Article by Emily Foster] IRS Issues Guidance on Business Interest Expense Limitations The IRS has issued guidance describing regulations that it intends to issue to help taxpayers comply

Lynn Nichols Federal Tax Update Podcast April 2, 2018, edition   Listen as Lynn Nichols provides commentary on 6 Items pertaining to current developments in U.S. tax law. This week’s topics include: OUR PROGRAM THIS WEEK INCLUDES . . . . . . NYSBA Tax Section Submits Report on Qualified Business Income Karen Sowell of the New York State Bar Association Tax Section has submitted comments to address various technical and interpretative issues that have arisen as a result of the addition of section 199A by the Tax Cuts and Jobs Act (P.L. 115-97). [Tax Notes Today; 3/26/2018]     Third Circuit Affirms Drug Technology Royalties Were Ordinary Income A divided panel of the Third Circuit affirmed a Tax Court decision that held that a pharmaceutical scientist didn’t transfer all substantial rights to the liquisolid drug technology he developed and, thus, subjected royalties he received under a licensing agreement with a drug company to treatment as ordinary income and not capital gains under section 1235. [Spire