Document Summaries for the Week of Nov. 9, 2015

EMPLOYEE BENEFITS

Final regs. allow hybrid defined benefit plans to switch interest crediting rate

The IRS issued final regulations that permit a plan sponsor of an applicable defined benefit plan that does not comply with the market rate of return requirement to amend the plan to change to an interest crediting rate that is permitted under previously issued final hybrid plan regulations without violating the anti-cutback rules of Sec. 411(d)(6). T.D. 9743 (11/13/15).

IRS updates weighted average interest rates, yield curves, and segment rates for November

The IRS issued guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Sec. 417(e)(3), and the 24-month average segment rates under Sec. 430(h)(2) for November 2015. The guidance also provides the interest rate on 30-year Treasury securities under Sec. 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under Sec. 431(c)(6)(E)(ii)(I). Notice 2015-80 (11/13/15).

 

INDIVIDUALS

Uncertainty whether income was received does not excuse omitting it from return

The Tax Court held that a taxpayer’s uncertainty whether he actually received income reported on Forms W-2, Wage and Tax Statement, that he did not include in his tax return did not satisfy his burden of proving that he did not receive the income. In addition, the criminal investigation and incarceration of the taxpayer did not constitute reasonable cause for his failure to timely file his return or to timely pay the tax shown on the return, and he was thus liable for penalties as well as back taxes. McDougall, T.C. Summ. 2015-65 (11/9/15).

Taxpayer’s log inflated rental real estate activity hours

The Tax Court held that a taxpayer’s log inflated the number of hours she performed personal services with respect to rental real estate activities and that she did not qualify as a real estate professional. Thus, she was not entitled to deduct rental real estate losses and was liable for penalties. Calvanico, T.C. Summ. 2015-64 (11/9/15).

 

IRS PROCEDURE

Identity theft victims can get copies of fraudulent returns from the IRS

The IRS posted instructions on how taxpayers who have had their identity stolen can obtain copies of fraudulent returns filed by the thieves. Instructions for Requesting Copy of Fraudulent Returns (11/3/15) (see related news story).

GAO: IRS cannot accurately determine unpaid tax assessments

The U.S. Government Accountability Office reported that the IRS did not maintain effective internal control over financial reporting as of Sept. 30, 2015, because of a continuing material weakness in internal control over unpaid tax assessments. GAO Rep’t No. GAO-16-146 (11/12/15).

 

MISCELLANEOUS

Guidance issued on tax-exempt bond financing under state supplemental loan programs

The IRS provided guidance on qualified student loan bonds under Sec. 144(b) to clarify certain requirements for tax-exempt bond financing for loan programs of general application approved by a state under Sec. 144(b)(1)(B) (state supplemental loan programs). Notice 2015-78 (11/13/15).

Newsletter Articles

SPONSORED REPORT

Year-End Tax Planning and What’s New for 2016

A look at year-end tax planning strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.

PRACTICE MANAGEMENT

CPAs Contend With Tax ID Theft

Tax-related identity theft fraud remains a widespread problem that is often difficult for victims and their tax preparers to correct.