Document Summaries for the Week of Nov. 9, 2015
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).
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).
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).
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).
Business meal deductions after the TCJA
This article discusses the history of the deduction of business meal expenses and the new rules under the TCJA and the regulations and provides a framework for documenting and substantiating the deduction.
Quirks spurred by COVID-19 tax relief
This article discusses some procedural and administrative quirks that have emerged with the new tax legislative, regulatory, and procedural guidance related to COVID-19.