Document Summaries for the Week of March 21, 2016


Regulations on coordination rule exceptions and outbound asset reorganizations

The IRS finalized regulations that eliminate one exception to the coordination rule that applies to certain asset transfers and indirect stock transfers in outbound asset reorganizations, modify another exception to the coordination rule, and modify the procedures for obtaining reasonable-cause relief for failing to comply with certain reporting requirements. T.D. 9760 (3/21/16) (see related news story).


IRS extends due date for estate basis reporting forms

The IRS announced that it is delaying the deadline for filing Form 8971, Information Regarding Beneficiaries Acquiring Property From a Decedent, until June 30, 2016. Notice 2016-27 (3/24/16) (see related news story).


Sixth Circuit orders IRS to disclose names of applicants for exempt status

The Sixth Circuit upheld a lower court decision ordering the IRS to disclose information about organizations that had applied for tax-exempt status, holding that the organizations’ names were not protected return information. NorCal Tea Party Patriots, No. 15-3793 (6th Cir. 3/22/16) (see related news story).


Horse training activity was not engaged in for profit; penalties upheld

The Tax Court held that, because the taxpayer’s horse training activity was not engaged in for profit within the meaning of Sec. 183, the losses from the activity could not be offset against the taxpayer’s other business income. Further, since the taxpayer and her husband did not demonstrate that they acted with reasonable cause and in good faith in reporting the horse training activity as an activity engaged in for profit and failed to include a state income tax refund in income, they were liable for Sec. 6662(a) accuracy-related penalties. Kaiser, T.C. Summ. 2016-13 (3/21/16).

Substantiation requirements for conservation easement deduction not met

The Tax Court held that, with respect to a deduction taken by a couple for a donation of a conservation easement, the conservation deed that was recorded in 2005 was the only written acknowledgment that was contemporaneous with the taxpayers’ 2005 return on which the deduction was taken, and it did not comply with the strict substantiation requirements of Sec. 170(f)(8)(B). Thus, the court concluded that the taxpayers were ineligible for the deduction. French, T.C. Memo. 2016-53 (3/23/16).


Court rejects IRS account transcript that even the IRS described as “indecipherable”

The Tax Court held that the taxpayer met his burden of proving that he did not enter into an installment agreement and therefore did not waive the 10-year statute of limitation on collection under Sec. 6502(a)(2)(A). The court concluded that, because the IRS’s only evidence that an installment agreement existed was an account transcript that even the IRS conceded was “inaccurate and an indecipherable and unconvincingly explained collection of numerical codes,” the 10-year statute of limitation for collecting tax from the taxpayer had expired. Grauer, T.C. Memo. 2016-52 (3/22/16).

IRS launches competition to redesign its presentation of tax information

The IRS announced that it will be launching a competition aimed at “civic-minded technologists, designers, and innovative thinkers” to improve taxpayers’ experience using the IRS website. Notice, 81 Fed. Reg. 15413 (3/22/16) (see related news story).

Proposed regulations issued on low-income housing credit utility allowance

The IRS issued proposed regulations that amend the utility allowance rules under the Sec. 42 low-income housing credit. REG-123867-14 (3/21/16).

Failure to be current on estimated tax payments justifies IRS denial of OIC

The Tax Court held that the IRS could proceed with a collection action against a couple after it had rejected their offer in compromise (OIC). According to the court, it was not an abuse of discretion for the IRS to consider a taxpayer ineligible for an OIC because of their failure to be current on estimated tax payments. Rehn, T.C. Memo. 2016-54 (3/24/16). 

IRS extends time for empowerment zone designation

The IRS provided guidance on how state or local governments can amend an empowerment zone nomination to provide for a new termination date of Dec. 31, 2016. Notice 2016-28 (3/28/16).


IRS posts new Form 3115

The IRS released a new version of Form 3115, Application for Change in Accounting Method, and new instructions. Announcement 2016-14 (3/24/16) (see related news story).

Tax Insider Articles


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.