Document summaries for the week of Oct. 22, 2018

EMPLOYEE BENEFITS

Guidance on revocation of church plan elections issued

The IRS provided guidance on how taxpayers can notify the IRS of revocation of an election to aggregate or disaggregate certain church-related organizations from treatment as a single employer under Secs. 414(c)(2)(C) and (D). Notice 2018-81 (10/22/18).

 

ESTATES, TRUSTS & GIFTS

18% discount rate applies to decedent’s transfer of a limited partnership interest

The Tax Court held that, in determining the value for estate tax purposes of a transfer by a decedent to a revocable trust, the interest to be valued was an 88.99% limited partnership interest in an asset holding entity. While the court concluded that no discount for lack of control was appropriate, it found that an 18% discount rate for lack of marketability did apply. Estate of Streightoff, T.C. Memo. 2018-178 (10/24/18).

 

INDIVIDUALS

Individual is not entitled to a whistleblower award

The Tax Court granted the IRS summary judgment after finding that an individual who filed for a whistleblower award was not entitled to any proceeds because the IRS Whistleblower Office did not initiate any administrative or judicial action against any taxpayer and did not collect any proceeds on the basis of the information the individual provided. Perales, T.C. Memo. 2018-177 (10/23/18).

Taxpayer’s involvement and benefit received weigh against innocent spouse relief

The Tax Court held that a taxpayer was not entitled to innocent spouse relief from joint and several liability under Sec. 6015(b), (c), or (f) for 2003 and 2004. According to the court, although many of the factors for equitable relief either favored the taxpayer or were neutral, the taxpayer’s actual knowledge of the losses deducted on the joint returns, his involvement in preparing those returns, and the significant benefit he received from the understatements weighed too heavily against him to allow relief. Schorse, T.C. Memo. 2018-176 (10/22/18).

Court sustains collection action against taxpayer who failed to file returns and pay taxes

The Tax Court held that the IRS was entitled to summary judgment and, as a result, sustained a proposed collection action against a taxpayer who failed to file income tax returns for 2009, 2010, and 2012 and failed to pay the tax liabilities the IRS assessed for those years. The court found no abuse of discretion on the IRS’s part and noted that the taxpayer is free to submit to the IRS at any time, for its consideration and possible acceptance, a collection alternative in the form of an offer in compromise or an installment agreement, supported by the necessary financial information. Stout, T.C. Memo. 2018-179 (10/24/18).

 

IRS PROCEDURE

PTIN renewals required by year end

The IRS notified preparers that they must renew their preparer tax identification numbers (PTINs) before the end of 2018 to be able to prepare tax returns for compensation in 2019. News Release IR-2018-207 (10/23/18).

OPR announces disciplinary sanctions

The Office of Professional Responsibility announced recent disciplinary sanctions against attorneys, CPAs, and enrolled agents. Announcement 2018-13 (10/22/18).

Proof of claim in probate court tolls statute of limitation

The Sixth Circuit affirmed a district court decision, holding that the government’s filing of a proof of claim in a probate proceeding counted as a “proceeding in court” that tolled the running of the statute of limitation in Sec. 6502(a), allowing a suit to collect the decedent’s unpaid tax liability to proceed. Estate of Chicorel, No. 17-2321 (6th Cir. 10/25/18).

 

TAX ACCOUNTING

Chief Counsel’s Office addresses use of tax-exempt bonds to advance refund taxable bonds

The Office of Chief Counsel advised that Sec. 149(d), as amended by Section 13532 of the law known as the Tax Cuts and Jobs Act, P.L. 115-97, does not preclude the issuance of tax-exempt bonds to advance refund non-tax-advantaged, taxable bonds in a situation involving the issuance by a local government of build America bonds. The Chief Counsel’s Office determined that, under the facts described, there were not two sets of tax-advantaged bonds outstanding for the same project or activity. CCA 201843009 (10/26/18).

Newsletter Articles

TAX REFORM

Traps for the unwary: Tax Cuts and Jobs Act changes

By now many of us are familiar with the various provisions of the law known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97. Here is a list of changes together with (perhaps) unexpected nuances.

DEDUCTIONS

Qualified business income deduction regs. and other guidance issued

The package includes final regulations, guidance on how to calculate W-2 wages, a safe-harbor rule for rental real estate businesses, and new proposed rules on the treatment of previously suspended losses.