Document summaries for the week of Feb. 11, 2019

EMPLOYEE BENEFITS

IRS issues monthly corporate yield curve and segment rates

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). In addition, the IRS provided guidance as to 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 2019-16 (2/14/19).

 

INDIVIDUALS

Court finds couple who filed ‘zero returns’ liable for tax deficiencies and penalties

The Tax Court held that arguments presented by a tax protestor couple who did not report their income, and instead filed “zero returns” claiming refunds of withheld taxes, were frivolous, and the couple were therefore liable for tax deficiencies the IRS assessed. The court also held that, while the couple were not liable for penalties under Sec. 6663(a) because they did not file valid returns for any of the years at issue, they were liable under Sec. 6651(f) for fraudulent-failure-to-file penalties and for late-payment penalties under Sec. 6651(a)(2). Hendrickson, T.C. Memo. 2019-10 (2/11/19).

National Office analyzes tax issues of a business’s employee meal policies

The National Office advised that, for purposes of applying Sec. 119, Boyd Gaming Corp., 177 F.3d 1096 (9th Cir. 1999), AOD 1999-010, and Jacobs, 148 T.C. No. 24 (2017), preclude the IRS from substituting its judgment for the business decisions of a taxpayer as to: (1) the taxpayer’s business needs and/or concerns; and (2) what specific business policies or practices are best suited to addressing the taxpayer’s business needs and/or concerns. The National Office examined the taxpayer’s employee meal policies and concluded that the taxpayer’s snack areas and employee desks, where meals were provided and consumed by employees, did not qualify as an employer-operated eating facility defined in Regs. Sec. 1.132-7 and, therefore, fair market value must be used in determining the amount to include in employee wages for those meals furnished to employees not qualifying for an exclusion of that value from income. TAM 201903017 (2/15/19).

Alimony arrearages retain their character as alimony paid

The Tax Court held that a couple could deduct $225,000 paid under a court order because the amount was for payment of alimony arrearages from the husband’s maintenance obligations to his former wife. The court concluded that lump-sum payments of alimony arrearages retain their character as alimony paid. Siegel, T.C. Memo. 2019-11 (2/14/19).

Appeals court upholds conviction for declaring false tax returns

The Tenth Circuit upheld the conviction of a bank teller who stole money from her bank’s vault on six counts of declaring false tax returns under Sec. 7206(1) as well as embezzlement and making false bank entries, but reversed her conviction for money laundering  and remanded the case to the district court for resentencing. Christy, No. 17-3122 (10th Cir. 2/15/19).

 

IRS PROCEDURE

Taxpayer advocate’s annual report to Congress

National Taxpayer Advocate Nina Olson released her annual report to Congress, cataloguing problems encountered by taxpayers and making recommendations. Annual Report to Congress, 2018 (2/12/19).

IRS issues March 2019 applicable federal rates

The IRS issued a ruling that prescribes the applicable federal rates for March 2019. This guidance provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, and the adjusted federal long-term tax-exempt rate and are determined as prescribed by Sec. 1274. Rev. Rul. 2019-07 (2/15/19).

Draft form issued for Sec. 199A deduction computation

The IRS released a draft 2019 form that taxpayers will be required to attach to their income tax returns showing how they computed their qualified business income deduction under Sec. 199A. Draft Form 8995, Qualified Business Income Deduction Simplified Computation (2/15/19) (see related news story).

 

TAX ACCOUNTING

Automobile bonus depreciation safe harbor

The IRS provided a safe-harbor method to determine depreciation deductions for passenger automobiles that qualify for the 100% additional first-year depreciation deduction and that are subject to the depreciation limitations for passenger automobiles under Sec. 280F. Rev. Proc. 2019-13 (2/13/19) (see related news story).

Newsletter Articles

50th ANNIVERSARY

50 years of The Tax Adviser

The January 2020 issue marks the 50th anniversary of The Tax Adviser, which was first published in January 1970. Over the coming year, we will be looking back at early issues of the magazine, highlighting interesting tidbits.

PRACTICE MANAGEMENT

2019 tax software survey

This annual survey shows how CPAs rate the tax preparation software they used during last tax season and how it handled the recent tax law changes.