Document summaries for the week of Feb. 3, 2020 - The Tax Adviser
Tax document summaries for the week of Feb. 3–7, 2020, covering individuals, IRS procedure, and partnerships.
Couple cannot deduct easement contribution, but avoid gross-valuation-misstatement penalties
The Tax Court held that a couple, who were partners in a partnership that reported a charitable contribution deduction equal to the purported value of an easement conveyed by the partnership to a charitable organization, were not entitled to a charitable contribution deduction for the easement donation because of certain restrictions that the court found to be antithetical to the easement’s conservation purpose. However, regarding the gross-valuation-misstatement penalties assessed on the couple, the court concluded that because written approval of the penalties by the IRS agent's immediate supervisor came only after the agent sent reports to the couple that advised them of his initial determination of the penalties, that approval was not timely for purposes of Sec. 6751(b)(1), and the penalties were not sustained. Carter, T.C. Memo. 2020-21 (2/3/20).
Final regs. issued on maximum values for employer-provided vehicles
The IRS issued final regulations updating the fleet-average and vehicle cents-per-mile valuation rules described in Regs. Secs. 1.61-21(d) and (e), respectively, to align the limitations on the maximum vehicle fair market values for use of these special valuation rules with recent changes to the depreciation limitations in Sec. 280F. T.D. 9893 (2/4/20) (see related news story).
Return preparer convicted of aiding in the preparation of a false tax return
The Eighth Circuit affirmed the conviction of the owner of several tax-preparation businesses for conspiring to defraud the United States and willfully aiding and assisting in the preparation of a false tax return. The court remanded the case for resentencing, however. Keleta, No. 18-2896 (8th Cir. 2/6/20).
IRS launches Identity Theft Central
The IRS announced the launch of a website designed to improve access to information on identity theft and data security. The website has links to a “Taxpayer’s Guide to Identity Theft” as well as information for tax professionals and businesses. Identity Theft Central (2/3/20).
IRS did not abuse discretion in rejecting taxpayers’ requests
The Fifth Circuit affirmed a Tax Court decision that held the IRS did not abuse its discretion when it denied the taxpayers’ request that the proceeds of a tax levy be applied to a tax year for which the levy did not issue and when it rejected a partial payment installment agreement because the taxpayers could pay more of the balance due than they were proposing. Melaskey, No. 19-60084 (5th Cir. 2/3/20).
Partnership cannot deduct conservation easement not protected in perpetuity
The Tax Court held that a partnership was not entitled to a charitable contribution deduction for its donation of a conservation easement to a charitable organization. Because the conservation purpose of the easement was not protected in perpetuity within the meaning of Sec. 170(h)(5)(A), the donation was not a qualified conservation contribution under Sec. 170(h)(1). The easement deed provided that, if the easement was ever extinguished and the proceeds were to be allocated between the partnership and the charity, then the charity would be entitled to a portion of the proceeds at least equal to the fair market value of the conservation easement as of the date of the conservation easement, rather than being entitled to a proportionate share of the proceeds. Railroad Holdings, LLC, T.C. Memo. 2020-22 (2/5/20).
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.