Document summaries for the week of Jan. 27, 2020

Tax document summaries for the week of Jan. 27–31, 2020, covering individuals, IRS procedure, tax accounting, and more.


Form 1023 must now be submitted electronically

The IRS issued guidance modifying Rev. Proc. 2020-5 and updating the procedures for exempt organization determination letters made via Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, used to apply for recognition of exemption as an entity described in Sec. 501(c)(3). The guidance requires Form 1023 to be submitted electronically and also (1) provides a 90-day transition relief period during which paper Form 1023 applications will be accepted, and (2) modifies language related to Canadian charities’ written requests to be listed on the Tax Exempt Organization Search database or for a determination of their private foundation status. Rev. Proc. 2020-8 (1/31/20) (see related news story).



Tax Court limits taxpayer’s Schedule C deductions

The Tax Court held that a taxpayer did not show that he was entitled to more than the $46,000 in Schedule C deductions the IRS had allowed. The court found that the taxpayer did not have adequate records to support the additional deductions he claimed. Abubakr, T.C. Summ. 2020-8 (1/30/20).



Final regs. on return due dates

The IRS issued final regulations updating the due dates and available extensions of time to file various tax and information returns. The regulations finalize with nonsubstantive changes proposed regulations from 2017, and the due dates were already in effect under temporary regulations issued in T.D. 9821. T.D. 9892 (1/29/20).

Court upholds rejection of whistleblower’s claim

The Tax Court held that the IRS’s Whistleblower Office (WBO) did not abuse its discretion when it summarily rejected a taxpayer’s whistleblower claim and did not refer the claim to an operating division of the IRS or otherwise address its merits. The court found that the WBO’s stated grounds for its determination did not appear to lack a sound basis in fact and law. Also, the court held, the rejection was reasonably supported by the taxpayer’s Form 211, Application for Award for Original Information, and accompanying submission, which alleged illegal action by the German court system and other violations by individuals whom the WBO could not identify. Alber, T.C. Memo. 2020-20 (1/30/20).

No CDP hearing where taxpayer was late in requesting a hearing

The Tax Court granted an IRS motion to dismiss for lack of jurisdiction a taxpayer’s claim that he filed two letters requesting a Collection Due Process hearing within 30 days after the IRS issued lien and levy notices. The court noted that the taxpayer testified that he mailed the requests one day late and stated that it could not provide him a hearing. Chang, T.C. Memo. 2020-19 (1/29/20).



Payments to acquire vehicle and equipment leases must be capitalized

The Office of Chief Counsel advised that a taxpayer was required under Regs. Sec. 1.263(a)-4(c)(1)(vi) to capitalize excess markup payments to purchase auto leases from automobile dealers and participation payments to purchase equipment leases from equipment manufacturers. CCA 202005019 (1/31/20).

IRS clarifies computing income limits for low-income housing credit

The IRS issued guidance clarifying computing the income limits of the low-income housing credit under Sec. 42. The Consolidated Appropriations Act, 2018, P.L. 115-141, added a new minimum set-aside test available to owners of a low-income housing project — the average-income test (Sec. 42(g)(1)(C)). The IRS also addressed the additional income limits available in the average-income test. Rev. Rul. 2020-4 (1/29/20).

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.