Document summaries for the week of March 30, 2020
Tax document summaries for the week of March 30–April 3, 2020, covering corporations, IRS procedure, and more.
Prop. regs. issued on life insurance reserves
The IRS issued proposed regulations on the computation and reporting of reserves for life insurance companies. REG-132529-17 (4/1/20).
ESTATES, TRUSTS & GIFTS
Fifth Circuit affirms Tax Court estate valuation decision
The Fifth Circuit affirmed a Tax Court decision that a decedent’s estate was not entitled to a lack-of-control discount for purposes of valuing a limited partnership interest held in the decedent's revocable trust. Estate of Frank D. Streightoff, No. 19-60244 (5th Cir. 3/31/20).
Taxpayer not entitled to abatement of interest
The Tax Court held that (1) a Form 4549, Income Tax Examination Changes, prepared by the IRS and signed by the taxpayer and his wife in 2011 was not a binding contract under which the couple owed no interest for their 2004 tax year, and (2) the taxpayer was not entitled to an abatement of interest under Sec. 6404(e)(1), with the exception of one brief time period. The court generally sustained the IRS’s notice of determination and concluded that the IRS Office of Appeals did not abuse its discretion in denying interest abatements for the other time periods. Goldberg, T.C. Memo. 2020-38 (4/2/20).
Taxpayer cannot carry adoption expenses forward 7 years
The Court of Federal Claims denied a taxpayer’s claim for an adoption credit on her 2010 federal income tax return because the relevant adoption expenses were incurred in 2003 and, under Sec. 36C, the adoption credit can only be carried forward five years. Simmons, No. 19-1142T (Fed. Cl. 3/31/20).
Public proposed regs. hearings to be held by telephone
The IRS announced that public hearings on proposed regulations will be held by telephone until further notice. Individuals who want to testify by telephone at a public hearing must send an email to email@example.com to receive the telephone number and access code for the hearing. Announcement 2020-4 (4/1/20).
IRS provides coronavirus-related relief from employment taxes penalties
The IRS issued a notice providing a waiver of (1) additions to tax for failure to make a deposit of taxes for employers required to pay qualified sick leave wages and qualified family leave wages mandated by the Families First Coronavirus Response Act (Families First Act) and qualified health plan expenses allocable to these wages, and (2) additions to tax for failure to make a deposit of taxes for certain employers subject to a full or partial closure order due to the coronavirus disease 2019 (COVID-19) or experiencing a statutorily specified decline in business under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136. The notice applies (1) to deposits of employment taxes (including withheld income taxes, Federal Insurance Contributions Act taxes, and Railroad Retirement Tax Act taxes) reduced in anticipation of the credits with respect to qualified sick leave wages and qualified family leave wages paid with respect to the period beginning April 1, 2020, and ending Dec. 31, 2020, and (2) with respect to deposits of employment taxes reduced in anticipation of the credits with respect to qualified wages paid for the period beginning on March 13, 2020, and ending Dec. 31, 2020. Notice 2020-22 (3/31/20) (see related news story).
Form issued for advance employer tax credits
The IRS issued a new form and instructions for employers to use to obtain advance payments of three tax credits that were created to help businesses cope with the coronavirus pandemic. Form 7200 and instructions (3/31/20) (see related news story).
IRS provides guidance on economic impact payments
The IRS issued informal guidance on how it will pay recovery rebates or economic impact payments mandated by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136, and how taxpayers who have not filed a return can become eligible for a payment. IR-2020-61 (3/30/20) (see related news story).
IRS acquiesces in result only to Feigh decision
The IRS announced its acquiescence in result only to the Tax Court’s decision in Feigh, 152 T.C. No. 15 (2019). The IRS said it acquiesces only to the court’s holdings that (1) Medicaid waiver payments received as wages for the care of the taxpayers’ disabled adult children in their own home are not excludable from income under Sec. 131; and (2) if such payments are treated as excludable from gross income pursuant to Notice 2014-7, the payments nevertheless may be earned income for determining a taxpayer’s eligibility to receive the Sec. 32 earned income credit and the Sec. 24 additional child tax credit. AOD 2020-2 (3/30/30).
Chief Counsel’s Office changes internal procedures for handling documents
The Office of Chief Counsel announced changes to procedures for clearing and signing Office of Chief Counsel documents and regulations. Effective immediately, where a physical document or file previously would have been used to clear a document, the same document may be submitted to the approving official electronically via email, and the subject line of the email should reflect that the document is being submitted for clearance. CC-2020-005 (4/1/20).
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.