Document Summaries for the week of Aug. 1, 2022

C CORPORATIONS

Corporation formed to acquire another corporation could execute Form 872

The IRS Office of Chief Counsel advised that a corporation, Corporation A, formed to acquire another corporation, Corporation B, was the default successor to Corporation B and was therefore the agent for Corporation B and its subsidiaries. Therefore, the Chief Counsel's Office stated, Corporation A was the correct entity to execute Forms 872, Consent to Extend the Time to Assess Tax. CCA 202231014 (8/5/22).

EMPLOYEE BENEFITS

IRS extends certain deadlines for amending retirement plans or IRAs

The IRS issued a notice extending the deadlines for amending a retirement plan or individual retirement arrangement (IRA) to reflect certain provisions of the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 and the Bipartisan American Miners Act of 2019 (both parts of the Further Consolidated Appropriations Act, 2020, P.L. 116-94). The notice thus modifies Notice 2020-68 and Notice 2020-86. In addition, the notice extends the deadline for amending a retirement plan to reflect the provisions of Section 2203 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Notice 2022-33 (8/3/22).

ESTATES, TRUSTS & GIFTS

IRS issues corrected copy of July estate tax case

The IRS issued a corrected copy of an estate tax case opinion in which it held that the value of seven of 10 checks written before, but paid after, a decedent's death were properly includible in the decedent's gross estate. In the penultimate paragraph, the corrected version leaves out the word "apparently" in the following sentence included in the original version: "Thus, although all ten checks at issue would otherwise apparently be includible in decedent's gross estate under a proper legal analysis, to ignore the concession respondent made in his brief sua sponte would be prejudicial to the petitioner." Estate of DeMuth, T.C. Memo. 2022-72 (7/12/22).

INDIVIDUALS

Taxpayer's claimed business deductions disallowed

The Tax Court sustained the IRS's disallowance of a taxpayer's claimed deductions for two businesses for tax years 2015 and 2016, based on a lack of substantiation. These included car and truck expenses and, for one of the businesses, $175,000 ostensibly paid for materials and tools. The court called these claimed deductions "implausible," for reasons including that the taxpayer filed as head of household with two dependents, had a "good-sized" mortgage, and paid private-school tuition for at least one child. Eze, T.C. Memo. 2022-83 (8/4/22).

Tax Court vacates prior whistleblower determinations and remands case

The Tax Court granted a joint motion by the IRS and a whistleblower asking it to vacate prior determinations of the IRS Whistleblower Office and remand the whistleblower's claims to the Whistleblower Office for further consideration without retaining jurisdiction. According to the court, nothing in Sec. 7623(b) precluded it from proceeding as the parties requested. Whistleblower 769-16W, 159 T.C. No. 2 (8/4/22).

IRS PROCEDURE

IRS updates procedures for requesting special statistical studies and compilations

The IRS updated the procedures for other government agencies or members of the public to request that it create special statistical studies and compilations involving return information pursuant to Sec. 6108(b), and to set forth the criteria for determining reasonable fees for costs associated with the creation of the special statistical studies and compilations. The procedure modifies and supersedes Rev. Proc. 2006-36. Rev. Proc. 2022-29 (8/1/22).

IRS announces tax relief for victims of Kentucky flooding

The IRS announced that victims of severe storms, flooding, landslides, and mudslides in parts of Kentucky beginning July 26, 2022, now have until Nov. 15, 2022, to file various individual and business tax returns and make tax payments. KY-2022-06 (8/1/22).

National Taxpayer Advocate appeals IRS response on scanning technology

In a memo to IRS Commissioner Charles Rettig, National Taxpayer Advocate Erin Collins appealed the Service's response to her directive that it institute barcode scanning technology to process paper returns. NTA Blog (8/4/22) (see related news story).

Tax relief for seaweed-invaded island of St. Croix

The IRS announced that victims of a water shortage and health impact from unprecedented sargassum seagrass influx on the island of St. Croix, U.S. Virgin Islands, beginning July 15, 2022, now have until Nov. 15, 2022, to file various individual and business tax returns and make tax payments. VI-2022-01 (8/3/22).

PARTNERS & PARTNERSHIPS

Sec. 754 election signature requirement removed

The IRS issued final regulations removing the regulatory requirement that a partner sign the election statement by which a partnership makes a valid election under Sec. 754 to adjust the basis of partnership property in the case of a distribution of property by the partnership or a transfer of an interest in the partnership. T.D. 9963 (8/4/22) (see related news story).

TAX-EXEMPT ORGANIZATIONS

IRS revokes tax-exempt status of certain Sec. 501(c)(3) organizations

The IRS announced the revocation of tax-exempt status for a Sec. 501(c)(3) organization that failed to meet the Code section's requirements. Announcement 2022-14 (7/29/22).

IRS revokes tax-exempt status of certain Sec. 501(c)(3) organizations

The IRS announced the revocation of tax-exempt status for a Sec. 501(c)(3) organization that failed to meet the Code section's requirements. Announcement 2022-15 (7/29/22).

IRS provides specs for red-ink substitutes for Forms W-2 and W-3

The IRS provided the specifications for the private printing of red-ink substitutes for the 2022 Forms W-2, Wage and Tax Statement, and W-3, Transmittal of Wage and Tax Statements. This revenue procedure will be produced as the next revision of IRS Publication 1141, General Rules and Specifications for Substitute Forms W-2 and W-3. Rev. Proc. 2021-46 is superseded. Rev. Proc. 2022-30 (8/1/22).