C CORPORATIONS
Qualified small business stock exclusion: Business that facilitates leasing of properties is a brokerage business
The IRS Office of Chief Counsel advised that a corporation's business, which facilitates the leasing of property between lessors and lessees, is a business that involves the performance of services in the field of brokerage services within the meaning of Sec. 1202(e)(3)(A). The Chief Counsel's Office concluded that (1) the fact that the business's services are provided by software created by people rather than directly by people does not change the functional nature of the services, and (2) because the business provides brokerage services within the meaning of Sec. 1202(e)(3)(A), a taxpayer who sold stock in the business is not entitled to exclude under Sec. 1202 any of the gain from the sale. CCA 202204007 (1/28/22).
EMPLOYEE BENEFITS
IRS issues 2022 Cumulative List for Section 403(b) pre-approved plans
The IRS issued a notice setting forth the requirements for Sec. 403(b) pre-approved plans (2022 Cumulative List). The 2022 Cumulative List will assist providers of Sec. 403(b) pre-approved plans in applying to the IRS for opinion letters for the second remedial amendment cycle (i.e., Cycle 2) under the IRS's Sec. 403(b) pre-approved plan program. Notice 2022-8 (1/28/22).
INTERNATIONAL
Final regs. on determining gross income of partners with respect to foreign corporations
The IRS issued final regulations under Sec. 958 regarding the treatment of domestic partnerships for purposes of determining amounts included in the gross income of their partners with respect to foreign corporations. T.D. 9960 (1/24/22) (see related news story).
Proposed regs. on PFICs and CFCs held by partnerships and S corporations
The IRS issued proposed regulations providing guidance on passive foreign investment companies (PFICs) and controlled foreign corporations (CFCs) held by domestic partnerships and S corporations. REG-118250-20 (1/24/22) (see related news story).
IRS PROCEDURE
IRS issues guidance for taxpayers not otherwise required to file returns
The IRS issued procedures for certain individuals who are not otherwise required to file 2021 federal income tax returns, to claim (1) the child tax credit under Sec. 24, (2) the 2021 recovery rebate credit under Sec. 6428B, and (3) the earned income tax credit under Sec. 32. The guidance also provides an electronic filing procedure for individuals who (1) are not required to file a federal income tax return for tax year 2021 and (2) had zero adjusted gross income for the tax year. Rev. Proc. 2022-12 (1/25/22) (see related news story).
Tax Court lacks jurisdiction in CDP review case
The Fourth Circuit affirmed a Tax Court decision holding that the Tax Court did not have jurisdiction to determine whether a taxpayer overpaid his tax and to order a refund where, in a Collection Due Process (CDP) hearing, the IRS had conceded that the taxpayer owed no tax and was entitled to have an IRS lien removed. McLane, No. 20-1074 (4th Cir. 1/25/22).
IRS levy trumps decedent's children's claim to money held in usufruct
The Fifth Circuit affirmed a district court decision that an IRS levy against a decedent's estate for unpaid taxes took precedence over his children's claims to the money, which the decedent held in usufruct under Louisiana law, since they were essentially "unsecured creditors." Goodrich, No. 20-30422 (5th Cir. 1/25/22).
Statute of limitation runs from date of last act necessary to complete offense
The Ninth Circuit upheld the tax-evasion conviction of a former IRS attorney, holding that the statute of limitation ran from the date he filed a partnership return underreporting sale proceeds — the last act that completed the offense of tax evasion — and not from the earlier date he filed his personal return and concealed his income from the sale. Orrock, No. 19-10388 (9th Cir. 1/26/22).
Chief Counsel rejects release of liens for son-of-boss promoter
The IRS Office of Chief Counsel rejected a request for a release of liens relating to a son-of-boss tax shelter promoter because the penalties at issue had not been satisfied and had not expired under the Sec. 6502 collection statute. The Chief Counsel's Office also stated that a certificate of release could not be issued because the underlying tax liability had not been satisfied and had not become unenforceable due to a lapse of time. CCA 202204008 (1/28/22).
‘Quick’ carryback tax refunds took nearly double the 90-day deadline
The IRS consistently missed its 90-day deadline to process taxpayers' applications for carryback adjustment refunds under COVID-19 relief legislation, the U.S. Government Accountability Office said in a report. GAO-22-105291 (1/27/22) (see related news story).
MISCELLANEOUS
Tax Court issues corrected opinion in FAB Holdings case
The Tax Court issued a corrected opinion for a decision it issued on Nov. 30, 2021. The court did not identify the correction for which it was issuing the corrected opinion. FAB Holdings, LLC, T.C. Memo. 2021-135 (1/27/22) (corrected).
Business meal deductions after the TCJA
Quirks spurred by COVID-19 tax relief