Document Summaries for the week of Oct. 17, 2022
Tax document summaries for the week of Oct. 17–21, 2022, covering employee benefits, IRS procedure, and more.
IRS updates weighted average interest rates, yield curves, and segment rates
The IRS issued a notice that provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Sec. 417(e)(3), and the 24-month average segment rates under Sec. 430(h)(2). In addition, the notice provides guidance as to the interest rate on 30-year Treasury securities under Sec. 417(e)(3)(A)(ii)(II), as in effect for plan years beginning before 2008, and the 30-year Treasury weighted average rate under Sec. 431(c)(6)(E)(ii)(I). Notice 2022-54 (10/17/22).
IRS announces retirement plan inflation adjustments
The IRS issued the 2023 inflation-adjusted dollar-amount ceilings and thresholds for a wide range of qualified retirement plans and accounts, including traditional individual retirement arrangements (IRAs) and Roth IRAs. Notice 2022-55 (10/21/22) (see related news story).
Liability for S corporation taxes did not pass to receivership after husband's guilty plea
The Tax Court held that a married couple filing joint returns improperly failed to include in income amounts attributable to their interest in an S corporation and also should have included in income their daughter's taxable interest and distributive share of the S corporation's income pursuant to Sec. 1(g). The court rejected the couple's assertion that pursuant to the husband's guilty plea in criminal proceedings, all of their ownership interest in the S corporation was transferred to a receivership created by the California Superior Court and the receivership was thus required to pay and discharge all of the expenses of the receivership, including any tax liabilities imposed. Yaguda, T.C. Summ. 2022-21 (10/20/22).
IRS withdraws proposed regulations on previously taxed earnings and profits
The IRS announced that it is withdrawing regulations proposed in August 2006 relating to the exclusion from gross income of foreign corporations' previously taxed earnings and profits under Sec. 959 and related basis adjustments to controlled foreign corporation stock under Sec. 961. REG-121509-00 (10/21/22).
IRS issues November 2022 AFRs
The IRS issued a ruling providing tables of prescribed rates for federal income tax purposes for November 2022. Table 1 contains the short-term, midterm, and long-term applicable federal rates (AFRs) for purposes of Sec. 1274(d). Table 2 contains the short-term, midterm, and long-term adjusted AFRs for purposes of Sec. 1288(b). Table 3 sets forth the adjusted federal long-term rate and the long-term tax-exempt rate described in Sec. 382(f). Table 4 contains the appropriate percentages for determining the low-income housing credit described in Sec. 42(b)(1) for buildings placed in service during July 2022 (although, under Sec. 42(b)(2), the applicable percentage for non–federally subsidized new buildings placed in service after July 30, 2008, is not less than 9%). Table 5 contains the federal rate for determining the present value of an annuity, an interest for life or for a term of years, or a remainder or a reversionary interest for purposes of Sec. 7520. Rev. Rul. 2022-20 (10/17/22).
IRS announces annual inflation adjustments for 2023
The IRS issued the inflation-adjusted items for tax year 2023 for various Code provisions in effect on Oct. 18, 2022. To the extent amendments to the Code are enacted for 2023 after Oct. 18, 2022, the IRS advises taxpayers to consult additional guidance to determine whether these inflation-adjusted items remain applicable. Rev. Proc. 2022-38 (10/18/22) (see related news story).
Disaster area filing extensions apply to 2019 and 2020 penalty relief
The IRS reminded taxpayers living in some disaster-declared areas that the extended time they have to file certain returns includes filing returns to qualify for the penalty relief under Notice 2022-36 for 2019 and 2020 tax returns. IR-2022-185 (10/19/22) (see related news story).
Tax Court values conservation easement at $7.8 million
On remand from the Eleventh Circuit, the Tax Court determined the amount of a deduction for the charitable contribution of a conservation easement relating to the development of a golf course. On the basis of the record before it, the Tax Court concluded that the fair market value of the easement in 2010 was $7,834,091. Champions Retreat Golf Founders, LLC, T.C. Memo. 2022-106 (10/17/22).
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.