The Tax Court denied the IRS’s argument that the money, which the sheriff had repaid, was includible in her income as embezzled funds.
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TOPICS / INDIVIDUALS
Income
Lawsuit proceeds includible in income
A recent Tax Court case serves as a reminder that the Sec. 104(a)(2) exclusion from gross income applies only to damages received on account of personal physical injuries or physical sickness.
Proposed regs. would exclude tribal general welfare benefits from income
The first proposed regulations under Sec. 139E set out the requirements for excluding Indian tribal general welfare benefits from income.
Fact sheet addresses taxability of crowdfunding distributions
The IRS said that crowdfunding distributions may be included in the gross income of the person receiving them, depending on the facts and circumstances of the distributions.
Avoiding passive loss limitations on rental real estate losses
Strategies for using the $25,000 offset for rental real estate losses can include keeping income within its phaseout range and contributing the loss activity to a closely held C corporation.
Amendment to Sec. 6501 not retroactive
Because his tax year preceded the effective date of a special limitation period that was not retroactive, a taxpayer could be assessed excise taxes on $25 million in excessive IRA contributions, the Tax Court held.
Workers’ compensation offset includible in Social Security benefits
Benefits not disbursed but treated under the Sec. 86(d)(3) offset as having been received were includible in a couple’s gross income, the Tax Court held.
Two home energy rebates not includible in gross income, IRS says
The IRS said it will not include the rebates provided under the Inflation Reduction Act of 2022 in individual purchasers’ gross income or in the cost basis of the property purchased.
Guidance issued on consequences of certain state payments after 2022
The IRS issued guidance on the treatment of refunds of state or local taxes and certain other payments made by states made to individuals in 2023 and future years, including spillover payments made in 2023 under 2022 programs covered by IRS News Release IR-2023-23.
Investing in qualified opportunity zones in Puerto Rico
This article summarizes the potential federal tax benefits from qualified opportunity zone investments in Puerto Rico under Sec. 1400Z-2, coupled with incentives of the Puerto Rico Incentive Code of 2019 (Act 60).
Distribution from 401(k) plan taxable to taxpayer with diabetes
Sec. 401(k) plan distribution is not excludable from income or exempt from the Sec. 72(t) addition to tax due to taxpayer’s diabetes.
Sec. 987 foreign currency regulations applicability date extended again
On Aug. 15, 2022, the IRS announced that it intends to defer by one more year the applicability date of certain foreign currency regulations under Sec. 987.
Sec. 163(j) business interest limitation: New rules for 2022
This item discusses how the rules for calculating ATI have changed for 2022 and beyond and how this affects the deductibility limit.
Social Security wage base, COLA set for 2023
The Social Security Administration announced the maximum amount of wages subject to Social Security tax in 2023 and a cost-of-living adjustment (COLA) for Social Security benefits. The COLA is 8.7%.
‘Swag bags’ are back: Influencers and noncash compensation
This item discusses whether and when ‘freebies’ or discounts result in taxable income to the influencer and possible limitations on deductions for the related expenses.
Dispute remains over whether couple sold house due to poor health
Taxpayer’s health may have been the reason for sale of personal residence, but the issue may not be material to whether taxpayers are entitled to an exclusion of gain on the sale.
New, lower Form 1099-K threshold prompts cautions, criticisms
The new, lower $600 reporting threshold for reporting credit card and cash payment app transactions will likely lead to problems for taxpayers and payment settlement entities, the Taxpayer Advocate Service warns.
Current developments in taxation of individuals
This semiannual update covers recent federal tax developments involving individuals, highlighting noteworthy IRS guidance and decisions of the Tax Court and other courts, as well as tax changes made by legislation.
Taking possession of coins in IRA causes a taxable distribution
A taxpayer has taken a distribution from a self-directed IRA if he or she takes physical possession of IRA assets;
Trust terms do not create legal obligation for claim-of-right purposes
A potential restriction on the sale of stock by a trust does not cause the trust’s grantor’s right to the income to be restricted for claim-of- right doctrine purposes.
TAX PRACTICE MANAGEMENT
2025 tax software survey
AICPA members in tax practice assess how their return preparation software performed during tax season and offer insights into their procedures.
