Individual tax update
This semiannual update surveys recent federal tax developments involving individuals.
Income
IRS refunding taxes overpaid on unemployment benefits
To help taxpayers who might otherwise have been required to file amended income tax returns, the IRS announced that it will automatically issue to eligible taxpayers refunds of income tax paid on 2020 unemployment benefits.
Compensatory split-dollar life insurance benefits are compensation
Economic benefits from a compensatory split-dollar life insurance arrangement are not property distributions.
Credit card rewards for purchases of gift cards are not taxable income
Credit card rewards attributable to purchases of Visa gift cards are purchase price rebates.
Revisiting withholding on equity compensation
In the time of COVID-19, where employers may increasingly turn to equity compensation to save on cash compensation expenses and employees are increasingly mobile, there is increased risk for employers.
Unemployment benefit identity theft scam targets unemployed taxpayers
The IRS warned taxpayers that identity thieves are fraudulently claiming state unemployment benefits using stolen taxpayer identities. Here is what taxpayers should do if they receive a Form 1099-G reporting state unemployment benefits they did not receive.
Like-kind exchanges of real property: New final regs.
This article provides background on like-kind exchanges and examines how final regulations define real property for purposes of like-kind exchanges.
Beware of identity theft scam involving unemployment benefits
The IRS warned taxpayers that identity thieves are fraudulently claiming state unemployment benefits using stolen taxpayer identities. Here is what taxpayers should do if they receive a Form 1099-G reporting state unemployment benefits they did not receive.
Guidance permits change in vehicle use valuation during pandemic
In response to the COVID-19 pandemic, the IRS is allowing employers to switch from the vehicle lease valuation method to the cents-per-mile method for determining the value of an employee’s personal use of a vehicle during the pandemic.
Taxpayer had unfettered control over SEP-IRA distribution
A distribution from a SEP-IRA to an LLC owned by the taxpayer is includible in the taxpayer’s gross income.
Demolished structures and qualified opportunity zones
Rev. Proc. 95-27 uses a two-part test to define whether the modification of a building, other than a certified historic structure, is a demolition for purposes of Sec. 280B.
Investments in qualified small business stock
The Code provides favorable treatment for gains from investing in small business stock under Sec. 1202.
Final regulations govern income tax withholding rules after the TCJA
The IRS issued final regulations providing guidance on withholding federal income tax from employees’ wages under changes enacted in the TCJA.
Malpractice lawsuit settlement payment is not a return of capital
A settlement payment from a malpractice claim cannot be excluded from income.
Coronavirus pandemic prompts IRS to extend deadlines, relax QOZ rules
In response to the COVID-19 pandemic, the IRS further postponed the 180-day deadline to invest in a qualified opportunity fund from July 15, 2020, to Dec. 31, 2020, extended other deadlines, and relaxed some qualified investment rules.
Recent developments in individual taxation
This semiannual update of recent developments in the area of individual taxation includes cases on conservation easements, discharge of student loan debt, net operating loss deductions, and real estate professional status.
Litigation support payments are income, not loans
Litigation support payments received by lawyer are includible in gross income.
Foreclosure of principal residence and DOI income
Taxpayers can exclude from gross income a discharge of qualified principal residence indebtedness before Jan. 1, 2021; under the CARES Act, certain taxpayers may also request forbearance from foreclosure on their residence.
Swaps with nonperiodic payments: Back to the old way for some NPCs
Under proposed regulations, the IRS would return to a modified version of the rules that predated the temporary regulations.
Qualified opportunity zone rules are relaxed
In response to the COVID-19 pandemic, the IRS further postponed the 180-day deadline to invest in a qualified opportunity fund from July 15, 2020, to Dec. 31, 2020, extended other deadlines, and relaxed some qualified investment rules.
