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.
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Individuals
Deficiency notice invalid because IRS cannot prove last known address
The Tax Court held the Service did not show it followed its regulations and procedures to update a taxpayer’s address to which it sent the notice.
IRS steps up enforcement of the individual expatriation tax
The Sec. 877A exit tax applies to specified expatriating U.S. citizens and long-term residents on gains from a deemed sale of assets. Expatriates’ numbers have risen, and the IRS is emphasizing compliance.
Petition timely filed as regulations held invalid
Regulations governing the time for filing a Tax Court petition during a federally declared disaster are invalid, and the taxpayers met Sec. 7508A(d)’s mandatory postponement provision, the court holds.
Third Circuit rejects IRS’s mootness claims
The IRS’s setoffs of estimated payments against the taxpayer’s deficiencies were invalid, the court finds, making the taxpayer’s lawsuit a live case or controversy.
Foreign trust transactions and large gifts addressed in proposed regs.
The proposed regulations implement Secs. 643(i), 679, 6039F, 6048, and 6677, which were added or modified to prevent efforts by U.S. taxpayers to use foreign trusts and offshore arrangements to avoid U.S. taxes.
Final regs. issued for new, previously owned clean vehicle credits
The final regulations, which the IRS issued Friday, also provide rules regarding the critical mineral and battery component requirements for the new clean vehicle credit, and they add a new test for mineral content.
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.
Pond muddies the waters of the mailbox rule
A Fourth Circuit decision seeks a middle ground between Sec. 7502 and common law rules to prove timely mailing of tax returns, refund claims, and other filings.
Tax Court allows hearsay evidence that was part of administrative record
In its review of the IRS’s denial of a request for innocent-spouse relief, the court determines it can consider hearsay evidence that was included in the Service’s administrative record.
PTETs: Orchestrating ASC 740 compliance
Passthrough entity tax (PTET) elections give partners and shareholders a workaround to the $10,000 deductibility limit for state and local taxes for individuals, but entities must reckon with their financial accounting implications while adapting to a wide variety of state PTET regimes.
Current developments in taxation of individuals
This update surveys recent federal tax developments involving individuals, including court cases, rulings, and guidance issued during the six months ending October 2023.
On Form 1099-K delays, Werfel says IRS must protect taxpayer rights
IRS Commissioner Danny Werfel also discussed the employee retention credit and IRS funding when he appeared before the House Ways and Means Committee on Thursday.
Auto depreciation limitations increase
The IRS issued the 2024 depreciation limitations for passenger automobiles, including those for which bonus depreciation is applied.
House OKs $78B tax bill with changes to ERC and child tax credits
The bill, which now goes to the Senate, also delays amortization of research or experimental costs and restores tax breaks for companies from 2017’s Tax Cuts and Jobs Act.
Don’t wait on action on tax bill to file returns, IRS tells taxpayers
With tax season opened as of Monday, Commissioner Danny Werfel said the IRS will handle any necessary changes if a bill passes after returns are filed.
Business standard mileage rate increases for 2024
The optional standard mileage rate for business use of a vehicle increased slightly from 2023. The new rate is effective Jan. 1.
Community property conundrums abound
This item highlights some of the ways in which community property laws could affect the tax situation of clients residing in common law states.
employee benefits & pensions
Profits interests: The most tax-efficient equity grant to employees
By granting them a profits interest, entities taxed as partnerships can reward employees with equity. Mistakes, however, could cause challenges from taxing authorities.
