The Office of Chief Counsel advised that self-employed individuals may deduct Medicare premiums from their self-employment income.
Advertisement
TOPICS
Individuals
Determining Tax Consequences of Corporate Liquidation to the Shareholders
Under Sec. 331, a liquidating distribution is considered to be full payment in exchange for the shareholder’s stock, rather than a dividend distribution, to the extent of the corporation’s earnings and profits.
No Deduction for Donating Right to Burn House
The Tax Court held that taxpayers who gave a local fire department the right to burn down a house on property they had recently purchased were not entitled to a charitable deduction donation for the value of the house.
IRS Issues Sample Text for Sec. 83(b) Election
The IRS released sample language for making a Sec. 83(b) election to include property received in connection with the performance of services in income in the year the property is received even if there is a substantial risk that the property will later be forfeited.
Guidance Distinguishes Tips and Service Charges
The IRS issued question-and-answer guidance for distinguishing between tips and service charges for FICA tax and other purposes.
Investors’ Dilemma on Purchasing Distressed Obligations
This article discusses the purchaser’s perspective of an investment in distressed obligations that are secured by leases on tangible property.
Removal of Two-Year Limit on Innocent Spouse Claims Does Not Revive Taxpayer’s Case
A federal court dismissed a taxpayer’s claim that she was entitled to innocent spouse relief under Notice 2011-70, which announced the removal of the two-year limitation period for claims for equitable innocent spouse relief under Sec. 6015(f).
Taxability of Employer-Provided Educational Assistance
There are four distinct circumstances in which employer-provided educational assistance is nontaxable.
Taxation of Frequent Flyer Miles
A benefit has only lately received attention after flying under the radar for many years: tax-free receipt of frequent flyer miles.
The ABCs of Acquisitive Reorganizations
This column addresses the call for more active teaching methods by providing tax educators an interactive spreadsheet assignment to incorporate into an introductory taxation course.
Sec. 83 Substantial Risk of Forfeiture Clarified
The IRS issued proposed regulations that would clarify when a substantial risk of forfeiture exists on the transfer of stock to an employee that is treated as compensation under Sec. 83.
Supreme Court: Health Care Mandate Is Constitutional as a Tax
The Supreme Court declared the mandate requiring U.S. citizens and legal residents to maintain minimum essential health coverage to be a permissible exercise of Congress’s taxing powers under the Constitution.
Proposed Regs. Would Clarify Who Is Subject to Sec. 274(n) Limit on Meal Expenses
The IRS released proposed regulations clarifying which party is subject to the rule that limits the deduction for meals to 50% of the expenses incurred.
Taxpayers Who Did Not Establish Insolvency Must Recognize COD Income
Taxpayers who settled a credit card debt for $4,412 less than they owed in 2008 had to include that amount in income because they did not prove they were insolvent under Sec. 108(a)(1)(B) at the time of the debt discharge (Shepherd, T.C. Memo. 2012-212). Sec. 108(a)(1)(B) excludes cancellation of debt
Tax Court Upholds Regulation Requiring Dependents Be Citizens in Year Tax Benefits Are Claimed
The Tax Court upheld Regs. Sec. 1.152(a)(1), which requires that children be U.S. citizens at some time during the calendar year for which the children are claimed as dependents.
Self-Employed Can Deduct Medicare Premiums, IRS Chief Counsel Advises
The Office of Chief Counsel advised that self-employed individuals may deduct Medicare premiums from their self-employment income.
Debtors’ Taxes Are Not Discharged in Bankruptcy Where Tax Return Was Filed Late
A federal appeals court held that bankrupt debtors who filed their income tax return 17 months after their income taxes were assessed were not entitled to have those taxes discharged in the bankruptcy proceeding.
Federal Income Tax Treatment of Certain Transferable State Tax Credits
The emergence of online marketplaces and auction houses has provided a single point of contact for both sellers and buyers, making sales and purchases of transferable state tax credits more common.
Global High-Wealth Audit Update
While the IRS audit rate for individual returns of persons earning less than $200,000 has hovered at about 1% over the past several years, 12% of individual taxpayers with incomes of $1 million or more were audited in fiscal year 2011.
Get the Most Out of Overpayments Applied to the Following Year’s Return
A taxpayer can elect to have an overpayment refunded or applied to the subsequent year’s estimated tax payment. This election, once made, is generally irrevocable.
INDIVIDUALS
Current Developments in Taxation of Individuals: Part 1
This update surveys recent federal tax developments involving individuals, including court cases, rulings, and guidance issued during the six months ending October 2025.
