The Tax Court denied a deduction for a claimed theft loss because the taxpayer had not filed a tax return for the year of loss and thus did not make a proper election to itemize deductions.
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TOPICS / PROCEDURE
Collections, Liens & Levies
IRS Modifies Position on Frozen Refundable Credits and the Substantial Understatement Penalty
The IRS announced that it will no longer impose a substantial understatement penalty when a taxpayer claims a refundable tax credit he or she is not entitled to, but the IRS does not pay the refund or approve the credit.
A Trust Fund Recovery Penalty Primer
This item discusses the basic mechanics of the trust fund recovery penalty, what qualifies someone as responsible for payroll taxes, and what constitutes willfulness.
New FAQs and Rules for Offshore Voluntary Disclosure Program
The IRS released 55 questions and answers updated for the 2012 offshore voluntary disclosure program.
IRS Changes Stance on Application of Sec. 6662 Penalty to Frozen Refundable Credits
The IRS announced that it would no longer impose a penalty under Sec. 6662 for a substantial understatement of tax when a taxpayer claims a refundable tax credit he or she is not entitled to, but the IRS does not pay the refund or approve the credit.
Accuracy-Related Penalty Tested in Five Recent Cases
In five recent cases, the Tax Court tested the defenses of various taxpayers to the imposition by the IRS of accuracy-related penalties for substantial understatements of income tax.
Penalty Relief for the Unemployed Under Expanded “Fresh Start” Initiative
The IRS announced an expanded “Fresh Start” initiative March 7 to help struggling taxpayers with a number of measures for relief.
IRS Chief Counsel: Continue Applying Valuation Misstatement Penalties
The IRS recently addressed the application of the valuation misstatement penalties contained in Secs. 6662(b)(3) and 6662(h).
Annual Update on Adequate Disclosure of Return Positions Issued
The IRS released updated guidance identifying when a taxpayer’s disclosure of an item or position in an income tax return is adequate for purposes of reducing the understatement of tax penalty and the tax return preparer penalty for understatement due to unreasonable positions.
IRS Gives Transitional Relief to Form 8937 Filers
The IRS announced that, due to its late release of the required form, it will not impose penalties on issuers of stock who report incorrect 2011 information required under Sec. 6045B, as long as they make a good-faith effort to timely comply with the requirements.
The Codified Economic Substance Doctrine and Related Penalties
The IRS issued a directive providing details on a multistep process that examiners must follow before the ultimate application of the economic substance doctrine in an examination. It also provides guidance on related penalties that might be imposed upon the application of the doctrine.
Final Regs. Issued on Reportable Transaction Penalties
The IRS issued final regulations governing the Sec. 6707A penalty regime for failure to report reportable transactions, to reflect changes made by the Small Business Jobs Act of 2010.
IRS Gives Penalty Relief, Delays Backup Withholding for Payment Card Reporting
The IRS postponed for a year the effective date of the backup withholding requirement for payments in settlement of payment card and third-party network transactions.
President Signs Bill Increasing EITC Due Diligence Penalty
President Barack Obama signed into law a bill that increases from $100 to $500 the penalty for failure by preparers to exercise due diligence with respect to the EITC.
Trade Bills Pass Congress with Tax Provisions
The EITC due diligence penalty will increase to $500 under a bill passed by Congress Oct. 12.
Reportable Transaction Penalty Gets Final Regulations
The IRS issued final regulations, governing the Sec. 6707A penalty regime for failure to report reportable transactions, to reflect changes made by the Small Business Jobs Act.
Codification of Economic Substance Affects All Tax Practitioners
This column discusses uncertainty surrounding the codification of the economic substance doctrine and explores selected areas of impact on CPAs’ professional obligations and practice.
Penalty Relief for Delinquent FBARs and Forms 5471 Ends August 31
The IRS has provided penalty relief in guidance related to its latest offshore voluntary disclosure initiative. The focus of this item is on who qualifies for penalty relief and procedures for obtaining this relief.
Lack of Control Does Not Except Owners from Trust Fund Recovery Penalty
The owners of a company who had delegated payroll functions to a separate payroll company they owned but did not operate were liable for trust fund recovery penalties because they were responsible persons both before and after the withholding taxes that were the basis of the penalties accrued.
Violation of Public Policy and the Denial of Deductions
Recent events have drawn attention to the disallowance of deductions where allowing the deductions would violate public policy. This article discusses the disallowance of deductions under Sec. 162 and Sec. 165 for public policy reasons.
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.
