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The first podcast of 2012 is led by Lynn Nichols of Nichols Patrick CPE. This weekly podcast covers the latest updates in the federal tax area. For all of your CPE needs please see us at www.ficpa.org/cpe.
- Final Regs on Cost-Sharing Arrangements
(T.D. 9568; 76 F.R. 80082-80136; 12/22/2011)
The IRS has issued final regulations on determining taxable income from cost-sharing arrangements under section 482.
Temporary Regs Implement Use of Differential Income Stream for Cost-Sharing Arrangements
(T.D. 9569; 76 F.R. 80249-80251; 12/23/2011)
The IRS has issued temporary regulations implementing the use of the differential income stream as a consideration in assessing the best method for a cost-sharing arrangement.
- Value Of Stock Transferred On Option Exercise Includable In Individual's Income, Deductible to Company
(Allen L. Davis et al. v. Commissioner; T.C. Memo. 2011-286; 12/12/2011)
Stock an individual received on exercise of his stock options in a payday loan company was transferred in connection with his performance of services and includable in his gross income; the court determined the value of the stock and held that the amount is deductible to the company as reasonable compensation.
- Final Regs Modify Return Preparer Penalty Rules for Purposes of EITC Due Diligence Requirements
(T.D. 9570; 76 F.R. 78816-78820; 12/20/2011)
The IRS has published final regulations modifying the tax return preparer penalty rules under section 6695 to provide additional measures to improve compliance with the preparer earned income tax credit due diligence requirements of section 6695(g).
- Attorney Isn't Entitled to Deduct Expenses as Unreimbursed Partnership Expenses
(Peter A. McLauchlan v. Comm.; T.C. Memo. 2011-289; 12/19/2011)
The Tax Court, sustaining an accuracy-related penalty, held that an attorney in a law partnership isn't entitled to deduct indirect or reimbursable expenses as unreimbursed partnership expenses and isn't entitled to deduct any portion of auto expenses due to lack of proper substantiation.
- IRS Releases FATCA Reporting Form, Instructions
(Form 8938; 12/19/2011)
The IRS has posted to its website the instructions and form for reporting foreign financial assets under section 6038D; Form 8938, "Statement of Foreign Financial Assets," is used to report the ownership of specified foreign financial assets if the total value of those assets is more than the applicable reporting threshold.
- IRS Acquiesces in Decision That Limitation on Wagering Losses Doesn't Apply to Related Business Expenses
(AOD-2011-06; 2012-3 IRB 1; 12/20/2011)
In an action on decision, the IRS has announced its acquiescence in Ronald Andrew Mayo et ux. v. Commissioner, in which the Tax Court held that an individual may deduct gambling losses only to the extent of his gambling gains under section 165(d) but that section 165(d) doesn't restrict deductions for gambling-related business expenses.
- Third Circuit Reverses Tax Court: PPL Cannot Claim Foreign Tax Credit for Windfall Profit Tax Paid in UK
(PPL Corp. et al. v. Comm.; CA 3; No. 11-1069; 12/22/2011)
The Third Circuit reversed a Tax Court decision that allowed PPL, a U.S. parent corporation, to claim a foreign tax credit for a windfall tax imposed on its foreign subsidiary, holding that the windfall tax was not a war profits, income, or excess profits tax within the meaning of section 901(b)(1).
- Treasury Issues Third Version of Repair Regs in Temporary Form
(Tax Notes Today Article: Coder & Elliott; 12/27/2011)
The Treasury Department on December 23 issued a mammoth guidance package, withdrawing the 2008 re-proposed regulations on capitalization of tangible assets -- the so-called repair regs -- and proposing for a third time in nearly five and a half years new regulations designed to reduce uncertainty and controversy regarding section 263(a).
Temporary Regs on Deduction and Capitalization of Tangible Assets
(T.D. 9564; 76 F.R. 81060-81127; 12/27/2011)
The IRS has issued temporary regulations that provide guidance on the application of sections 162(a) and 263(a) to amounts paid to acquire, produce, or improve tangible property.
- Consent Required to Change Accounting Method to New FASB Standard for Multiple Deliverable Contracts
(ILM 201151022; 12/1/2011; rel. 12/23/2011)
In a legal memorandum, the IRS concluded that a taxpayer that previously elected to defer advance payments must obtain consent if the taxpayer adopts new accounting standards for its books and wants to use the new financial statement method to determine the extent to which advance payments are included in gross income.
- Purported Stock Sale Was Liquidation; Shareholders Liable as Transferees
(Ray Feldman et al. v. Comm.; T.C. Memo. 2011-297; 12/27/2011)
The Tax Court held that a stock sale by a dude ranch was in substance a liquidation to the shareholders of the ranch's cash and that the shareholders were liable as transferees under state law and section 6901 for their proportionate shares of the ranch's unpaid liability and related additions to tax, penalties, and interest.
LAST UPDATED 1/3/2012