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Lynn Nichols delivers the update this week on the latest changes in the federal tax area. Lynn will be delivering a FICPA webcast in February, titled New Tangible Property Regulations, Effective 1/1/2012: Analyzed and Explained. Watch your email for more details. The podcast this week covers the following:
Maximum Values of Employer-Provided Vehicles for 2012 - (Rev. Proc. 2012-13; 2012-3 IRB 295; 1/17/2012)
The IRS has announced the maximum value of employer-provided vehicles first made available to employees for personal use in 2012 for which the vehicle cents-per-mile valuation rule or the fleet-average valuation rule may be applicable.
Parent Corporation Bound by Original Price Allocations - (Peco Foods Inc. et al. v. Comm.; T.C. Memo. 2012-18; 1/17/2012)
The Tax Court held that the parent of an affiliated group of corporations wasn't entitled to modify purchase price allocations for assets it acquired at two poultry processing plants, finding that the original allocation schedules were binding under section 1060 and sustaining the IRS's deficiency determinations.
Medicare Contribution Tax Will Apply to S Corp Shareholders - (Tax Notes Today; Article by Shamik Trivedi; 1/19/2012)
Lack of adequate planning for the scheduled 3.8 percent Medicare contribution tax on unearned income could create the need to distribute 43.4% of S corporation income if Congress allows a return to the pre-Bush tax cut income tax rates.
Accuracy-Related Penalty Guidance - (Rev. Proc. 2012-15; 2012-7 IRB 1; 1/19/2012)
The IRS has updated earlier guidance on whether disclosure of a position taken on a tax return is adequate for purposes of reducing the section 6662(d) accuracy-related penalty and the section 6694(a) preparer penalty.
Cattle Ranch Was Passive Activity . . . Losses Suspended - (Alfred A. Iversen et ux. v. Comm.; T.C. Memo. 2012-19; 1/18/2012)
The Tax Court disallowed losses a couple claimed from the operation of a cattle ranch, finding that they didn't materially participate in the ranch's operation but declining to impose accuracy-related penalties because they reasonably relied on their accountant in claiming the losses.
Bail Denied to Individual Convicted of Evading Payroll Tax Obligation - (United States v. Skoshi Thedford Farr; No. 11-6324; 1/18/2012)
The Tenth Circuit, in an unpublished per curiam opinion, affirmed a district court's denial of an individual's release on bail while she appealed her conviction for tax evasion, agreeing with the district court that her appeal failed to raise a substantial question of law or fact.
Couple Failed to Report Income, Can't Defer Capital Gain on Stock Sale - (John P. Owen et al. v. Commissioner; T.C. Memo. 2012-21; 1/19/2012)
The Tax Court, upholding accuracy-related penalties, held that a couple omitted income received by their personal services corporation, that they didn't overreport income for one year, that they weren't entitled to defer a $1.8 million capital gain on a stock sale, and that they weren't required to report an employment termination payment.
Lease Terms Not Honored, Rental Income Non-Passive - (L.A. Samarasinghe et ux. v. Commissioner; T.C. Memo. 2012-23; 1/19/2012)
The Tax Court held that rental income a couple received was non-passive, finding that they did not qualify for transitional relief under reg. section 1.469-11(c)(1)(ii) because they did not prove the lease was in effect, but that they were not liable for an accuracy-related penalty because they reasonably relied on their accountant.
LAST UPDATED 1/23/2012