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Lynn Nichols of Nichols Patrick CPE delivers the federal tax update this week. In addition to the weekly podcasts, Nichols Patrick CPE presents seminars for the FICPA. You can find all of their courses in Florida by clicking here or for information on all of the FICPA CPE offerings, you can go to www.ficpa.org/cpe. This week the podcast covers the following:
- Penalty Relief Available for Farmers Affected by MF Global Bankruptcy
- 5th Circuit Affirms . . . Law Firm Workers Were Employees
- Interest on Taxpayer Indebtedness Hedged by Derivative is Deductible
- IRS Corporate Audit Practices to Focus on International, Midmarket Businesses
- Gifts of LLC Interests Were for Dollar Amount, Not Contrary to Policy
- Errors in Temporary Regs on Deduction and Capitalization of Tangible Assets
- Deposits to Bail Bond Agent's Indemnification Fund Are Not Deductible
- Court Finds Trust Beneficiary Was Gift Donee for Gift Tax Purposes
- Correct Treatment of Disallowed First-Time Home Buyer Credits When Calculating Innocent Spouse Relief
- Penalty Relief Available for Farmers Affected by MF Global Bankruptcy - (IR-2012-37; 2/23/2012)
The IRS has announced penalty relief for farmers who incur estimated tax penalties because they did not timely receive Forms 1099 from MF Global or its court-appointed trustee and were unable to file their 2011 calendar year tax return by March 1, 2012.
- 5th Circuit Affirms . . . Law Firm Workers Were Employees - (Donald G. Cave A Professional Law Corp. v. Comm.; CA 5; No. 11-60390; 3/22/2012)
The Fifth Circuit, in a per curiam opinion, affirmed the Tax Court's holding that three associate attorneys and a law clerk were employees rather than independent contractors, finding that the Tax Court did not apply an incorrect legal standard and that its holding was not clearly erroneous.
- Interest on Taxpayer Indebtedness Hedged by Derivative is Deductible - (ECC 201212014; 12/20/2012; rel. 3/23/2012)
In e-mailed advice, the IRS stated that section 263(g)(1) would not require a taxpayer's otherwise deductible payments or accruals on its issued indebtedness to be capitalized because the taxpayer's indebtedness was being hedged by the taxpayer's derivative.
- IRS Corporate Audit Practices to Focus on International, Midmarket Businesses - (Tax Notes Today, Article by Amy Elliott; 3/27/2012)
The IRS is streamlining the audit/appeals process to reduce the resources devoted to auditing coordinated industry case (CIC) taxpayers and to focus its efforts on flow-throughs, financial products, and businesses with either international operations or with less than $250 million in assets, an IRS official said March 26.
- Gifts of LLC Interests Were for Dollar Amount, Not Contrary to Policy - (Joanne M. Wandry et al. v. Comm.; T.C. Memo. 2012-88; 3/26/2012)
The Tax Court held that gifts individuals made of interests in a limited liability company were of specified dollar amounts rather than of fixed percentage interests and that the gifts were not contrary to public policy.
- Errors in Temporary Regs on Deduction and Capitalization of Tangible Assets - (T.D. 9564; 77 F.R. 18687-18688; 3/28/2012)
The IRS has corrected errors in temporary regulations on the deduction and capitalization of tangible assets. Regulations affected include 1.162-3, 1.162-3T, 1.168(i)-1T, 1.168(i)-8T, 1.263(a)-2T, 1.263(a)-3T, 1.263(a)-6T, and 1.1016-3T.
- Deposits to Bail Bond Agent's Indemnification Fund Are Not Deductible - (Ernest N. Zweifel v. Comm.; T.C. Memo. 2012-93; 3/28/2012)
The Tax Court, sustaining accuracy-related penalties, held that a licensed professional bail bond agent could not deduct as section 162 business expenses the amounts deposited in "build up fund" accounts intended to indemnify a surety company for any loss from the posting of bail bonds by the agent.
- Court Finds Trust Beneficiary Was Gift Donee for Gift Tax Purposes - (U. S. v. Robert S. MacIntyre et al.; USDC S TX HSTN; No. 4:10-cv-02812; 3/28/2012)
A U.S. district court held that for gift tax purposes, the income beneficiary of a grantor-retained income trust received a gift when the value of stock held in the trust was increased by her former husband's sale of the same type of stock at below market value.
- Correct Treatment of Disallowed First-Time Home Buyer Credits When Calculating Innocent Spouse Relief - (PMTA** 2011-036; 6/24/2011; rel. 3/30/2012)
In partially redacted program manager technical assistance, the IRS addressed the correct treatment of disallowed first-time home buyer credits when making allocations as part of its review of claims for relief from joint and several liability under section 6015.
** Program Manager Technical Assistance
LAST UPDATED 4/2/2012