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Lynn Nichols from NicholsPatrick CPE delivers the weekly update on federal tax issues. For all of your tax CPE needs, please go to www.ficpa.org/cpe. The podcast for this week covers the following:
- IRS Revises Electronic Filing Requirements
(Rev. Proc. 2012-30; 2012-33 IRB 165; 8/13/2012)
The IRS has provided updates and revisions to Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically, for use in preparing 2012 and prior year information returns.
- Assignment of Rights in Lawsuit Will Not Produce Taxable Income
(LTR 201232024; 5/15/2012; rel. 8/10/2012)
The IRS ruled that the assignment of interest in a lawsuit and rights to costs from the lawsuit from one trust beneficiary to another will not result in taxable income to the assignor, finding that the mere anticipation or expectation of the receipt of income is insufficient to conclude that a fixed right to income exists.
- Corporation and Tenant-Stockholders May Deduct Real Estate Taxes
(LTR 201232018; 4/20/2012; rel. 8/10/2012)
The IRS ruled that a corporation and its tenant-stockholders will be entitled to a deduction under section 164 for their proportionate share of the property taxes paid by the corporation, but only to the extent that the taxes are not attributable solely to the land.
- S Corp’s Gain From Deemed Sale Allocable to QSST, Not Income Beneficiary
(LTR 201232003; 4/9/2012; rel. 8/10/2012)
The IRS ruled that a company's gain from the deemed sale of its assets, resulting from a section 338(h)(10) election that is allocable to the shares of the company's stock held by a qualified subchapter S trust, is that of the trust and not the trust's income beneficiary.
- Parent, Subsidiaries Treated as Having Filed Consolidated Return
(LTR 201232015; 5/3/2012; rel. 8/10/2012)
The IRS ruled that a parent company and its two subsidiaries will be treated as having joined in the making of a consolidated return even though the group failed to include Forms 1122, "Authorization and Consent of Subsidiary Corporation To Be Included in a Consolidated Income Tax Return," with the consolidated return.
- S Corporation's Rental Income Is Not Passive
(LTR 201232023; 4/4/2012; rel. 8/10/2012)
The IRS ruled that an S corporation's rental income from its property ownership, leasing, and management activities is not passive investment income under section 1362(d)(3)(C)(i) and that a statement attached to its return was not an effective revocation of its S corporation election.
- Accrual-Method Taxpayer May Not Deduct State Taxes When Incurred
(Wells Fargo et al v. United States; US DC MN; No. 09-cv-2764; 8/10/2012)
A U.S. district court affirmed and adopted the order and report of a special master, finding that section 461(d) requires an accrual-method taxpayer to deduct taxes paid to a state in the year to which the taxes relate rather than in the year in which the amount of taxes becomes fixed, the obligation to pay is established, and the taxes are paid.
- Laborers Were Employees; Employer Was Liable for Employment Tax and Penalties
(Atlantic Coast Masonry Inc. v. Comm.; T.C. Memo. 2012-233; 8/13/2012)
The Tax Court, sustaining penalties and additions to tax, held that a company was liable for employment taxes on wages paid to the laborers it argued were independent contractors, finding that the requirements for relief were not satisfied.
- Tax Court's Valuation of Conservation Easement Affirmed by 10th Circuit
(Trout Ranch LLC et al. v. Commissioner; No. 11-9006; 8/16/2012)
The Tenth Circuit affirmed the Tax Court's holding that a conservation easement reduced the value of property by more than the IRS had argued but less than the taxpayer had argued, finding that the Tax Court had not clearly erred.
LAST UPDATED 8/20/2012