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Lynn Nichols of Nichols Patrick CPE delivers the federal tax update podcast this week.  For more information on several of the topics discussed this week please click here for more information on individual tax issues and click here for partnership tax issues.

The podcast this week covers the following:

October 22, 2012
CITATIONS

(Doc #s are citations to Tax Analysts, Tax Notes Today,  the premier reference for tax professionals wishing to stay on top of current developments and expert opinions)

1. No Changes for FSA 'Use It or Lose It' Rule in 2012
   (Tax Analysts, Tax Notes Today, Article by Matthew Dalton, 10/15.2012)
   Any changes to the "use it or lose it" rule for healthcare flexible spending arrangements  will not apply for 2012, government officials said October 12.     [Doc 2012-21192]
2. Ninth Circuit Affirms Tax Court Finding Father-Son Farm Was a Partnership
   (William F. Holdner v. Commissioner; CA 9; No. 11-71593; 10/12/2012)
   The Ninth Circuit upheld a Tax Court opinion that found a father-son farming business was a partnership for federal tax purposes, explaining that the Tax Court's decision was not clearly erroneous, that the underlying deficiency notice was not inadequate, and that the judge did not abuse her discretion in managing the trial.     [Doc 2012-21219]
   See Randal W. Holdner v. Comm., T.C. Memo. 2010-175 (8/4/2010), [Doc 2010-17437]
3. S Corp Permitted to Use Alternative Method of Basis Recovery
   (LTR 201241001; 7/10/2012; rel. 10/12/2012)
   The IRS granted an S corporation permission to use an alternative method of basis recovery to report payments from a contingent payment sale.     [Doc 2012-21166]
4. Correction Methods for 401(k) Plans in Voluntary Correction Program
   (CORRECTION METHODS FOR 401(k) FAILURES; Undated; rel. 10/15/2012)
   An undated IRS presentation outlines voluntary correction program correction methods for 401(k) plan failures and explains that such methods "should restore the Plan and its participants to the position they would have been in had the failure not occurred."
   [Doc 2012-21165]
5. Most Compliant Taxpayers Do Not Receive First-Time Abate Waivers
   (TIGTA Report 2012-40-113; 9/19/2012; rel. 10/18/2012)
   While the IRS's purpose for granting some penalty waivers is to reward past tax compliance and promote future tax compliance, "most taxpayers with compliant tax histories are not offered" and do not receive the first-time abate waiver, a September 19 Treasury Inspector General for Tax Administration report said.     [Doc 2012-21439]
6. 2nd Circuit Holds DOMA Unconstitutional in Estate Tax Refund Suit
   (Edith Schlain Windsor v. U. S. et al.; CA 2; Nos. 12-2335, 12-2435; 10/18/2012)
   The Second Circuit affirmed a district court decision that granted a same-sex surviving spouse a refund of estate taxes paid on her deceased spouse's estate and held that the definition of marriage in the Defense of Marriage Act violates the Fifth Amendment's equal protection clause.     [Doc 2012-21564]
7. Inflation-Adjusted Tables for 2013
   (Rev. Proc. 2012-41; 2012-45 IRB 1; 10/18/2012
   The IRS has released inflation-adjusted items for 2013, noting increases in some tax benefits.     [Doc 2012-21538]