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Lynn Nichols from Nichols Patrick CPE delivers the weekly podcast on federal tax issues. For all of your CPE needs, please go to www.ficpa.org/cpe. This week’s podcast covers the following topics:
NICHOLS PATRICK WEEKLY TAX UPDATE
With E. Lynn Nichols, CPA
August 12, 2013
(‘Doc’ numbers are citations to the listed item in Tax Analysts’ Tax Notes Today. The author relies on, and recommends, Tax Notes Today and Tax Analysts’ Federal Research Library as essential tools for the tax professional.)
See more at www.taxanalysts.com
- Owners of Gift Basket Company Granted Summary Judgment Allowing Section 199 “Qualified Domestic Production Deduction”
(United States v. Timothy J. Dean et al.; USDC C CA; No. 8:11-cv-01977; 5/7/2013
A U.S. district court, in an erroneous refund suit, held that the owners of an S corporation that made and sold gift baskets and towers were entitled to the refunds they received based on deductions they claimed under section 199, finding that they engaged in a qualified production activity by combining several products into a new product.
You might be interested to read the article cited below for a different view.
Manufacturing Tax Break Gone Wild
(Tax Notes Today; 8/5/2013; Article by David Cay Johnston)
David Cay Johnston writes about United States v. Dean, a recent district court case that he argues defines eligibility for the section 199 manufacturing deduction too broadly.
- Individual Granted “Innocent Spouse” Relief From Liability on Joint Return
(Dale H. Santa v. Commissioner; T.C. Memo 2013-178; 8/5/2013)
The Tax Court held that an individual is entitled to relief from joint and several liability on a joint tax return, finding that the claim was not barred by res judicata and that the Appeals Office erred in not granting the request for relief.
- Couple Did Not Underreport Income: Credible Testimony Established Agency Relationship
(Chad B. Hessing et ux. v. Commissioner; T.C. Memo. 2013-179; 8/5/2013)
The Tax Court held that a couple did not have unreported income for the time period in question, finding credible the couple's testimony that they were acting as agents instead of personally collecting payments and that the statutory limitations period for assessments had passed.
- S Corp Liable for Employment Tax Deficiencies and Penalties for Failure to Treat Payment to Shareholder as Wages
(Glass Blocks Unlimited v. Commissioner; T.C. Memo. 2013-180; 8/7/2013)
The Tax Court sustained the IRS's determinations that an S corporation was liable for employment tax deficiencies and for additions to tax for failure to file employment tax returns and failure to deposit taxes, finding that payments made to the sole officer and shareholder were wages and not loan repayments.
- Losses From Bull Breeding Activity Limited by Failure to Satisfy Recordkeeping Requirements of Passive Activity Rules
(Ben Bartlett et ux. v. Commissioner; T.C. Memo. 2013-182; 8/8/2012)
The Tax Court, sustaining accuracy-related penalties, held that a couple's loss deductions related to a bull breeding activity were limited by the passive activity loss rules of section 469, finding that they failed to show that the husband materially participated in the activity.
- Disability Payment Included in Income, Taxpayer Liable for Additions to Tax
(Marrianne Elizabeth Rayhill v. Commissioner; T.C. Memo. 2013-181; 8/8/2013)
The Tax Court held that a disability payment an individual received was includable in her gross income during the 2007 tax year, that she failed to substantiate business expense deductions, and that she was liable for additions to tax for failure to timely file a return and failure to timely pay taxes.
- Insurance Company Loses Tax-Exempt Status
(LTR 201331005; 8/2/2013)
The IRS revoked the tax-exempt status of an organization established to provide title insurance for aircrafts because the company does not meet the requirements for exemption as an insurance company.
- Research Organization Is Denied Tax-Exempt Status
(LTR 201331008; 8/2/2013)
The IRS denied tax-exempt status to an organization established to conduct scientific research because the organization operates more than insubstantially to market health products on behalf of a for-profit business.
LAST UPDATED 8/12/2013