Federal Tax Update - Dec. 16, 2013

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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
December 16, 2013

CITATIONS

  1. Proposed Regs on Deductibility of Start-Up, Organizational Expenses for Partnerships
    (REG-126285-12; 2013-52 IRB 853; 78 F.R. 73753-73756; 12/9/2013)
    The IRS has published proposed regulations providing guidance on the deductibility of start-up expenditures and organizational expenses for partnerships following a technical termination of a partnership.
  2. 2014 Standard Mileage Rates
    (Notice 2013-80; 2013-52 IRB 821; 12/6/2013)
    The IRS has issued guidance providing the 2014 standard mileage rates for taxpayers to use in determining the deductible costs of operating a car for business, charitable, medical, or moving expense purposes.
  3. Payments to Veterinarian Not Exempt From Information Reporting
    (ILM 201349013; rel. 12/6/2013)
    In a legal memorandum, the IRS ruled that payments made in the course of a taxpayer's trade or business to an incorporated veterinarian must be reported to the IRS under section 6041 if those payments exceed $600 annually.
  4. Couple Prevailed in Tax Dispute, Court Awards Attorney Fees
    (John Purciello v. U.S.; USDC NJ;No. 2:11-cv-04181; 12/9/2013)
    A U.S. district court granted a couple's request for attorney fees and litigation costs in a dispute with the IRS seeking funds the IRS withheld for trust fund recovery penalties, finding that the couple was the prevailing party and was entitled to reasonable litigation costs.
  5. Manufacturer Using Improper Accounting Method for Advance Payments
    (FAA 20134801F; rel. 11/29/2013)
    In field attorney advice, the IRS concluded that a manufacturer isn't properly using the accounting method in reg. section 1.451-5 for advance payments received under long-term contracts because its liability under the contracts ended when they were modified and it must immediately recognize as income all advance payments received in prior years.
  6. Fifth Circuit Affirms Corporation Wasn't Entitled to Bad Debt Deductions
    (DF Systems Inc. v. Commissioner; CA 5; No. 13-60322; 12/10/2013)
    The Fifth Circuit, in an unpublished per curiam opinion, affirmed a Tax Court decision that sustained a deficiency determination against an electrical contracting company, holding that the Tax Court didn't err in finding that purported loans for which the corporation claimed bad debt deductions weren't bona fide loans.
  7. Surrender of Securities Resulted in Capital Loss
    (Pilgrim's Pride Corp. et al. v. Commissioner; 141 T.C. No. 17; 12/11/2013)
    The Tax Court held that a $98.6 million ordinary loss a corporation claimed as the result of its surrender of securities was a capital loss subject to the loss limitations of sections 1211 and 1212 because the surrender was deemed a sale or exchange of capital assets under section 1234A.
LAST UPDATED 12/16/2013