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Lynn Nichols of Nichols Patrick CPE delivers the latest federal tax updates. For all of your CPE needs, visit www.ficpa.org/cpe. (‘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.)
The podcast this week covers the following:
- Couple's Earnings From CFC Were Taxable as Ordinary Income
(Osvaldo Rodriguez et ux. v. Comm.; CA 5; No. 12-60533; 7/5/2013)
The Fifth Circuit affirmed a Tax Court decision that held that earnings from a couple's controlled foreign corporation that were invested in U.S. property and included in their gross income under sections 951 and 956 were not qualified dividend income entitled to preferential tax treatment under section 1(h)(11).
Affirming Rodriguez v. Commissioner, 137 T.C. No. 14 (12/7/2011)
- QSST Beneficiary May Deduct Interest Expense on Loan to Acquire S Stock
QSST Beneficiary May Deduct Interest Expense on Loan to Acquire S Stock
(ILM 201327009; 7/5/2013)
In a legal memorandum, the IRS determined that interest expense associated with debt incurred by a qualified subchapter S trust to acquire stock of an S corporation is allocated to the grantor trust portion of the trust, thereby allowing the beneficiary to report the interest expense as a deduction on his personal income tax return.
- Voting Trust and S Corporation Can Survive Death of Grantor
(Tax Notes Today; 7/9/2013; Article by John Novogrod and Blake Rigel)
John Novogrod and Blake Rigel argue that LTR 201226019 provides direction to owners of S corporations who choose to use a voting trust to maintain voting control of the corporation, even after making significant gifts of their beneficial interests in the voting trust.
IRS Rules on Tax Consequences of Proposed Voting Trust
(LTR 201226019; 07/02/2012)
- Final Rules Implementing Some Affordable Care Act Provisions
The Department of Health and Human Services has issued a final rule implementing provisions of the Patient Protection and Affordable Care Act to reflect new statutory eligibility provisions and changes related to Medicaid and the Children's Health Insurance Program eligibility notices, delegation of appeals, and other administrative procedures.
- Transitional Relief From Health Insurance Reporting Requirements
(Notice 2013-45; 2013-31 IRB 1; 7/9/2013)
The IRS has provided transition relief for 2014 from the information reporting requirements for employers under section 6056 and providers of minimum essential healthcare coverage under section 6055; accordingly, no penalties will be assessed under section 4980H.
- D.C. Circuit Reverses Tax Court on Taxing Nonresident Alien Gambling Income
(Sang J. Park v. Commissioner; USDC DC; No. 12-1058; 7/9/2013)
The D.C. Circuit, reversing the Tax Court, held that a nonresident alien's gains from slot machine winnings should have been calculated on a per-session basis, allowing for the subtraction of losses during that period rather than on a per-bet basis.
IRS Must Calculate Gambling Winnings Consistently for Citizens and Foreigners
(Tax Notes Today; 7/10/2013; Article by Jaime Arora)
Finding that gains from gambling winnings should be calculated the same for both U.S. citizens and nonresident aliens, the D.C. Circuit on July 9 reversed a Tax Court decision and held that a South Korean individual's gains from slot machine winnings should be calculated on a per-session basis rather than on a per-bet basis.
- Guidance on Tax Lien Notice Withdrawals Involving Installment Agreements
The IRS Small Business/Self-Employed Division has reissued interim guidance on processing requests for withdrawal of notices of federal tax lien when the taxpayers are in an established direct debit installment agreement.
LAST UPDATED 7/15/2013