Federal Tax Update - July 8, 2013

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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.  The podcast this week covers the following:

  1. S Corp Not Deemed to Have More Than 1 Class of Stock
    (LTR 201326012; 6/28/2013)
    The IRS ruled that an S corporation will not be deemed to have more than one class of stock under section 1361(b)(1)(D) as a result of the issuance of debentures to an employee and the employee's IRA in exchange for advances they made to the company.
    [Doc 2013-15751]
  2. Eleventh Circuit Affirms Decision Refusing to Quash IRS Summonses
    (Jeffrey A. Azis et al. v. United States; No. 12-13929; 7/1/2013)
    The Eleventh Circuit, in an unpublished per curiam opinion, affirmed a district court decision that refused to quash third-party IRS summonses issued to banks in the IRS's investigation of a CPA and his accounting and consulting business, finding no clear error or abuse of discretion by the district court.
    [Doc 2013-15899]
  3. Treasury Delays Employer Healthcare Insurance Mandate Until 2015
    (Tax Notes Today; Article by Matthew Dalton; 7/3/2013)
    Enforcement of the section 4980H employer health insurance mandate will be delayed until 2015, along with reporting requirements under sections 6055 and 6056, according to a July 2 blog post by Treasury Assistant Secretary for Tax Policy Mark Mazur.
    [Doc 2013-16103]
  4. Final Regs on Deferred Discharge of Indebtedness Income of Corporations and Deferred OID Deductions
    (T.D. 9622; 78 F.R. 39984-39992; 7/2/2013)
    The IRS has published final regulations under section 108(i) on the accelerated inclusion of deferred discharge of indebtedness income of corporations, the accelerated deduction of deferred original issue discount, and the calculation of earnings and profits resulting from an election under section 108(i).
    [Doc 2013-15973]
  5. Final Regs on Deferred Discharge of Indebtedness Income of Partnerships, S Corps
    (T.D. 9623; 78 F.R. 39973-39984; 7/3/2013)
    The IRS has published final regulations under section 108(i), providing rules on the deferral of discharge of indebtedness income and original issue discount deductions by a partnership or an S corporation relating to reacquisitions of applicable debt instruments in 2009 or 2010.
    [Doc 2013-15974]
  6. S Corp Can Expense Business Assets Up to Maximum Sec. 179 Amount
    (INFO 2013-0016; 6/28/2013)
    The IRS addressed whether an S corporation that is a member of a controlled group of corporations within the meaning of section 1563(a) can make a section 179 election up to the full amount specified in section 179(b).
    [Doc 2013-16075]
  7. IRS Advises on Tax Treatment of Severance Pay
    (INFO 2013-0023; 6/28/2013)
    The IRS provided information on whether severance pay is subject to Social Security tax, Medicare tax, and federal income tax withholding.
    [Doc 2013-16082]
    Government Seeks Certiorari on FICA Tax Treatment of Severance Payments
    (United States v. Quality Stores Inc. et al.; 5/31/2013)
    Court Petitions and Complaints
    [Doc 2013-13579]
  8. IRS Provides Instructions for Optional Expedited Process for Some Tax-Exempt Applications
    (IRS Letter; 6/1/2013)
    The IRS has released a letter it will send to some groups seeking accelerated processing of their section 501(c)(4) tax-exempt applications under the IRS's optional expedited process, a safe harbor program designed to reduce the IRS's backlog of applications that have been pending for more than 120 days as of May 28, 2013.
    [Doc 2013-16189]
  9. Eleventh Circuit Affirms Tax Court; Corporation Bound by Original Price Allocations
    (Peco Foods Inc. et al. v. Commissioner; No. 12-12169; 7/2/2013)
    The Eleventh Circuit, in an unpublished opinion, affirmed a Tax Court decision that sustained deficiencies and held that a corporation wasn't entitled to modify purchase price allocations for assets it acquired at two poultry processing plants, agreeing with the Tax Court that the original allocation schedules were binding under section 1060.
    [Doc 2013-16109]
  10. Individual's Rental Activity Losses Denied Under Passive Activity Loss Rules
    (Garfield K. Windross et ux. v. Commissioner; T.C. Summ. Op. 2013-52; 7/3/2013)
    The Tax Court, in a summary opinion, held that an individual wasn't a real estate professional and sustained IRS deficiency determinations stemming from the disallowance of claimed losses from his real estate rental activity; the court declined to impose accuracy-related penalties, noting the complexity of section 469 and its related regulations.
    [Doc 2013-16168]