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Lynn Nichols from Nichols Patrick CPE presents this week’s podcast covering the latest federal tax updates. If you have any last minute CPE needs before the June 30 reporting period, go to www.ficpa.org/cpe. Lynn Nichols will be presenting for the FICPA on June 27 on Construction Contractors: Unique Accounting and Audit Issues. The podcast this week covers the following topics.
- Collaboration Is a Partnership
(ILM 2013230150; 2/21/2013; rel. 6/7/2013)
In a legal memorandum, the IRS ruled that a collaboration between two corporations was a partnership for federal tax purposes, that the partnership wasn't eligible to opt out of subchapter K, and that the partnership must provide the information necessary for each corporation to claim its share of the domestic production activities deduction.
- Reminder - IRS Needs Judicial Approval to Levy a Principal Residence
(ECC 201323018; 5/20/2013; rel. 6/7/2013)
In e-mailed advice, the IRS advised that it should seek judicial approval to levy a principal residence as provided in section 6334.
- Website Service Provider Denied Exempt Status . . . . 1 of 3 exemption rulings
(LTR 201323037; 3/11/2013; rel. 6/7/2013)
The IRS ruled that an organization that provides a website service allowing vendors and clients to exchange goods and services does not qualify for exempt status under section 501(c)(3) because the organization is not operated exclusively for charitable purposes. [Doc 2013-13984]
- Organization Supporting Polygamy Not Entitled to Tax-Exempt Status
(LTR 201323025; 3/14/2013; rel. 6/7/2013)
The IRS ruled that an organization primarily operated to condone and support those engaging in polygamy has as a substantial purpose the support of an illegal activity; therefore, the organization doesn't qualify for tax-exempt status under section 501(c)(3). [Doc 2013-13972]
- Veterans Group Loses Tax-Exempt Status
(LTR 201323039; 7/1/2012;
The IRS revoked the tax-exempt status of an organization established to unite veterans and their families through social clubs, finding that it operates a bar in a way similar to entities operated for profit, and neither the organization nor any of its subordinates meet the membership requirements of sections 501(c)(19) or 501(c)(7). [Doc 2013-13986]
- JUNE 13, 2013 . . . NASBA ADVISES PRIVATE COMPANIES NOT TO USE THE AICPA’S FINANCIAL REPORTING FRAMEWORK FOR SMALL AND MEDIUM-SIZED ENTITIES (RELEASED JUNE 10TH) . . . PROOF POSITIVE THAT NASBA IS COMPLETELY OUT OF TOUCH ! ! ! ! ! ! !
- Abandonment of Property, Foreclosure of Mortgage Resulted in Capital Gain
(Drucella T. Malonzo v. Comm.; T.C. Summ. Op. 2013-47; 6/10/2013)
The Tax Court, in a summary opinion sustaining an IRS deficiency determination, held that an individual's abandonment of her property and the subsequent foreclosure of her mortgage loan was a sale or exchange that resulted in a capital gain. [Doc 2013-14141]
- Dentist Not Allowed to Deduct Expenses Incurred While Traveling to Work
(Javad Bigdeli et ux. v. Comm.; T.C. Memo. 2013-148; 6/11/2013)
The Tax Court, sustaining penalties, held that a dentist couldn't deduct automobile expenses incurred traveling from his Pennsylvania home to his New York office, travel expenses incurred staying near his office, or meal expenses incurred at work; the court denied additional insurance expense deductions beyond those conceded by the IRS. [Doc 2013-14251]
- Partner Not Allowed to Report Sale of Unrealized Receivables Under Installment Method
(Lori M. Mingo et vir v. Commissioner; T.C. Memo. 2013-149; 6/12/2013)
The Tax Court held that the portion of a note attributable to unrealized receivables that a partner received in exchange for her partnership interest wasn't reportable under the installment method and was ordinary income; she was entitled to a reduction of long-term capital gain in a later year but not to a long-term capital loss claimed that year. [Doc 2013-14373]
- Guidance on Standard of Review of Equitable Innocent Spouse Relief Cases
In a chief counsel notice, the IRS has provided guidance on the standard and scope of review the Tax Court applies when reviewing requests for section 6015(f) relief from joint and several liability; the notice also provides litigation guidance for section 6015 cases. [Doc 2013-14470]
LAST UPDATED 6/17/2013