Federal Tax Update - June 24, 2013

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Lynn Nichols from Nichols Patrick CPE delivers the weekly federal tax update.  The podcast this week covers the following topics:

  1. Indemnity of a Partnership's Indebtedness Should Be Ignored, IRS Advises
    (ILM 201324013; 3/14/2013; rel. 6/14/2013)
    In a legal memorandum, the IRS concluded that the indemnity of a partnership's indebtedness by a partner's parent company in connection with the disposition of the parent's contributed assets should be disregarded. [Doc 2013-14517]
  2. Cash Settlement Payment Won't Be Treated as Other Than Voting Stock
    (LTR 201324003; 3/18/2013; rel. 6/14/2013)
    The IRS ruled that a foreign corporation's payment of a cash settlement amount to former shareholders of a U.S. company that the corporation acquired in a section 368(a)(1)(C) reorganization won't be considered a payment of other than voting stock that would cause the acquisition to fail to be a valid reorganization under section 368(a). [Doc 2013-14507]
  3. Subsidiaries Will Be Treated as Having Joined Consolidated Return
    (LTR 201324010; 3/14/2013; rel. 6/14/2013)
    The IRS ruled that each of three subsidiaries will be treated as having joined in the filing of a consolidated return with their common parent. [Doc 2013-14514]
  4. Couple Liable for Self-Employment Taxes on Payments From USDA Conservation Reserve Program
    (Rollin J. Morehouse et ux. v. Commissioner; 140 T.C. No. 16; 6/18/2013)
    The Tax Court held a couple liable for self-employment taxes on payments received under the U.S. Department of Agriculture Conservation Reserve Program, finding that the husband was engaged in a trade or business with a nexus to the payments and the payments weren't excludable from self-employment earnings as rentals from real estate. [Doc 2013-14833]
  5. LB&I Issues Memorandum on Information Document Requests
    (LB&I-04-0613-004; 6/18/2013)
    The IRS Large Business and International Division has issued a memorandum announcing that all information document requests issued after June 30, 2013, must be issue focused, discussed with the taxpayer, and provide a reasonable deadline for response. [Doc 2013-14924]
  6. Tax Court Finds IRS Positions Justified, Denies Corporation Litigation Costs
    (Thousand Oaks Residential Care Home I Inc. et al. v. Commissioner; T.C. Memo. 2013-156; 6/20/2013)
    The Tax Court denied a corporation administrative and litigation costs after finding in a prior opinion that compensation paid to its owner-employees was reasonable and deductible as a business expense, holding that the corporation wasn't the prevailing party because the IRS's positions were reasonable and substantially justified. [Doc 2013-15096]
  7. IRS Analysis Finds Positive Results From Return Preparer Oversight
    (Tax Notes Today; 6/20/2013; Presentation to the IRS-TPC Research Conference)
    An IRS initiative to increase oversight and standards among return preparers, combined with e-filing guidance, appears to be leading to long-term reductions in the number of preparers, increased standardization, and fewer errors on returns, according to a June 20 analysis from the IRS. [Doc 2013-15045]
  8. IRS Provides Information on Professional Responsibility and FBAR Filing Requirements
    (www.irs.gov; Professional Responsibility and the Report of
    Foreign Bank and Financial Accounts. The IRS has posted to its website information on professional responsibility and the foreign bank account report. [Doc 2013-15109]
LAST UPDATED 6/24/2013