Federal Tax Update - Nov. 12, 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:
                                                                                                                                               
CITATIONS

  1. Contract Manufacturing Developments May Increase Coordination Among Parties
    (Tax Notes Today; 11/4/2013; Article by Amy Elliott)
    Two recent developments have increased the likelihood that companies will negotiate an agreement with their contract manufacturers regarding which entity will claim the section 199 domestic production activities deduction to avoid costly disputes with the IRS.
  2. Proposed Bequest to Camp Would Constitute an 'Unusual Grant'
    (LTR 201342011; 10/18/2013)
    The IRS ruled that a proposed bequest to an organization that operates a camp for seriously ill children constitutes an unusual grant within the meaning of reg. section 1.170A-9(f)(6)(ii) because the size of the grant is not only unusual and unexpected but would also adversely affect the group's publicly supported status.
  3. LB&I Issues Memorandum on IDR Enforcement Process
    (LB&I-04-1113-009; 11/4/2013)
    The IRS Large Business and International Division has issued a memorandum that reiterates prior guidance on information document requests and provides guidance on the enforcement process for when a taxpayer does not timely respond to an IDR that is issued in accordance with the requirements described in the directive.
  4. Bonuses Not Deductible Until Year of Payment
    (FAA 20134301F; 10/25/2013)
    In field attorney advice, the IRS concluded that cash bonuses paid by an employer are not deductible until the year the bonuses are paid.
  5. IRS Forcing All Applicants for Same-Day EINs to Apply Online
    (Tax Notes Today; 11/6/2013; Article by Amy Elliott)
    Although taxpayers and their representatives will still be able to request a new employer identification number by faxing or mailing a Form SS-4, "Application for Employer Identification Number," those wishing to receive same-day EINs will be required to use the online EIN assistant, an IRS official said November 5.
  6. Officials Hope Taxpayers and Agents Will Be Reasonable Regarding Repair Regs' De Minimis Rule
    (Tax Notes Today; 11/7/2013; Article by Jamie Arora)
    The final repair regulations do not include details on how small taxpayers can defend their de minimis policies during exam, but Treasury and the IRS hope that both agents and taxpayers will take a reasonable approach.
  7. IRS Announces Nationwide Availability of Fast-Track Settlement Program for Small Businesses, Self-Employed
    (IR-2013-88; 11/6/2013)
    The IRS has announced the nationwide rollout of its fast-track settlement program to help small businesses and self-employed individuals quickly resolve disputed issues and expedite case resolution within the IRS's Small Business/Self-Employed Division.
  8. Couple Denied Mortgage Interest Deduction for Interest Paid on Loan From Parent
    (Christopher DeFrancis v. Comm.; T.C. Summ. Op. 2013-88; 11/6/2013)
    The Tax Court, in a summary opinion declining to impose an accuracy-related penalty, held that a couple wasn't entitled to a mortgage interest deduction for interest paid on a mortgage loan from one of their mothers, finding that they failed to show that it was a secured debt and that the interest was qualified residence interest.
LAST UPDATED 11/12/2013