Federal Tax Update - Sept. 3, 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:


(‘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.)

See more at www.taxanalysts.com

  1. Proposed Regs on Small Business Healthcare Tax Credit
    (REG-113792-13; 78 F.R. 52719-52733; 8/26/2013)
    The IRS has published proposed regulations that provide guidance on the section 45R tax credit available to some small employers that offer health insurance coverage to their employees.
    [Doc 2013-20396] 
  2. Sixth Circuit Affirms Tax Court Decision Denying S Corp Losses, Deductions
    (Robert Broz et ux. v. Commissioner; No. 12-1403; 8/23/2013)
    The Sixth Circuit affirmed a Tax Court decision that held an individual lacked debt-basis to deduct an S corporation's passthrough losses and denied business expense and amortization deductions for the S corporation and entities created to hold Federal Communications Commission licenses because they weren't actively involved in a trade or business.
    [Doc 2013-20415] 
  3. Court Refuses to Dismiss Suit Challenging Church Exemption From Filing Requirements
    (Freedom From Religion Foundation et al. v. Daniel I. Werfel; DC W WI; 8/22/2013)
    A U.S. district refused to dismiss a nonprofit group's claim that the exemption of churches from information reporting requirements that other nonprofits must comply with is unconstitutional and granted the group an opportunity to show that a redressable injury exists as to their claim regarding church exemption from the application requirements.
    [Doc 2013-20395] 
  4. Gift Tax Consequences of Proposed Disclaimers
    (LTR 201334001; 8/23/2013)
    The IRS ruled that an individual's proposed disclaimers of his contingent right to receive any distributions from four trusts won't constitute transfers subject to the federal gift tax if the disclaimers are made within nine months of the date he became aware of his interest in the trusts.
    [Doc 2013-20342]
  5. Married Taxpayer Can't Claim Head of Household Status During Spouse's Temporary Absence
    (ECC 201334041; 8/6/2013)
    In e-mailed advice, the IRS concluded that a married taxpayer can't be considered the head of a household if the couple is not legally separated, does not intend to live apart permanently, and lives apart due to temporary employment circumstances.
    [Doc 2013-20382]
  6. Tax Court Sides With IRS in Revocation of Booster Club's Tax-Exempt Status
    (Capital Gymnastics Booster Club Inc. v. Commissioner; T.C. Memo. 2013-193; 8/26/2013)
    The Tax Court held that the IRS properly revoked a sports booster club's tax-exempt status, finding that the club's earnings inured to the benefit of some of its athletes' parents in violation of section 501(c)(3) and that the club improperly furthered the private interests of the athletes.
    [Doc 2013-20518]
  7. Second Circuit Affirms Settlement Payment Was Subject to FICA Taxation
    (Chester Gerstenbluth v. Credit Suisse Securities (USA) LLC et al.; CA2; 8/27/2013)
    The Second Circuit affirmed a district court decision that dismissed claims against a former employer and granted the government summary judgment in an individual's suit for a refund of FICA taxes withheld from a settlement payment in an age discrimination lawsuit, finding that the payment constituted wages subject to FICA tax withholding.
    [Doc 2013-20557]
  8. Tax Court Holds Individual Wasn't a Trader in Securities; Penalties Sustained
    (Thomas Arthur Endicott et ux. v. Commissioner; T.C. Memo. 2013-199; 8/28/2013)
    The Tax Court, sustaining accuracy-related expenses, held that an individual was an investor and not a trader in securities and wasn't entitled to claim his related expenses on Schedule C of his return, finding that his trading activity wasn't substantial and he didn't seek to catch and profit from daily market swings.
    [Doc 2013-20735]
  9. Treasury and IRS Announce Recognition of All Legal Same-Sex Marriages
    (Tax Analysts Tax Notes Today; Article by Jaime Arora
    Treasury and the IRS announced August 29 that same-sex couples will be treated as married for federal tax purposes as long as they were legally married in jurisdictions that recognize their marriages.
    [Doc 2013-20812]

    All Legal Same-Sex Marriages Recognized for Federal Tax Purposes, IRS Rules
    (Rev. Rul. 2013-17; 2013-38 IRB 1; 8/29/2013)
    The IRS has ruled that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage.
    [Doc 2013-20815]

    FAQ on Same-Sex Couples Married Under State Law
    (Nineteen Q & A; 8/29/2013)
    The IRS has issued a list of frequently asked questions providing tax-related information to individuals of the same sex who are lawfully married.
    [Doc 2013-20817]

    FAQ on Tax-Related Concerns for Registered Domestic Partners
    (Twenty-Seven Q & A; 8/29/2013)
    The IRS has issued a list of frequently asked questions providing tax-related information to individuals of the same and opposite sex who are in registered domestic partnerships, civil unions, or other similar formal relationships that are not marriages under state law.
    [Doc 2013-20818]