Federal Tax Update - Sept. 9, 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. Sixth Circuit Dismisses Appeal in FedEx Research Tax Credit Case
    (FedEx Corp. et al. v. United States; No. 13-5594; 8/29/2013)
    The Sixth Circuit issued an order dismissing the government's appeal of a district court decision involving a research tax credit dispute with FedEx Corp. based on a stipulation of dismissal filed by the parties to the appeal.

    The Justice Department abandoned its appeal August 29 over the appropriate legal standard governing FedEx's section 41 research tax credit claim involving computer software research, which means FedEx is not bound by the heightened "discovery" test under prior regulations and may apply a more basic test in qualifying for the credit.
    [Doc 2013-20920] and  [Doc 2013-20915]

    Proposed Regs on Research and Experimental Expenses
    (REG-124148-05; 78 F.R. 54796-54800; 9/6/2013)
    The IRS has published proposed regulations to amend the definition of research and experimental expenditures under section 174.
    [Doc 2013-21136]
  2. Final Regs on Limitations on Duplication of Net Built-In Losses
    (T.D. 9633; 78 F.R. 54156-54168; 8/30/2013)
    The IRS has published final regulations that apply to some nonrecognition transfers of loss property to corporations.
    [Doc 2013-20877] 

    Final Loss Duplication Rules With Fix for Transfers of Partnership Interests
    (Tax Notes Today; 9/3/2013; Article by Amy Elliott and Andrew Velarde)
    Treasury on August 30 released final regulations that provide guidance on section 362(e)(2), which prevents the duplication of loss when net built-in loss assets are transferred to a corporation in exchange for stock in a section 351 nonrecognition transaction or in some reorganizations and spinoffs.
    [Doc 2013-20919]
  3. IRS Addresses Tax Treatment of Attorney Fees Paid Under Settlement Agreements
    (FAA 20133501F; rel. 8/30/2013)
    In field attorney advice, the IRS addressed the proper reporting of attorney fees paid under settlement agreements between an employer and former employees and the potential penalties that apply for failure to properly report.
    [Doc 2013-20923] 
  4. IRS Must Honor Corporation's Designation of Voluntary Tax Payments
    (James R. Dixon et ux. v. Commissioner; 141 T.C. No. 3; 9/3/2013)
    The Tax Court held that the IRS could not proceed with a levy to collect individuals' taxes after the corporation that employed them made payments that it designated as income tax payments withheld on their behalf, finding that the IRS must honor the corporation's designation of the tax payments to discharge the individuals' income tax liabilities.
    [Doc 2013-21023] 
  5. Final, Temporary Regs on Application of Straddle Rules to Debt Instruments
    (T.D. 9635; 78 F.R. 54568-54569; 9/5/2013)
    The IRS has published final and temporary regulations on the application of the straddle rules to a debt instrument, clarifying that a taxpayer's obligation under a debt instrument can be a position in personal property that is part of a straddle.
    [Doc 2013-21038] 
  6. Proposed Regs on Healthcare Coverage Information Reporting
    (REG-136630-12; 9/5/2013)
    The IRS has issued proposed regulations providing guidance to employers that are subject to the information reporting requirements under section 6056, as enacted by the Affordable Care Act.
    [Doc 2013-21218]
  7. Proposed Regs on Information Reporting of Minimum Essential Coverage
    (REG-132455-11; 9/5/2013)
    The IRS has issued proposed regulations for providers of minimum essential health coverage that are required under section 6055 to report to the IRS information about the type and period of coverage and furnish related statements to covered individuals.
    [Doc 2013-21217]