Federal Tax Update - March 4, 2013

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Lynn Nichols of NicholsPatrick CPE delivers the weekly update on federal tax news.  Watch next week for the FICPA 2013 CPE courses to go live at www.ficpa.org/catalog.  Over 200 live courses will be available for registration.

The podcast this week covers the following:

  1. IRS Files Notice of Appeal in Return Preparer Regulations Case
    (Sabina Loving et al. v. IRS et al.; USDC DC; No. 1:12--cv-00385; 2/20/2013)
    The IRS filed its notice of appeal of a district court decision that held that the IRS did not have authority to institute new tax return preparer regulations and that enjoined the agency from enforcing them, and of the court's decision denying a motion for a stay of the injunction pending appeal.
    [Doc 2013-4325]

  2. Government Seeks Stay in PTIN Reg Case
    (Sabina Loving et al. v. United States et al.; USDC DC; No. 13-5061; 2/20/2013)
    The government filed a motion asking the D.C. Circuit to stay enforcement of a district court order that enjoined enforcement of federal tax return preparer regulations pending appeal of the order, arguing that the government is likely to succeed on the merits and that there would be irreparable injury to the government and public without a stay.
    [Doc 2013-4449]

  3. Payments Under Settlement Agreement Are Deductible Business Expenses
    (ILM 201308027; 10/31/2013; rel. 2/22/2013)
    In a heavily redacted legal memorandum, the IRS concluded that payments made by a taxpayer under a settlement agreement in satisfaction of claims  against it by a state attorney general do not constitute a fine or similar penalty under section 162(f) for purposes of the business expense deduction.
    [Doc 2013-4247] 

  4. Proper Year to Deduct Theft Loss Claim Based on Fraudulent Investment
    (ILM 201308025; 10/19/2012; rel. 2/22/2013)
    In a legal memorandum, the IRS ruled that a taxpayer was entitled to a theft loss deduction for a loss from a criminally fraudulent investment arrangement and determined the proper discovery year for the taxpayer's theft loss claim.
    [Doc 2013-4251] 

  5. IRS Addresses Effect on Amounts at Risk for Guarantees of LLC Debt
    (ILM 201308028; 11/14/2012; rel. 2/22/2013)
    In a legal memorandum, the IRS concluded that the guarantor of an LLC's debt may be at risk for the debt even if he does not completely waive his rights of subrogation and reimbursement as long as the guaranty is bona fide and enforceable under local law and the guarantor is not otherwise protected against loss under section 465(b)(4).
    [Doc 2013-4248]

  6. 2013 Limits on Depreciation Deductions for Autos
    (Rev. Proc. 2013-21; 2013-12 IRB 1; 2/25/2013)
    The IRS has announced the depreciation limitations for owners of passenger cars that are first placed in service in 2013 and the amounts to be included in income by lessees of passenger cars first leased in 2013.
    [Doc 2013-4405]

  7. Bank Must Capitalize Costs Associated With Holding OREO Property
    (FAA 20123201F; 6/18/2012; rel. 8/10/2012; pub. 2/25/2013)
    In field attorney advice, the IRS concluded that direct costs and an allocable share of indirect costs associated with a bank's "other real estate owned" property produced or held primarily for resale must be capitalized to the basis of the property under section 263A.
    [Doc 2013-4349] 

  8. IRS Releases Publication on Choosing a Small Business Retirement Plan
    (Publication 3998; pub. 2/26/2013)
    IRS Publication 3998 (rev. Dec. 2012), Choosing a Retirement Solution for Your Small Business, providing a small-entity compliance guide and explaining the types of programs available and associated tax incentives and advantages.
    [Doc 2013-4427]

  9. Voluntary Worker Classification Settlement Program Expanded
    (IR-2013-23; 2/27/2013)
    The IRS has detailed the expansion of its voluntary classification settlement program to give more taxpayers an opportunity to apply for the program, which provides partial relief from federal payroll taxes for eligible employers that agree to prospectively treat workers as employees.
    [Doc 2013-4618]

  10. FAQ on Voluntary Classification Settlement Program
    (VCSP FAQ; 2/21/2012; Consolidated and Reissued on 2/27/2013)
    The IRS has issued a combined list of frequently asked questions on its voluntary  classification settlement program, with the first list explaining the program generally and the second explaining the temporary eligibility expansion feature that is available through June 30, 2013.
    [Doc 2013-4619]

  11. Workers Were Employees; Company Owner Liable for Employment Taxes
    (Mieczyslaw Kurek v. Commissioner; T.C. Memo. 2013-64; 2/28/2013)
    The Tax Court classified workers employed by a construction company as employees rather than independent contractors because after applying a seven-factor test for determining worker status, the facts and circumstances weighed in favor of classifying the workers as employees and therefore the company's owner was liable for employment taxes.
    [Doc 2013-4826]