Federal Tax Update - March 11, 2013

Printer Friendly
Text Size: A A A A

Click here to listen to the audio. Alternatively, you may download the file to your computer by right clicking your mouse, choosing "Save Target As", then selecting a location on your computer to save the file.

Lynn Nichols delivers the weekly podcast presenting the latest important issues on federal taxation.  For all of your CPE needs, please see www.ficpa.org/cpe.  The March 11 podcast covers the following:

  1. 2nd Circuit Reverses Tax Court; Tax Assessments Are Timely
    (City Wide Transit Inc. v. Commissioner; CA 2; No. 12-1040; 3/1/2013)
    The Second Circuit held that the IRS could collect unpaid employment taxes from a corporation because the company's accountant had filed fraudulent tax returns to embezzle funds and evade taxes owed to the IRS; therefore assessments against the corporation were timely.     [Doc 2013-4886]

  2. E & Y Pays $123 Million to Settle Tax Shelter Investigation
    (Tax Notes Today; 3/4/2011; Article by William Hoffman and Shamik Trivedi)
    Ernst & Young LLP has agreed to pay $123 million and admit wrongful conduct by partners and employees who helped some 200 clients use four tax shelters to defer, reduce, or eliminate more than $2 billion in tax liabilities, the Justice Department announced March 1.     [Doc 2013-5011]

  3. Proposed Regs on Health Insurance Provider Fee
    (REG-118315-12; 78 F.R. 14034-14046; 3/4/2013)
    The IRS has published proposed regulations on the annual health insurance provider fee imposed by the Patient Protection and Affordable Care Act.     [Doc 2013-4874]

  4. Recognized Built-In Loss Not Treated Separately in Annual Tax Calculation
    (ILM 201309013; 11/21/2013; rel. 3/1/2013)
    In a legal memorandum, the IRS concluded that section 382 does not treat a recognized built-in loss as a net operating loss for the year in a determination separate from the annual tax computation for the year under sections 63(a) and 172(c).     [Doc 2013-4943]

  5. OREO Property Not Considered Acquired for Resale; Not Subject to 263A
    (AM 2013-001; 2/22/2013; rel 3/1/2013)
    In generic legal advice, the IRS determined that property classified as "other real estate owned" acquired by a loan-originating bank through foreclosure proceedings or by deed in lieu of foreclosure is not property acquired for resale within the meaning of section 263A(b)(2).     [Doc 2013-5025]

  6. Couple Deceived by Construction Company May Claim Theft Loss Deduction
    (James M. Urtis et ux. v. Comm.; T.C. Memo. 2013-66; 3/5/2013)
    The Tax Court held that a construction company misused funds a couple paid for an addition on their home and made misrepresentations to them, entitling the couple to a theft loss deduction for the 2007 tax year, when the prospect of recovering their loss became remote.     [Doc 2013-5214]

  7. Certification Period for Work Opportunity Credit Extended
    (Notice 2013-14; 2013-13 IRB 1; 3/7/2013)
    The IRS has issued guidance providing employers that hire members of targeted groups additional time beyond the 28-day deadline for submitting Form 8850, "Pre-Screening Notice and Certification Request for the Work Opportunity Credit," to designated local agencies.
    [Doc 2013-5393]

  8. Judicial Doctrines Should Not Prevent Deferred Gain Recognition
    (FAA 20123401F; 7/18/2013; rel. 8/24/12; pub. 3/7/2013)
    In field attorney advice, the IRS advised that the substance-over-form and step transaction doctrines should not be applied to prevent a taxpayer from deferring gain recognition.     [Doc 2013-5277]

  9. Loan Proceeds Are Includable in Income When All Events Test Is Met
    (FAA 20124103F; 8/22/2012; rel. 10/12/2013; pub. 3/7/2013)
    In partially redacted field attorney advice, the IRS concluded that loan proceeds a corporation receives from a state that will be wholly or partially canceled, depending on whether the corporation has created a specified number of jobs, are includable in the corporation's income when the all events test is met.     [Doc 2013-5284]

  10. Minimum Royalties Must Be Capitalized
    (FAA 20124401F; 10/2/2012; rel. 11/2/2012; pub 4/7/2013)
    In field attorney advice, the IRS concluded that minimum royalties paid for the use of licensed patents must be capitalized to ending inventory under section 263A.      [Doc 2013-5286]
LAST UPDATED 3/11/2013