Federal Tax Update - Nov. 25, 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:


  • Correcting Deduction of Commissions Is Not Accounting Method Change
    (ILM 201345025; 11/8/2013)
    In a partially redacted legal memorandum, the IRS determined that an employer has not changed its method of accounting for purposes of section 446(e) when it stops deducting commission expenses twice and begins to deduct those expenses once.
  • Publication for 403(b)Tax-Sheltered Annuity Plan Sponsors
    (Publication 4483; 11/1/2013)
    The IRS has released Publication 4483 (rev. Nov. 2013), 403(b) Tax-Sheltered Annuity Plans for Sponsors, explaining common section 403(b) plan mistakes to help sponsors remain in compliance with the law, maximize employees' retirement benefits, and avoid additional taxes and penalties.
  • Rental Property Repairs, Expenses Not-Currently-Deductible Startup Costs
    (Gale Jordan et al. v. Commissioner; T.C. Summ. Op. 2013-91; 11/18/2013)
    The Tax Court, in a summary opinion, held that two individuals couldn't deduct expenses relating to a rental property for 2008 because the property wasn't placed in service in that year; the court noted that the repairs and expenses were not-currently-deductible startup expenses and found each individual liable for accuracy-related penalties.
  • Partnership's Deduction for Qualified Conservation Contribution Is Disallowed
    (61 York Acquisition LLC et al. v. Commissioner; T.C. Memo. 2013-266; 11/19/2013)
    The Tax Court disallowed a partnership's claimed charitable contribution deduction for its contribution of an easement to an organization, finding that the contribution failed to meet the exclusivity requirement since the restriction didn't preserve the entire exterior of the structure.
  • New York Cigarette Dealer Must Capitalize Costs of Cigarette Tax Stamps
    (City Line Candy & Tobacco Corp. v. Commissioner; 141 T.C. No. 13; 11/19/2013)
    The Tax Court held that a corporation operating as a reseller and wholesale cigarette dealer didn't qualify for the small reseller exception of the uniform capitalization rules of section 263A and that it must capitalize its New York cigarette tax stamp costs as indirect handling costs.
  • Corporation Not Entitled to Claim Accelerated Deductions
    (VECO Corp. et al. v. Commissioner; 141 T.C. No. 14; 11/20/2013)
    The Tax Court held that a corporation wasn't entitled to claim accelerated deductions based on an accounting method change, finding that the requirements of the all-events test had not been met for some deductions and that the recurring item exception to the general rule of economic performance did not apply regarding other deductions.
  • Grant Thornton Ordered to Pay $100 Million in Damages for Sale of Tax Shelter
    (William A. Yung et ux. v. Grant Thornton LLP et al.; No. 07-CI-2647; COMMONWEALTH OF KENTUCKY; KENTON CIRCUIT COURT; FOURTH DIVISION; 11/8/2013)
    A Kentucky circuit court ordered accounting firm Grant Thornton LLP to pay a businessman and his family more than $100 million in damages stemming from a leveraged distribution strategy product the firm sold to them and that the IRS found to be an abusive tax shelter.
LAST UPDATED 11/25/2013