Duty of Consistency Applied to Partnership and Settlement Fund Where Receiver Controlled Returns of Both

The receiver appointed to handle the assets of a partnership that was found to have been involved in a Ponzi scheme ended up with a bit of a tax issue that is discussed in Chief Counsel Advice 201052004.  The receiver established a settlement fund consisting of income generated from the partnership’s remaining legitimate business activities [...]

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Timely Mailing Rule Does Not Apply to Amended Returns Reporting Tax Due, Does Apply to Amended Returns Asking for Refund

In a Chief Counsel Advice (CCA 201052003) the IRS decided that the timely mailing rule of §7502 does not apply to amended tax returns reporting tax due, but does apply to amended returns that are claims for refund or credit.

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K-1 Found to Be In Error, S Corporation Had to Deduct All Payments on Employment Agreement in Year Paid for Terminated Employee

In the second Winter case (T.C. Memo. 2010-287) Judge Holmes was put in an unusual position—being assigned to decide issues that he had previously indicated the Court had no jurisdiction to decide (Winter v. Commissioner, 135 TC No. 12).  So he begins his opinion by noting: “I would have held that the Court lacks jurisdiction over [...]

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IRS Releases Additional PTIN Guidance, Implements Provisions for Individuals Working Under Supervision of CPA and other Circular 230 Preparers

The IRS in Notice 2011-6 offered additional guidance as 2010 ended on the application of the PTIN rules for 2011.  The notice creates some new categories of PTIN holding preparers, including carving out special treatment for individuals that work under the supervision of CPAs, EAs, attorneys or enrolled actuaries.

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IRS Releases Annual Revenue Procedure on Adequate Disclosure on a Tax Return

The IRS issued the annual return disclosure revenue procedure applicable for 2010 income tax returns (Revenue Procedure 2011-13).  The document outlines disclosures made on the return that will be deemed to be adequate to escape the penalty for substantial understatement of tax without having to file a Form 8275 or 8275-R for positions that have, [...]

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Tax Court Find That Horse Breeding Was Not a Hobby Despite 10 Years of Losses

Once again the Tax Court (Frimml v. Commissioner) was facing the question of whether a horse breeding operation that generated substantial and continuing losses (this time over ten years) was a hobby operation where losses would be disallowed under §183.

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IRS Claims Lack of Authority to Allow Late Conversion to Roth IRA of Distribution Under Special Rule Related to Airline Plans

Prior to the addition of §402(c)(B) to the Internal Revenue Code, the IRS took the position it had no authority to waive the 60-day period for rolling a distribution from a qualified employer sponsored retirement plan to an IRA.  In PLR 201051027 the IRS returned to that position when a taxpayer attempted to get permission to [...]

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The Rise Of The Networked Enterprise: Web 2.0 Finds Its Payday

McKinsey’s new survey research finds that companies using the Web intensively gain greater market share and higher margins. Read article

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IRS Announces Delay in Enforcement of Anti-Discrimination Provision Related to Health Plans Pending Issuance of Guidance

One item in the Patient Protection and Affordable Care Act of 2010 that is in effect but for which no guidance had been provided was the provision found in §10101(d) of the Act that added §2716 to the Public Health Service Act.  The PHS §2716 provides that non-grandfathered insured group health plans must comply with [...]

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Draft of Form Released to Be Required When Return Not Prepared for Efile By Preparer Required to Efile Returns in 2011

The IRS has issued a draft of new Form 8948 which will be used to explain why a tax return is not being filed electronically.  The form is only to be used by preparers who are required to file a return electronically.

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