Lawsuit Award Allowed to Reduce Basis of Acquired Assets

The determination of the taxation of a litigation award was considered by the IRS in PLR 201152010.  In the matter at hand the taxpayer had been attempting to acquire a unit investment trust and had negotiated an agreement that tied down the purchase price.  The agreement was contingent on receiving unitholder approval of the purchase, [...]

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Employee Allowed a Deduction for Supplemental Unemployment Insurance

The IRS ruled in PLR 201152005 that an employee who paid premiums that were meant to provide supplemental unemployment benefits should the employee lose his/her job were deductible as employee business expenses under IRC §162.

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IRS Still Allowed to Request Documents and Examine Other Issues With Claim for Refund, Even When Form 870-AD Previously Executed

The taxpayer and the IRS had executed a Form 870-AD, Offer to Waive Restrictions on Assessment and Collection of Tax Deficiency and to Accept Overassessment, with regard to particular year.  In Chief Counsel Email Advice 201152018 the IRS determined that even with the Form 870-AD, the IRS could still look at details of the year [...]

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Reading, A Good Way to Make Time Fly

Not many will argue that 2011 was an exciting year, as we saw Kim Jong Un succeed his father, Kim Jong-il as the new supreme leader of North Korea. On Dec. 15, the United States formally declared an end to the Iraq war. And we lost our version of American royalty, when Elizabeth Taylor passed away on [...]

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New Regulations Govern Capitalization of Tangible Assets

The IRS has issued the third revision of the proposed regulations on capitalization, this time issuing at the same time identical temporary regulations, in TD 9564.  These regulations would, among other things, attempt to outline rules for determining whether an expenditure was a repair that could be currently expensed, or a capitalized improvement that must [...]

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IRS Announces Temporary Extension of FICA Rate Reduction, Including Possible Recapture Tax on 2012 Forms 1040

After much year-end angst, Congress passed the Temporary Payroll Tax Cut Continuation Act of 2011 that extended the lower employee FICA tax rate of 4.2% through February 29, 2012.  Originally the lower rate was scheduled to expire at the end of 2011.  Attempts were made to extend the lower rate for the entire year of [...]

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IRS Adds New Option to Qualify for “Madoff” Relief

In Revenue Procedure 2011-58 the IRS extended the “Madoff Relief” provided in Revenue Procedure 2009-20 to cover additional situations.

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Employer’s Deduction for Meals Furnished to Flight Crew Subject to 50% Reduction Under §274(n)

Chief Counsel Advice 201151020 notes that meals may be excludable from an employee’s income under either IRC §119 or §132(e), but holds the treatment of the deduction on the employer’s return is different depending upon which section is involved.  Specifically, the ruling finds that, in the case presented, the benefit was an IRC §119 excludable [...]

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Change in Deductions for “Closed” Years Can Still Increase Net Operating Loss Carryover to Open Years

In Chief Counsel Memorandum 201151021 we are reminded that changes to the income or deductions in “closed” years can still affect net operating loss carryovers from that year that impact open years.

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Recurring Item Exception Limitations Outlined by IRS for Leases and Maintenance Contracts

The IRS outlined the application of the recurring item exception to leases and service contracts recognized over multiple years for financial statement purposes in Revenue Ruling 2012-1.

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