The IRS is Increasing Their Focus on Bitcoin and Other Virtual Currencies... [ read ]
On November, 17, 2016, the Department of Justice filed a petition in a United States District Court in Northern California asking the court to issue a John Doe Summons to Coinbase, the largest bitcoin exchange in the U.S., asking for the records of all customers who bought virtual currency from Coinbase for the years 2013, 2014 and 2015.
IRS Mandates Disclosure of Small Captives Before January 30, 2017... [ read ]
The IRS has officially declared war on small captive insurance arrangements that rely on I.R.C. Section 831(b) and the ability of the captive to exclude from income a certain amount of premiums earned each year. In Notice 2016-66, the IRS identified these microcaptives, as they are commonly known by, as "transactions of interest" for federal income tax purposes. This identification triggers an obligation by taxpayers and material advisors to formally disclose the details of their insurance transactions to the IRS or otherwise face potential penalties up to $50,000.
Tax Do-Overs: Unwinding a Transaction under the Rescission Doctrine... [ read ]
Growing up my Mom used to say "You've made your bed, now lie in it." Luckily for taxpayers, my Mom is not the IRS. The IRS understands that mistakes happen, conditions change, and deals sour. Under the rescission doctrine, a taxpayer may unwind a transaction and avoid federal income tax consequences flowing from the rescinded transaction.
Going..Going..Gone. Face-To-Face IRS Appeals Conferences are Disappearing... [ read ]
Effective October 1, 2016, the IRS has revised the Internal Revenue Manual (IRM) instructing Appeals Officers that most Appeals conferences will be held by telephone instead of in person. The changes to the IRS are in response to the dwindling IRS budget and lack of manpower.
An "Unnecessary" QTIP Election May Not be Disregarded for Portability Purposes... [ read ]
In recently issued Revenue Procedure 2016-49, the Service has confirmed that both a QTIP election and a portability election may be made on the same estate tax return, thereby maximizing exemption planning and flexibility in your estate plan. This new guidance was issued to clarify a gray area posed by Revenue Procedure 2001-38 whereby a QTIP election could possibly be void where the executor also makes a portability election.
Congress Takes Aim at the Proposed 2704 Regulations... [ read ]
As I discussed in detail in my August 4, 2016 blog post, the new proposed regulations are undoubtedly controversial. In their current form, they disregard longstanding valuation principles backed by decades-old legal precedent, and, in doing so, virtually eliminate minority and lack of marketability discounts. To no surprise, the regulations have come under fire from family business owners, tax practitioners, and appraisers, who criticize the new rules as regulatory overreach and the Treasury's attempt to change and make law.
IRS Will Once Again Rule on Corporate Business Purpose and Device Under §355... [ read ]
The IRS announced in Rev. Proc. 2016-45 that it will once again issue private letter rulings on issues of corporate business purpose and device under §355, after a hiatus of 13 years.
Statute of Limitations: The Taxpayer's Ultimate Defense in a Criminal Tax Case... [ read ]
In a previous post, I discussed the civil statute of limitations (SOL) the IRS has for assessing additional tax, penalties and interest against a taxpayer. In this post, I will briefly discuss the SOL for criminal tax cases and a recent case where the defendant effectively used the SOL as a defense.
IRS Rolls Over On Late IRA Rollovers... [ read ]
You are probably familiar with the idea of an IRA rollover. Generally, taxpayers can distribute assets from an IRA account, without an immediate tax consequence, provided that the assets are contributed to another IRA account within 60 days. The distribution is subject to tax, as well as a potential 10% early withdrawal penalty, if a taxpayer misses the 60-day deadline. The IRS may waive the deadline if it "would be against equity or good conscience" to enforce it. See I.R.C. §§ 402(c)(3)(B) or 408(d)(3)(I). Until last week, Revenue Procedure 2003-16 governed the procedure for granting waivers.
IRS Releases Procedure for Amending a Streamlined Submission... [ read ]
On July 18, 2016, the IRS released for the first time the procedure for amending a streamlined submission, as part of ongoing updates to its Frequently Asked Questions for U.S. Taxpayers Residing in the United States and for U.S. Taxpayers Residing Outside the United States .
