Debt Relief: Breaking Down the Tax Aspects of Covid-19's Economic Impact – Part V, Application of Section 108... [ read ]
Parts I–IV of this series have presented a general discussion of what constitutes indebtedness, the general consequences of significant modifications of indebtedness, and a number of statutory and congressionally-enacted exceptions to cancellation of indebtedness income ("COD Income"). This installment will build on these concepts and discuss in a more pragmatic manner the application of the statutory exceptions to COD Income in Section 108 of the Internal Revenue Code (the "Code").
Form 8275 Disclosure Statement: A Tax Practitioner's Best Friend Forever... [ read ]
There is no denying it. My Best Friend Forever, my BFF, is IRS Form 8275 – which I affectionately call Disclosure Statement. The reason being, Form 8275 keeps me and my clients (mostly) out of trouble. And it can do the same for you and your clients.
IRS Releases 2020 Dirty Dozen List: What Made the Cut?... [ read ]
Sometimes it better not to be noticed. And that is certainly true when it comes to the IRS' Dirty Dozen list – the IRS' proverbial "naughty" list of abusive transactions, fraudulent schemes, and criminal scams. In the list for 2020 released today, the IRS focuses on scams that target taxpayers. And for the first time since 2014, the IRS leaves off one allegedly-abusive transaction.
The IRS Publishes a Roadmap for Bipartisan Budget Act (BBA) Partnership Audits... [ read ]
On July 6th, the IRS published a BBA Roadmap for Taxpayers to assist partnerships subject to the centralized partnership audit regime. The centralized partnership audit regime was created in the Bipartisan Budget Act of 2015 and applies to partnership tax years beginning after December 31, 2017. Although the IRS has already started some BBA audits, the release of the roadmap is likely an indication that more partnership audits will be starting soon.
IRS Releases Practice Unit on Reasonable Cause and Good Faith Defenses to Penalties... [ read ]
On July 2, 2020, the IRS released a practice unit addressing a taxpayer's reasonable cause and good faith defenses to civil penalties. IRS practice units are developed through internal collaboration and serve as both job aids and training materials on tax issues. Practice units provide a general discussion of a concept, process or transaction and are a means for collaborating and sharing knowledge among IRS employees. A list of the IRS practice units can be found here. Although practice units are not official pronouncements of law or directives and cannot be used, cited or relied upon, they provide insight to taxpayers and tax advisors.
Working With the New IRS Independent Office of Appeals... [ read ]
On July 1, 2019, the Taxpayer First Act was signed into law and among other things, it established the "Internal Revenue Service Independent Office of Appeals". The IRS Office of Appeals has been around for almost 100 years and has generally been independent. However, the Taxpayer First Act codified the Office of Appeals and its long-standing purpose and duties, i.e., " to resolve tax controversies, without litigation, on a basis which is fair and impartial to both the Government and [the taxpayer] in a manner that will enhance voluntary compliance and [public confidence} in the integrity and efficiency of the Service".
The IRS Offers a Settlement Opportunity to Abusive Easement Cases... [ read ]
In an unexpected development on June 25th, the IRS announced a time-limited settlement offer to certain taxpayers with pending docketed Tax Court cases involving syndicated conservation easement transactions. The settlement offer is surprising because on June 18th, IRS SB/SE Division Commissioner, Eric Hylton, stated that the IRS was not considering a resolution program for syndicated conservation easements similar to the microcaptive insurance settlement offer.
Debt Relief: Breaking Down the Tax Aspects of Covid-19's Economic Impact – Part IV, Modifications of Indebtedness... [ read ]
Modifying the terms of indebtedness, as opposed to cancelling or discharging the indebtedness, leaves the indebtedness outstanding but revises the terms governing the obligation. For example, the lender and borrower of a debt instrument may adjust the interest rate, change the collateral underlying the obligation, or defer or otherwise adjust the schedule of payments made on the debt instrument. Whether such a change in terms results in tax consequences is dependent on the terms of the original, unmodified indebtedness instrument, as well as the nature and extent of the changes made.
IRS Finds New Target in Microcaptive Enforcement: The State of Delaware... [ read ]
Just when you thought the IRS hit full speed in its enforcement campaign against microcaptives, the IRS found another gear. After pursuing captive management companies, tax advisors, and taxpayers alike, the IRS has set its sights on a new foe: the Delaware Department of Insurance.
Tax Court Hands a Taxpayer a Rare Win in a Worker Classification Case... [ read ]
On June 17th, U.S. Tax Court Judge Tamara Ashford issued an opinion in Leticia C. Santos v. Commissioner holding for a taxpayer on a worker classification case. We have previously discussed how the IRS usually tries bad-fact cases, so a taxpayer win regarding worker classification is something to write about.