June 23, 2020
AICPA Calls for Excess Business Loss Refund Relief - Eric Yauch, Tax Notes ($). "Businesses that claimed excess business losses for 2018 are able to get refunds now that the loss limits have been delayed under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136), but some taxpayers need to amend their returns to do so, the AICPA noted in a June 22 letter to the IRS and Treasury."
This is especially a problem for taxpayers taking advantage of the new rules for 2018. They have to file their "quick refund" requests by the end of this month, and it's likely that the processing of the carrybacks will be delayed while the amended returns sit in the IRS pile of unread mail.
Got Loans? Treasury Will Make Some PPP Borrower Names Public - Kelly Phillips Erb, Forbes. "Under the agreement, the SBA will disclose the names of businesses who received PPP loans of $150,000 or more."
IRS requests, not demands, return of improperly-issued COVID payments. Here's how to do that - Kay Bell, Don't Mess With Taxes. "The first thing to note is that while the IRS has long encouraged electronic taxpayer transactions, it's not accepting returned COVID money this way."
IRS Announces Tax Relief for Leave Donations to Aid Victims of COVID-19 Pandemic - Thomson Reuters Tax & Accounting Blog. "First, cash payments that employers make to qualified tax-exempt organizations (as described in Code § 170(c)) in exchange for vacation, sick, or personal leave that their employees elect to forgo will not constitute income to the employees if the payments are made before January 1, 2021, for the relief of victims of the COVID-19 pandemic in the affected geographic areas"
How to Prepare for a Potential Increase in IRS Field Visits - Ben Peeler and Margarita Stone, Eide Bailly:
No doubt, the rapid pace of a field visit can prove beneficial to the IRS, but it can be detrimental to taxpayers. One of the easiest ways to slow the process down and ensure you remain in control is to let your revenue officer know immediately that you wish to consult someone to represent you or your business, or both, in the collection process. Hiring qualified representation is an effective way to protect your business and personal assets when the IRS comes calling.
Having someone who knows how the IRS operates and how to hold them to their own rules can be a huge comfort when an agent comes calling.
Lesson From The Tax Court: How Taxpayers Can Sometimes Benefit From IRS Errors - Bryan Camp, TaxProf Blog. "When you catch the IRS in error, the key lesson from these cases is to look at how did the error prejudice the taxpayer from obtaining relief that Congress provides in the Tax Code?"
Marijuana Dispensaries Lose IRS Tax Fight Over FedEx Delivery - Robert W. Wood, Forbes. If you don't send paper tax filings by certified mail, you have to use an "authorized" private delivery service. Some UPS and FedEx services qualify, some don't.
Iowa Supreme Court Affirms That Typical Cash Rent Landlords Not Eligible for Capital Gain Deduction - Kristine Tidgren, Ag Docket:
Since 1990, the Iowa Legislature has carved out a small exception to this rule, allowing qualifying small business owners and farmers to deduct at least a portion of the capital gain income they realize from the sale of their business-related property. The law has evolved through the years, but with respect to the sale of “real property,” a full capital gain deduction is currently allowed for net capital gain stemming from the sale of:
Real property used in a business in which the taxpayer materially participated for 10 years immediately prior to the sale, when that property has been held for a minimum of 10 years immediately prior to its sale.
As I discuss in the next item, results may differ when the cash rent is between a landowner and a farm that the owner operates in a corporation or other entity.
Iowa Supreme Court Nixes Capital Gain Break for Sale of Cash-rent Farmland - Joe Kristan, Eide Bailly. "Court upholds administrative rule treating farm rentals differently from other rental activity; taxpayer fails to demonstrate material participation."
Latest Data Shows That the Tax Cuts and Jobs Act Did Not Dampen Charitable Giving - Scott Hodge, Tax Policy Blog. "The Giving USA data does indicate that the TCJA did alter giving behavior at least in the short term as people tried to maximize their tax deductions while the top rate was 39.6 percent in 2017, in anticipation of lower rates in 2018... What makes this even more noteworthy is to see the increase in charitable contributions in 2019, even with the lower tax rates and the dramatically smaller number of taxpayers who itemize their deductions."
Student Loan Income-Driven Payments- Tax On Forgiveness Should Not Scare You Off - Peter Reilly, Forbes. "But the other thing you should do with a problem like that is plan for it, because, under Section 108, debt discharge income is only taxable to the extent that it makes you solvent."
When Marriage Doesn’t Pay: Analysis and Options for Addressing Marriage and Second-Earner Penalties - Taylor LaJoie, Tax Policy Blog. "In a recent NBER report by David Altig et. al., researchers found that by earning an extra $1,000, one in four of the poorest households, regardless of age, gives half to two-thirds of their paycheck to the government in taxes due to marginal net tax rates above 70 percent on earned income."
Faith-based Tax Position Meets Unholy Fate. A taxpayer who operated religious internet businesses failed to convince the Tax Court that the income was not taxable in this world. Unfortunately for the taxpayer, the Tax Court is not a heavenly body:
Petitioner's argument that the income tax is null and void is devoid of merit, and we reject it summarily.
On top of penalties for failure to file returns, the Tax Court added an extra $2,500 penalty, basically for wasting its time.
The Moral? Miracles may happen, but don't look for them from a Tax Court judge.
Cite: T.C. Memo. 2020-92
This is a roundup of tax news and opinion. Any opinions expressed or implied are those of the author and not necessarily those of Eide Bailly. Opinions found in linked items are those of the authors of the linked item, not of your bloggers or of Eide Bailly. “$” means link may be behind a paywall. Items here do not constitute tax advice.