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for tax years
DIVIDENDS RECEIVED BY AN EMPLOYEE OF A CORPORATION ARE In Chief Counsel Advice 202118009 the IRS addresses the question of whether tax dividends received by a shareholder who is also employed by the C corporation is subject to the net investment income tax, as well as if the answer changes if the corporation is closely held.. Net Investment Income Under IRC §1411. The Affordable Care Act added IRC 1411 which imposes a tax IRS GIVES INSTRUCTIONS FOR PREPARATION OF FORMS W-2 FOR The IRS has released guidance for preparing Forms W-2 for employers who have deferred employee old age, survivors and disability taxes pursuant to the President’s August 8 memorandum, as provided for inNotice 2020-65.
IRS TO REQUEST DISCLOSURE OF SHARES HELD AND LOANS TO The IRS has issued draft instructions to go with the Draft Schedule K-1 issued in July and Draft Form 1120-S issued in August. The draft instructions contain information on the new items G (related to stock ownership) and H (related to loans from shareholders) added to this year’s K-1, as well as a discussion of expenses paid with forgiven Paycheck Protection Program (PPP) loan proceeds. 199A SIGNED SAFE HARBOR STATEMENT MUST BE ATTACHED AS A If a taxpayer is electing making the safe harbor election for a real estate enterprise under Notice 2019-07 and electronically filing his/her return, a signed copy of the election must be submitted as a PDF attachment to e-filed return reports Tax Notes Today.In an article in the March 11, 2019 edition of Tax Notes Today, Eric Yauch reports that IRS Office of Chief Counsel Attorney Robert UPDATED GUIDANCE ISSUED FOR EMPLOYEE RETENTION TO APPLY TO The IRS released guidance on the version of the Employee Retention Credit (ERC) contained in the Taxpayer Certainty and Disaster Relief Act (TCDRA) of 2020 that is in effect for the first two quarters of 2021 in Notice 2021-23. As with Notice 2021-20, AICPA SENDS LETTER TO IRS RECOMMENDING PPP LOAN TREATMENT The shareholder has no basis at the end of 2020, so cannot deduct the $250,000 loss. Rather, the shareholder must wait until the tax exempt income is recognized by the S corporation in 2021 for his/her basis to be increased under IRC §1367 for the tax-exempt income in order to be able to claim the loss from the expenses paid with those funds. TAX ADVISERS' AREA 51 Area 51 is that mysterious area in the Nevada desert under the control of the United States Air Force. But it turns out that Area 51 is not the only mysterious 51 related to the United States federal government. Tax advisers have been exploring their own “area 51,” this time found at IRC Section 51 FORM 4868 FILED AFTER APRIL 15 AND ON OR BEFORE MAY 17 A question that many professionals had after the IRS announced the formal extension of time to file calendar year Forms 1040 in Notice 2021-21 was the impact of that extension on using a Form 4868 to extend both the income tax and gift tax return IRS NOTICE INDICATES HOW TO DETERMINE ERC ELIGIBLE WAGESSEE MORE ON CURRENTFEDERALTAXDEVELOPMENTS.COM IRS CONFIRMS MARRIED COUPLES IN COMMUNITY PROPERTY STATES The IRS has updated its online FAQ on the unemployment compensation exclusion for 2020 and its application in community property states. State law generally determines ownership of property and income, thus defining what is each spouse’s FINAL REGULATIONS MODIFY TABLES FOR COMPUTING RMDS The various tables used to compute required minimum distributions from retirement plans have been updated, taking effect beginning in 2022, as the IRS has issued revised regulations under IRC §401(a)(9). In August 2018, Executive Order 13847, 83 FR 45321, directed the IRS to review the life ex NEW 24 WEEK LIMITS ANNOUNCED FOR EMPLOYEE PAYROLL COSTS A new bit of guidance has emerged from the Small Business Administration, with another interim final rule (IFR) appearing on the Federal Register website in pre-publication form. This IFR contains a number of changes to the third and sixth interim final rule on PPP loans, mainly conforming language to agree with changes made in the Paycheck Protection Program Flexibility Act (PPPFA). IRS ADMITS THERE WERE DELAYS IN PROCESSING MEF PAYMENT The IRS has now admitted, via a QuickAlert sent the afternoon of April 22, 2021, that there has been a delay in processing payments requested via Modernized e-File. Many advisers began getting calls beginning on April 16 from clients concerned that IRS REVISES INSTRUCTIONS TO VIRTUAL CURRENCY QUESTION, BUT The final 1040 instructions seem to suggest that an “acquisition of a financial interest in a virtual currency” may not be an “acquisition of an interest in a virtual currency” in some cases for purposes of answering the first question to be answered on Form 1040 after the taxpayer’s identifying information and address. UPDATED GUIDANCE ISSUED FOR EMPLOYEE RETENTION TO APPLY TO The IRS released guidance on the version of the Employee Retention Credit (ERC) contained in the Taxpayer Certainty and Disaster Relief Act (TCDRA) of 2020 that is in effect for the first two quarters of 2021 in Notice 2021-23. As with Notice 2021-20, AICPA SENDS LETTER TO IRS RECOMMENDING PPP LOAN TREATMENT The shareholder has no basis at the end of 2020, so cannot deduct the $250,000 loss. Rather, the shareholder must wait until the tax exempt income is recognized by the S corporation in 2021 for his/her basis to be increased under IRC §1367 for the tax-exempt income in order to be able to claim the loss from the expenses paid with those funds. TAX ADVISERS' AREA 51 Area 51 is that mysterious area in the Nevada desert under the control of the United States Air Force. But it turns out that Area 51 is not the only mysterious 51 related to the United States federal government. Tax advisers have been exploring their own “area 51,” this time found at IRC Section 51 FORM 4868 FILED AFTER APRIL 15 AND ON OR BEFORE MAY 17 A question that many professionals had after the IRS announced the formal extension of time to file calendar year Forms 1040 in Notice 2021-21 was the impact of that extension on using a Form 4868 to extend both the income tax and gift tax return IRS NOTICE INDICATES HOW TO DETERMINE ERC ELIGIBLE WAGESSEE MORE ON CURRENTFEDERALTAXDEVELOPMENTS.COM IRS CONFIRMS MARRIED COUPLES IN COMMUNITY PROPERTY STATES The IRS has updated its online FAQ on the unemployment compensation exclusion for 2020 and its application in community property states. State law generally determines ownership of property and income, thus defining what is each spouse’s FINAL REGULATIONS MODIFY TABLES FOR COMPUTING RMDS The various tables used to compute required minimum distributions from retirement plans have been updated, taking effect beginning in 2022, as the IRS has issued revised regulations under IRC §401(a)(9). In August 2018, Executive Order 13847, 83 FR 45321, directed the IRS to review the life ex NEW 24 WEEK LIMITS ANNOUNCED FOR EMPLOYEE PAYROLL COSTS A new bit of guidance has emerged from the Small Business Administration, with another interim final rule (IFR) appearing on the Federal Register website in pre-publication form. This IFR contains a number of changes to the third and sixth interim final rule on PPP loans, mainly conforming language to agree with changes made in the Paycheck Protection Program Flexibility Act (PPPFA). IRS ADMITS THERE WERE DELAYS IN PROCESSING MEF PAYMENT The IRS has now admitted, via a QuickAlert sent the afternoon of April 22, 2021, that there has been a delay in processing payments requested via Modernized e-File. Many advisers began getting calls beginning on April 16 from clients concerned that IRS REVISES INSTRUCTIONS TO VIRTUAL CURRENCY QUESTION, BUT The final 1040 instructions seem to suggest that an “acquisition of a financial interest in a virtual currency” may not be an “acquisition of an interest in a virtual currency” in some cases for purposes of answering the first question to be answered on Form 1040 after the taxpayer’s identifying information and address. CURRENT FEDERAL TAX DEVELOPMENTS April 14, 2021 by Ed Zollars, CPA. A question that many professionals had after the IRS announced the formal extension of time to file calendar year Forms 1040 in Notice 2021-21 was the impact of that extension on using a Form 4868 to extend both the income tax and gift tax return for 2020. IRS EXTENDS AND EXPANDS TEMPORARY DEVIATION ALLOWING SOME The IRS has once again extended its special relief for the temporary use of e-signatures on specified tax documents in Memorandum NHQ-10-0421-0002, now providing that digital signatures may be used beyond the June 30, 2021 expiration of the prior memorandum.. The memorandum, revising a memorandum issued on December 28, 2020, states: As part of our response to the COVID-19 situation, UPDATED GUIDANCE ISSUED FOR EMPLOYEE RETENTION TO APPLY TO The IRS released guidance on the version of the Employee Retention Credit (ERC) contained in the Taxpayer Certainty and Disaster Relief Act (TCDRA) of 2020 that is in effect for the first two quarters of 2021 in Notice 2021-23. As with Notice 2021-20, IRS NOTICE INDICATES HOW TO DETERMINE ERC ELIGIBLE WAGES The IRS issued updated guidance for the 2020 version of the employee retention credit in Notice 2021-20, taking into account modifications made to the program by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 signed into law on December 27, 2020. This guidance is limited to the 2020 version of the ERC, and does not take into account changes that took effect on January 1, 2021. FINAL REGULATIONS ISSUED ON TREATMENT OF EXCESS DEDUCTIONS The IRS has issued the final regulations dealing with the post-TCJA treatment of excess deductions on termination in TD 9918. Previously Reg. §1.642(h)-2 had treated excess deductions on the termination of an estate or trust as miscellaneous itemized deductionsfor
ARIZONA TAXES 2021
A site devoted to articles on current developments in federal taxes geared toward CPAs in tax practice. SMALL PARTNERSHIP LATE FILING RELIEF IN REV. PROC. 84-35 Tax advisers who work with small partnerships have long been aware of the late filing relief provided by Revenue Procedure 84-35. But some have wondered that since the procedure refers to a provision removed from the Internal Revenue Code by the Bipartisan Budget Act of 2015for tax years
IRS REVISES INSTRUCTIONS TO VIRTUAL CURRENCY QUESTION, BUT The final 1040 instructions seem to suggest that an “acquisition of a financial interest in a virtual currency” may not be an “acquisition of an interest in a virtual currency” in some cases for purposes of answering the first question to be answered on Form 1040 after the taxpayer’s identifying information and address. 199A SIGNED SAFE HARBOR STATEMENT MUST BE ATTACHED AS A If a taxpayer is electing making the safe harbor election for a real estate enterprise under Notice 2019-07 and electronically filing his/her return, a signed copy of the election must be submitted as a PDF attachment to e-filed return reports Tax Notes Today.In an article in the March 11, 2019 edition of Tax Notes Today, Eric Yauch reports that IRS Office of Chief Counsel Attorney Robert IRS OUTLINES WHEN AMOUNTS PAID TO REIMBURSE EMPLOYEE FOR In Chief Counsel Advice 201547006 the IRS discusses the condition under which an employer can exclude an amount from an employee’s income for payments made through the employee’s spouse’s group health plan.. The advice begins by discussing general exclusion from income rules for medical benefits, noting: Section 106 provides that “gross income of an employee does not include CURRENT FEDERAL TAX DEVELOPMENTS April 14, 2021 by Ed Zollars, CPA. A question that many professionals had after the IRS announced the formal extension of time to file calendar year Forms 1040 in Notice 2021-21 was the impact of that extension on using a Form 4868 to extend both the income tax and gift tax return for 2020. TAX ADVISERS' AREA 51 Area 51 is that mysterious area in the Nevada desert under the control of the United States Air Force. But it turns out that Area 51 is not the only mysterious 51 related to the United States federal government. Tax advisers have been exploring their own “area 51,” this time found at IRC Section 51 AICPA SENDS LETTER TO IRS RECOMMENDING PPP LOAN TREATMENT The shareholder has no basis at the end of 2020, so cannot deduct the $250,000 loss. Rather, the shareholder must wait until the tax exempt income is recognized by the S corporation in 2021 for his/her basis to be increased under IRC §1367 for the tax-exempt income in order to be able to claim the loss from the expenses paid with those funds. IRS MEMORANDUM DISCUSSES DEDUCTION OF AIRCRAFT EXPENSES BY In Chief Counsel Advice 202117012 the IRS looks at issues surrounding the deduction of expenses related to the use of aircraft by a sole proprietor. Specifically, the ruling looks at whether the taxpayer uses: The primary purpose test found at Reg. §1.62-2(b) or The allocation methods fou IRS EXTENDS AND EXPANDS TEMPORARY DEVIATION ALLOWING SOME The IRS has once again extended its special relief for the temporary use of e-signatures on specified tax documents in Memorandum NHQ-10-0421-0002, now providing that digital signatures may be used beyond the June 30, 2021 expiration of the prior memorandum.. The memorandum, revising a memorandum issued on December 28, 2020, states: As part of our response to the COVID-19 situation, IRS CONFIRMS MARRIED COUPLES IN COMMUNITY PROPERTY STATES The IRS has updated its online FAQ on the unemployment compensation exclusion for 2020 and its application in community property states. State law generally determines ownership of property and income, thus defining what is each spouse’s NEW 24 WEEK LIMITS ANNOUNCED FOR EMPLOYEE PAYROLL COSTS A new bit of guidance has emerged from the Small Business Administration, with another interim final rule (IFR) appearing on the Federal Register website in pre-publication form. This IFR contains a number of changes to the third and sixth interim final rule on PPP loans, mainly conforming language to agree with changes made in the Paycheck Protection Program Flexibility Act (PPPFA). IRS ADMITS THERE WERE DELAYS IN PROCESSING MEF PAYMENT The IRS has now admitted, via a QuickAlert sent the afternoon of April 22, 2021, that there has been a delay in processing payments requested via Modernized e-File. Many advisers began getting calls beginning on April 16 from clients concerned that HOUSE PASSES COVID-19 RELIEF PACKAGE WITH TAX AND OTHER The bill must still clear the Senate and be signed into law, but the House has now passed the American Rescue Plan of 2021. The bill has 592 pages of material which, while far shorter than the year end Comprehensive Appropriations Act, 2021, is still a very substantial bill with a number of tax SBA FINALLY ISSUES GUIDANCE ON SELF-EMPLOYED INDIVIDUALS Although it’s now well after a large number of affected businesses had already applied for a loan under the Payroll Protection Program, the SBA has released additional guidance that explains how the program works for Schedule C filers and partners in a partnership. A new interim final rule (IFR), “B CURRENT FEDERAL TAX DEVELOPMENTS April 14, 2021 by Ed Zollars, CPA. A question that many professionals had after the IRS announced the formal extension of time to file calendar year Forms 1040 in Notice 2021-21 was the impact of that extension on using a Form 4868 to extend both the income tax and gift tax return for 2020. TAX ADVISERS' AREA 51 Area 51 is that mysterious area in the Nevada desert under the control of the United States Air Force. But it turns out that Area 51 is not the only mysterious 51 related to the United States federal government. Tax advisers have been exploring their own “area 51,” this time found at IRC Section 51 AICPA SENDS LETTER TO IRS RECOMMENDING PPP LOAN TREATMENT The shareholder has no basis at the end of 2020, so cannot deduct the $250,000 loss. Rather, the shareholder must wait until the tax exempt income is recognized by the S corporation in 2021 for his/her basis to be increased under IRC §1367 for the tax-exempt income in order to be able to claim the loss from the expenses paid with those funds. IRS MEMORANDUM DISCUSSES DEDUCTION OF AIRCRAFT EXPENSES BY In Chief Counsel Advice 202117012 the IRS looks at issues surrounding the deduction of expenses related to the use of aircraft by a sole proprietor. Specifically, the ruling looks at whether the taxpayer uses: The primary purpose test found at Reg. §1.62-2(b) or The allocation methods fou IRS EXTENDS AND EXPANDS TEMPORARY DEVIATION ALLOWING SOME The IRS has once again extended its special relief for the temporary use of e-signatures on specified tax documents in Memorandum NHQ-10-0421-0002, now providing that digital signatures may be used beyond the June 30, 2021 expiration of the prior memorandum.. The memorandum, revising a memorandum issued on December 28, 2020, states: As part of our response to the COVID-19 situation, IRS CONFIRMS MARRIED COUPLES IN COMMUNITY PROPERTY STATES The IRS has updated its online FAQ on the unemployment compensation exclusion for 2020 and its application in community property states. State law generally determines ownership of property and income, thus defining what is each spouse’s NEW 24 WEEK LIMITS ANNOUNCED FOR EMPLOYEE PAYROLL COSTS A new bit of guidance has emerged from the Small Business Administration, with another interim final rule (IFR) appearing on the Federal Register website in pre-publication form. This IFR contains a number of changes to the third and sixth interim final rule on PPP loans, mainly conforming language to agree with changes made in the Paycheck Protection Program Flexibility Act (PPPFA). IRS ADMITS THERE WERE DELAYS IN PROCESSING MEF PAYMENT The IRS has now admitted, via a QuickAlert sent the afternoon of April 22, 2021, that there has been a delay in processing payments requested via Modernized e-File. Many advisers began getting calls beginning on April 16 from clients concerned that HOUSE PASSES COVID-19 RELIEF PACKAGE WITH TAX AND OTHER The bill must still clear the Senate and be signed into law, but the House has now passed the American Rescue Plan of 2021. The bill has 592 pages of material which, while far shorter than the year end Comprehensive Appropriations Act, 2021, is still a very substantial bill with a number of tax SBA FINALLY ISSUES GUIDANCE ON SELF-EMPLOYED INDIVIDUALS Although it’s now well after a large number of affected businesses had already applied for a loan under the Payroll Protection Program, the SBA has released additional guidance that explains how the program works for Schedule C filers and partners in a partnership. A new interim final rule (IFR), “B 2021-06-07 PERHAPS TAX INSTRUCTIONS AREN'T JUST FOR This week we look at: Senate Parliamentarian’s second opinion on reconciliation limits practical use of revision of reconciliation instructions Long-time tax CPA who admits not reading Schedule B instructions hit with willful failure to file FBAR penalties MoneyGram is not a bank, meanin IGNORANCE WAS NOT BLISS: CPA FOUND LIABLE FOR OVER Photo by Houcine Ncib on Unsplash A CPA with 60 years of experience in preparing tax returns found that the Court wasn’t very sympathetic regarding his failure to file FBAR reports, even though income had been (kind of) reported in the case of United States v. Kronowitz . IRS EXTENDS AND EXPANDS TEMPORARY DEVIATION ALLOWING SOME The IRS has once again extended its special relief for the temporary use of e-signatures on specified tax documents in Memorandum NHQ-10-0421-0002, now providing that digital signatures may be used beyond the June 30, 2021 expiration of the prior memorandum.. The memorandum, revising a memorandum issued on December 28, 2020, states: As part of our response to the COVID-19 situation, A BUSINESS CONSISTING OF ISSUING MONEY ORDERS AND Back in November of 2016 we wrote about the Fifth Circuit reversing the holding of the Tax Court in a dispute that revolved over whether MoneyGram is a bank for tax purposes. The Fifth Circuit found that the Tax Court had not applied the proper test to determine if MoneyGram was a bank—so the appellate court sent the case back to the Tax Court for a determination of whether MoneyGram was a FINAL REGULATIONS MODIFY TABLES FOR COMPUTING RMDS The various tables used to compute required minimum distributions from retirement plans have been updated, taking effect beginning in 2022, as the IRS has issued revised regulations under IRC §401(a)(9). In August 2018, Executive Order 13847, 83 FR 45321, directed the IRS to review the life ex IRS NOTICE INDICATES HOW TO DETERMINE ERC ELIGIBLE WAGES The IRS issued updated guidance for the 2020 version of the employee retention credit in Notice 2021-20, taking into account modifications made to the program by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 signed into law on December 27, 2020. This guidance is limited to the 2020 version of the ERC, and does not take into account changes that took effect on January 1, 2021. IRS ANNOUNCES MAY START OF AUTOMATIC REFUND PROGRAM FOR In News Release IR-2021-71 the IRS announced that it plans to begin issuing automatic refunds to taxpayers who filed returns that included 2020 unemployment compensation as taxable if the changes made by the American Rescue Plan Act (ARPA) of 2021 make the unemployment not taxable in 2020.. ARPA added IRC §85(c) which rendered a limited amount of unemployment received in 2020 HOUSE PASSES COVID-19 RELIEF PACKAGE WITH TAX AND OTHER The bill must still clear the Senate and be signed into law, but the House has now passed the American Rescue Plan of 2021. The bill has 592 pages of material which, while far shorter than the year end Comprehensive Appropriations Act, 2021, is still a very substantial bill with a number of tax TAX TREATMENT OF CARES PAYMENTS TO STUDENTS DISCUSSED BY In yet another set of Frequently Asked Questions on the IRS website, the IRS clarified the tax treatment of funds received by students under provisions of the CARES Act that allows the use of certain funds allocated by the Department of Education to support students. The IRS cites IRC §139 pro PROCEDURES FOR ELECTING OPTIONS FOR NET OPERATING LOSS The CARES Act restored the ability to carryback net operating losses temporarily. The loss carrybacks were restored for 2018, 2019 and 2020, with special provisions provided for electing to carry losses from 2018 and/or 2019 forward to take care of the problem that it was too late in many cases to timely elect to forego the carryback period. 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IGNORANCE WAS NOT BLISS: CPA FOUND LIABLE FOR OVER $663,000 OF FBAR PENALTIES FOR ACCOUNTS HE FAILED TO REPORTJune 04, 2021
by Ed Zollars, CPA
Photo by Houcine Ncibon Unsplash
A CPA with 60 years of experience in preparing tax returns found that the Court wasn’t very sympathetic regarding his failure to file FBAR reports, even though income had been (kind of) reported in the case of _United States v. Kronowitz_.Read More
__June 04, 2021
/__Ed Zollars, CPA
__Comment
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BELIEF AMAZON WAS NOT REQUIRED TO ISSUE FORM 1099-K DID NOT JUSTIFY LEAVING INCOME OFF OF THE TAXPAYER'S RETURNMay 30, 2021
by Ed Zollars, CPA
A belief that many taxpayers have that most preparers have heard is that income below the level required to be reported to the IRS on Form 1099 or some other information report does not represent income that must be reported on a taxpayer’s return. In the case of _Legoski v. Commissioner_, T.C. Summ. Op. 2021-15 the Tax Court corrects a taxpayer who attempted to argue that point.Read More
__May 30, 2021
/__Ed Zollars, CPA
__Comment
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GUARANTEED MINIMUM SALES INCENTIVE PROGRAM DID NOT ESTABLISH FACT OF A LIABILITY UNTIL DEALERS MADE SALES IN FOLLOWING YEARMay 29, 2021
by Ed Zollars, CPA
In a Technical Advice Memorandum the IRS ruled that an overall accrual basis corporation’s promise to pay minimum incentives to dealers in the following year did not meet the requirements of the all events test under IRC §461, and thus could only be deducted in the year when the dealers sold the products in question.Read More
__May 29, 2021
/__Ed Zollars, CPA
__Comment
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UNEMPLOYMENT INCOME TREATED AS COMMUNITY INCOME IS SPLIT BETWEEN SPOUSES FOR UNEMPLOYMENT EXCLUSION PURPOSESMay 26, 2021
by Ed Zollars, CPA
The IRS has continued to clarify how the unemployment benefits exclusion from income for 2020 under the American Rescue Plan Act works in community property states, now explaining the impact when the spouses file a joint return, as well as the impact of returns when filing married filing separate.Read More
__May 26, 2021
/__Ed Zollars, CPA
__Comment
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DETAILED QUESTIONS AND ANSWERS ON ARPA COBRA PREMIUM ASSISTANCE ANDCREDIT ISSUED
May 20, 2021
by Ed Zollars, CPA
In Notice 2021-31 the IRS provided a series of questions and answers related to the COBRA Premium Assistance program enacted as part of the American Rescue Plan Act (ARPA).Read More
__May 20, 2021
/__Ed Zollars, CPA
__Comment
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HDHP AND HSA INFLATION ADJUSTED NUMBERS RELEASED FOR 2022May 16, 2021
by Ed Zollars, CPA
The IRS has published the annual inflation adjusted amounts that apply to high deductible health plans (HDHPs) and health saving accounts(HSAs) for 2022.
Read More
__May 16, 2021
/__Ed Zollars, CPA
__Comment
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IRS ANNOUNCES BEGINNING OF PROGRAM TO CORRECT PRE-ARPA RETURNS REPORTING UNEMPLOYMENT AND EXCESS ADVANCE PREMIUM TAX CREDITMay 16, 2021
by Ed Zollars, CPA
The IRS announced this week that the agency is beginning to issue refund checks to taxpayers who filed tax returns treating unemployment compensation as taxable in cases that Congress later made nontaxable in the American Rescue Plan of 2021 (ARPA).Read More
__May 16, 2021
/__Ed Zollars, CPA
__Comment
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2020 CENSUS RESULTS WILL NOT IMPACT BOUNDARIES OF QUALIFIEDOPPORTUNITY ZONES
May 16, 2021
by Ed Zollars, CPA
In Announcement 2021-10 the IRS provided that qualified opportunity zone (QOZ) boundaries will not be changed due to the recentlycompleted census.
Since QOZs are based on census tracts, there were some concerns expressed about how the new census would impact QOZs. The IRS has now stated there will be no changes to QOZ boundaries due to the resultsof the 2020 Census.
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__May 16, 2021
/__Ed Zollars, CPA
__Comment
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IRS AIMS TO HAVE FULLY AUTOMATED POWER OF ATTORNEY SYSTEM FUNCTIONINGBY JULY
May 16, 2021
by Ed Zollars, CPA
_Tax Notes Today_ reported that Sharyn Fisk, director of the IRS Office of Professional Responsibility, told participants in the American Bar Association Section of Taxation virtual meeting that the IRS expects to open up a fully electronic system for filing Powers of Attorney with the agency by July. Advisers have found a number of IRS processes to have slowed dramatically due to operational issues at the IRS during the pandemic. This slowdown has impacted how quickly the IRS is able to process and record power of attorneys authorizing CPAs, EAs and attorneys to deal with the IRS on behalf of taxpayersRead More
__May 16, 2021
/__Ed Zollars, CPA
__Comment
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IRS MEMORANDUM DISCUSSES DEDUCTION OF AIRCRAFT EXPENSES BY A SOLEPROPRIETOR
May 09, 2021
by Ed Zollars, CPA
In Chief Counsel Advice 202117012 the IRS looks at issues surrounding the deduction of expenses related to the use of aircraft by a sole proprietor. Specifically, the ruling looks at whether thetaxpayer uses:
*
The primary purpose test found at Reg. §1.62-2(b) or*
The allocation methods found at Reg. §1.274-10(e)Read More
__May 09, 2021
/__Ed Zollars, CPA
__Comment
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IRS GRANTED PERMISSION TO SERVE JOHN DOE SUMMONS FOR TRANSACTION INFORMATION FROM KRAKEN CRYPTOCURRENCY EXCHANGEMay 09, 2021
by Ed Zollars, CPA
The IRS won a victory in its attempt to obtain information related to virtual currency transactions from exchanges in the case of _In re Tax Liabilities of John Does_. The IRS has sought to serve a “John Doe” summons to Payward Ventures Inc. d/b/a/ Kraken and its subsidiaries for information related to customers of the exchange. The Court initially balked at the request, asking the IRS to show cause why the petition to serve the summons should not be denied for being overly broad. The IRS responded by narrowing the scope of the request and providing additional information to justify the items remaining as requested information. The Court allowed the IRS to move forward at this point to serve the summons, though the exchange or customers are still allowed to file additional arguments regarding the validity of therequest.
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__May 09, 2021
/__Ed Zollars, CPA
__Comment
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DIVIDENDS RECEIVED BY AN EMPLOYEE OF A CORPORATION ARE STILL PART OF NET INVESTMENT INCOMEMay 07, 2021 by Ed
Zollars, CPA
In Chief Counsel Advice 202118009 the IRS addresses the question of whether tax dividends received by a shareholder who is also employed by the C corporation is subject to the net investment income tax, as well as if the answer changes if the corporation is closely held.Read More
__May 07, 2021 /__EdZollars, CPA
__Comment
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FACT SHEET ISSUED FOR PROPOSALS FOR THE AMERICA FAMILIES PLANMay 01, 2021
by Ed Zollars, CPA
President Biden released a fact sheet on his just proposed changes to the tax system early on April 28. We’ve seen quite a bit of discussion in the popular, financial and tax press about items in this proposal since its release, so we’ll summarize some of the key itemshere.
The 15-page document details more than just tax proposals, with the major tax proposals that have gotten a lot of notice found on the last two pages of the fact sheet. Some other tax-related items are found elsewhere in the document.Read More
__May 01, 2021
/__Ed Zollars, CPA
__Comment
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IRS FINDS RENT PAID TO RELATED PARTY UNREASONABLY HIGH FOR TWO YEAR,DENIES DEDUCTION
May 01, 2021
by Ed Zollars, CPA
In the case of _Plentywood Drug Inc. et al. v. Commissioner_, TC Memo 2021-45, the IRS and the taxpayer were disputing whether rents paid by a C corporation to its shareholders were excessive. While the Tax Court did not agree with the IRS’s determination of what amount was reasonable, the Court did find a portion of the rent paid was above a reasonable amount and denied that amount of the deduction.Read More
__May 01, 2021
/__Ed Zollars, CPA
__Comment
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IRS CONFIRMS MARRIED COUPLES IN COMMUNITY PROPERTY STATES MAY GAIN UNEMPLOYMENT EXCLUSION BENEFIT ON SEPARATE 2020 INCOME TAX RETURNSMay 01, 2021
by Ed Zollars, CPA
The IRS has updated its online FAQ on the unemployment compensation exclusion for 2020 and its application in community property states. State law generally determines ownership of property and income, thus defining what is each spouse’s income when filing separate returns. In a community property state, community income (which is the default income in a community property state) is considered to be equally the income of each spouse, even if the income arises from the services of one spouse to the exclusion of the other.Read More
__May 01, 2021
/__Ed Zollars, CPA
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IRS EXTENDS AND EXPANDS TEMPORARY DEVIATION ALLOWING SOME FORMS TO BE SIGNED ELECTRONICALLY OR DIGITALLYApril 23, 2021
by Ed Zollars, CPA
The IRS has once again extended its special relief for the temporary use of e-signatures on specified tax documents in Memorandum NHQ-10-0421-0002, now providing that digital signatures may be used beyond the June 30, 2021 expiration of the prior memorandum.Read More
__April 23, 2021
/__Ed Zollars, CPA
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IRS ISSUES NEWS RELEASE AND FACT SHEET ON USING PAYROLL TAX CREDIT FOR REIMBURSING EMPLOYERS FOR PAID TIME OFF GIVEN FOR COVID-19 VACCINATIONRELATED REASONS
April 23, 2021
by Ed Zollars, CPA
Sometimes the IRS decides to make an announcement about what might appear to be a “new” development that really is just reminding taxpayers of items that were already part of the law. Such is the case with IRS News Release IR-2021-90 that discussed a tax credit available to subsidize employers who provide paid leave to employees receiving a COVID-19 vaccine or who take time off due to a reaction tothe vaccine.
In this case the President decided to emphasize these credits in a speech on Wednesday and many headlines implied that the program had just been created by the President. In reality, the President was simply emphasizing the changes made to the credit for paid sick leave (now found at IRC §3131) and qualified family leave wages (now found at IRC §3132) by the American Rescue Plan Act of 2021.Read More
__April 23, 2021
/__Ed Zollars, CPA
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SAFE HARBOR PROVIDED TO ALLOW SOME TAXPAYERS TO DEDUCT EXPENSES PAID WITH PPP LOAN PROCEEDS IN YEAR FOLLOWING THE YEAR THEY WERE INCURREDApril 23, 2021
by Ed Zollars, CPA
The IRS has provided relief for some taxpayers who filed returns for tax years ending on or after March 26, 2020 and on or before December 31, 2020 who did not deduct expenses paid with PPP loan proceeds in Revenue Procedure 2021-20. Those taxpayers may now worry that they will have to amend their already filed tax returns or face the loss of a deduction for those expenses that were retroactively allowed as a deduction by the COVID-related Tax Relief Act that was enacted onDecember 27, 2020.
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__April 23, 2021
/__Ed Zollars, CPA
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IRS ADMITS THERE WERE DELAYS IN PROCESSING MEF PAYMENT REQUESTS, TAXPAYERS WILL BE CREDITED AS PAYING ON ORIGINAL REQUESTED PAYMENTDATE
April 22, 2021
by Ed Zollars, CPA
The IRS has now admitted, via a QuickAlert sent the afternoon of April 22, 2021, that there has been a delay in processing payments requested via Modernized e-File. Many advisers began getting calls beginning on April 16 from clients concerned that payments scheduled to have been withdrawn from their accounts on April 15 had not been withdrawn. Reports on CPA society discussion forums and on TaxTwitter made it clear that this was not an isolated problem, impacting individuals all across the country.Read More
__April 22, 2021
/__Ed Zollars, CPA
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MOST COSTS INCURRED BY MALE COUPLE SEEKING TO HAVE A CHILD WERE NOT DEDUCTIBLE MEDICAL EXPENSESApril 15, 2021
by Ed Zollars, CPA
In PLR202114001 the IRS ruled that most of the costs incurred by a male couple wishing to have a child were not deductible medicalexpenses.
The question involves IRC §213 which allows a deduction for medical care of the taxpayer and dependents of the taxpayer. Specifically, the ruling looks at the definition of such care found at IRC 213(d)(1)(A) which reads:_(d) Definitions_
_For purposes of this section—_ _(1) The term “medical care” means amounts paid—_ _(A) for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function ofthe body,…_
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__April 15, 2021
/__Ed Zollars, CPA
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