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Blog & Articles

Accounting change to reflect tangible property regs brings prior year audit protection

Accounting change to reflect tangible property regs brings prior year audit protection

Chief Counsel Advice 201614037 In emailed Chief Counsel Advice, IRS has concluded that a taxpayer that makes an accounting method change to reflect the 2013 tangible property regs rule regarding non-incidental materials and supplies, and does so via the “limited Code Sec. 481(a) adjustment,” is protected from IRS auditors making a prior year change to […]

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How to divvy up assets as you head for retirement

How to divvy up assets as you head for retirement

As reported in the LA Times, “How to divvy up assets as you head for retirement.” Choosing how to invest retirement savings often ends up being a dartboard exercise for younger people, because it all seems so theoretical. As the date of retirement or semi-retirement gets nearer, however, you begin to realize that your financial […]

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Court clarifies definition of term used in foreign document request rules

Court clarifies definition of term used in foreign document request rules

LaRue, (DC OR 4/13/2016) 117 AFTR 2d ¶ 2016-624 A district court has concluded that the term “foreign-based documents,” which is used in the rules that govern IRS’s ability to obtain documents under the foreign document request rules, means documents held outside the U.S. and copies of those documents that are held in the U.S. […]

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When do entities providing Medicare services face health insurer deduction limit on pay?

When do entities providing Medicare services face health insurer deduction limit on pay?

Chief Counsel Advice 201616008 In Chief Counsel Advice (CCA), IRS explains which entities providing Medicare services may face the Code Sec. 162(m)(6) health insurer compensation deduction limit. The answer depends on whether the entity is risk-bearing, whether it is licensed as a health insurer, and whether a legal relationship exists between covered individuals and the […]

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Bank’s debt purchase doesn’t preclude favorable treatment of later securities exchange

Bank’s debt purchase doesn’t preclude favorable treatment of later securities exchange

PLR 201613008 In a private letter ruling (PLR), IRS has determined that where, as part of a series of transactions aimed at spinning off the portion of a consolidated group member’s business that wasn’t compatible with its business unit, a bank acquired the member’s indebtedness from the existing debt holders, that acquisition won’t prevent a […]

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April 29 — Ways & Means Approves Bills Aimed at Protecting Taxpayers’ Identities and Using Taxpayer Info to Find Missing Children

April 29 — Ways & Means Approves Bills Aimed at Protecting Taxpayers’ Identities and Using Taxpayer Info to Find Missing Children

On April 28, the House Committee on Ways and Means approved three IRS administration bills: H.R. 3209, the “Recovering Missing Children Act,” was approved by voice vote. The bill would allow IRS to share taxpayer information with state and local law enforcement agencies in order to help find missing or exploited children, while maintaining protection […]

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No relief for taxpayer who received IRS notice after deadline for protesting it

No relief for taxpayer who received IRS notice after deadline for protesting it

Atuke vs. Commissioner of Internal Revenue, Order of Dismissal for Lack of Jurisdiction, Tax Court Docket No. 31680-15SL (Apr. 15, 2016). In an unpublished order for dismissal, the Tax Court has held that it had no jurisdiction to hear a taxpayer’s appeal, brought after the 30-day deadline, of IRS’s determination following a collection due process […]

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Tax Court – Sale of scrap metal didn’t result in self-employment income

Tax Court – Sale of scrap metal didn’t result in self-employment income

Ryther, TC Memo 2016-56 The Tax Court has concluded that scrap metal abandoned by a steel-fabrication business and later sold by the owner of that bankrupt business didn’t generate self-employment income.  Click here for the Opinion of the Court. Background. A taxpayer’s self-employment income is subject to self-employment tax. (Code Sec. 1401(a), Code Sec. 1401(b)) Self-employment […]

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House votes to repeal U.S. retirement rule, Obama threatens veto

House votes to repeal U.S. retirement rule, Obama threatens veto

WASHINGTON (Reuters) – The U.S. House of Representatives voted on Thursday to repeal a Labor Department rule aimed at protecting retirement savers from profit-hungry brokers, a largely symbolic move that President Barack Obama has threatened to veto. Obama’s administration earlier in April released the rule setting a fiduciary standard for financial brokers who sell retirement […]

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National Bank of Panama to consider request to open New York branch

National Bank of Panama to consider request to open New York branch

PANAMA CITY (Reuters) – The National Bank of Panama (Banconal) said on Monday it will consider a proposal to open a correspondent bank in New York, a move that could help the country’s financial sector, which has come under close scrutiny due to the Panama Papers scandal. Rolando de Leon de Alba, general manager of […]

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Seventh Circuit lambasts Tax Court on its hobby loss analysis in horse racing decision

Seventh Circuit lambasts Tax Court on its hobby loss analysis in horse racing decision

Roberts v. Comm., (CA 7, 4/10/2016) 117 AFTR 2d ¶ 2016-629 The Court of Appeals for the Seventh Circuit, reversing the Tax Court, has concluded that a taxpayer’s horse racing activities were entered into for profit. The Court characterized the Tax Court decision as untenable, in that it in effect concluded that a business’s start-up […]

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New proposed regs on when related party debt is treated as equity

New proposed regs on when related party debt is treated as equity

Preamble to Prop Reg04/05/2016; Prop Reg § 1.385-1, Prop Reg § 1.385-2, Prop Reg § 1.385-3, Prop Reg § 1.385-4 IRS has issued proposed regs under Code Sec. 385 that would: (1) authorize IRS to treat certain related-party interests in a corporation as indebtedness in part and stock in part; (2) establish documentation requirements that […]

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Most Americans support usage fees to fix crumbling roads

Most Americans support usage fees to fix crumbling roads

(Reuters) – Nearly two-thirds of Americans would support roadway user fees to help fix the country’s crumbling transportation infrastructure, according to a survey to be published on Thursday that was seen by Reuters. Options include paying for the number of miles a vehicle travels, according to the survey conducted by Kelton Global for HNTB Corp, […]

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Surviving spouse can’t use deceased husband’s minimum tax credit from pre-marriage year

Surviving spouse can’t use deceased husband’s minimum tax credit from pre-marriage year

Vichich, (2016) 146 TC No. 12 The Tax Court has held that, where a man had an alternative minimum tax (AMT) as a result of exercising an incentive stock option (ISO) in a year before he got married, divorced, got married again, and then died before he could fully use the minimum tax credit (MTC) […]

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IRS OKs liberal reading of “otherwise excludible employees” for plan testing purposes

IRS OKs liberal reading of “otherwise excludible employees” for plan testing purposes

Chief Counsel Advice 201615013 In Chief Counsel Advice (CCA), IRS approved a liberal reading of who are “otherwise excludable employees” for purposes of the Code Sec. 410(b)(4)(B) qualified plan coverage testing and the Code Sec. 401(k)(3) nondiscrimination tests for cash or deferred arrangements (CODAs). It concluded that it was a permissible application of the Code […]

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Company’s matching contributions to employee PAC aren’t deductible

Company’s matching contributions to employee PAC aren’t deductible

PLR 201616002 A private letter ruling (PLR) concludes that a corporation’s contributions to an employee political action committee (PAC) charity match program aren’t deductible as ordinary and necessary business expenses under Code Sec. 162. The corporation’s contributions are made “in connection with” a political campaign and thus are nondeductible under Code Sec. 162(e)(1)(B). Background. Under […]

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Tax Court -purported welfare benefit plans were nonqualified deferred compensation arrangements

Tax Court -purported welfare benefit plans were nonqualified deferred compensation arrangements

Machacek, Jr., TC Memo 2016-55 In consolidated cases, the Tax Court has concluded that purported welfare benefit plans in which the taxpayers’ companies participated were nonqualified deferred compensation arrangements, and the taxpayers had to include in their gross income any vested accrued benefits in the plan under Code Sec. 402(b)(4), because the plan failed to […]

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Final regs revise method of computing adjusted federal rates

Final regs revise method of computing adjusted federal rates

T.D. 9763, 04/25/2016, Reg. § 1.382-12, Reg. § 1.1288-1 IRS has issued final regs that provide a new method to be used to adjust the applicable Federal rates (AFRs) under Code Sec. 1288 (adjusted AFRs) for tax-exempt obligations and to determine the long-term tax-exempt rate and the adjusted Federal long-term rate under Code Sec. 382. […]

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Washington Alert – RSC’s tax choices; TIGTA on filing season; JCT on background for business reform; TIGTA alert re IRS and phony iTunes gift cards

Washington Alert – RSC’s tax choices; TIGTA on filing season; JCT on background for business reform; TIGTA alert re IRS and phony iTunes gift cards

On April 22, the Republican Study Committee (RSC) released the conservative caucus’s tax policy recommendations. Perhaps most eye-catching of the suggestions was a proposal to repeal (sunset) the current tax Code at the end of 2019 in order to force Congress to finally act on comprehensive tax reform. Other suggestions included: collapsing the current seven […]

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Withholding agent not penalized for using invalid TIN provided by foreign payee

Withholding agent not penalized for using invalid TIN provided by foreign payee

Chief Counsel Advice 201615012 In Chief Counsel Advice, IRS has concluded that it should not impose penalties on withholding agents in every instance where an IRS audit determines that there were any invalid taxpayer identification numbers (TINs) reported on Forms 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding. Rather, IRS said, such penalties should […]

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Meet Paul Raymond

Meet Paul Raymond

Mr. Raymond is a sought after speaker in tax controversy law by many attorney, accountant, and business groups and at the request of the Internal Revenue Service, has presented programs at the IRS Nationwide Tax Forum, attended by tax professionals throughout the United States.

Additionally, he continues to be an active member in the Section of Taxation, American Bar Association, where he was the Past Chair of the Employment Taxes Committee.

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Member CA Bar Member Orange County Bar US Tax Court Attorney