Nichols’ Tax Update, Issue 21-42

  1. Extension Granted to File Election After Ownership Change
    • The IRS granted a taxpayer an extension to file a closing-of-the-books election after an ownership change.  [LTR 202140007;  7/14/2021, rel. 10/8/2021]
  1. Two Popular Tax Shelter Products Continue Battles With IRS . . . .
    • Microcaptive Insurance Companies Claiming Tax Deferral of Income and their ‘Advisors’
      • IRS Summons to State Agency Is Enforced in Microcaptive Case
        • A U.S. district court, adopting a magistrate judge’s report and recommendation over the Delaware Department of Insurance’s objections, granted enforcement and denied a petition to quash an IRS summons issued to the state agency for information on the role of several entities involved in transactions related to microcaptive insurance companies.  [United States vs. Delaware Department of Insurance
      • CIC Services Asks Court to Expand Injunction in Microcaptive Case
        • CIC Services LLC filed a motion in a U.S. district court asking it to reconsider a decision that enjoined the IRS from enforcing the captive insurance advisor’s compliance with Notice 2016-66, arguing that the scope of the injunction is too narrow and should not be limited to only CIC Services but should be expanded to a complete national injunction.  [Tax Notes Today, 10/14/2021, article  by Kristen Parillo]
    • Contributions (Direct and Indirect) of Conservation Easements to 501(c)(3) Organizations
      • Syndicated Easement Class Action Plaintiffs Dealt Setback
        • A putative class action alleging that a network of tax professionals conspired to sell fraudulent syndicated easement deals has been scaled back after a Georgia district court dismissed the federal RICO claims in Lechter v. Aprio LLP.   [Tax Notes Today, 10/12/2021, article by Kristen Parillo]
      • DOJ Urges Court to Dismiss Easement Appraiser Suit
        • A putative class action suit filed by three appraisers alleging that the IRS’s crackdown on syndicated conservation easement transactions constitutes harassment is barred under the Anti-Injunction Act, according to a Justice Department motion to dismiss in Benson v. IRS.[Tax Notes Today, 10/13/2021, article by Kristen Parillo]
      • Conservation Easement Proposal Would Enable Misuse, Letter Says
        • A provision in House reconciliation legislation to allow conservation easement donors to amend defects in their deeds related to property line adjustments or extinguishment clauses would open the door for widespread abuse and shouldn’t be included in the Senate version, seven authors wrote in an October 11 letter to the Senate Finance Committee. [Tax Notes Today, 10/11/2021, news report]

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(*** identifies item with useful analysis of current issue but not covered in Lynn’s recorded commentary due to complexity and time required for fair comment.)