Nichols’ Tax Update, Issue 21-51

  1. IRS Announces Standard Mileage Rates for 2022
    • The IRS has announced   the optional standard mileage rates used in computing the deductible costs paid or incurred after December 31, 2021, for operating an automobile for business, charitable, medical, or moving purposes. [IR-2021-251, 12/17/2021]
    • IRS Issues Guidance on 2022 Standard Mileage Rates
      • The IRS has issued guidance   providing the 2022 standard mileage rates for taxpayers to use in determining the deductible costs of operating a car for business, charitable, medical, or moving expense purposes. [Notice 2022-3; 2022-2 IRB 1, 12/17/2021]
  1. Ninth Circuit Affirms Tax Court on $5 Million Tax Assessment
    • The Ninth Circuit, in an unpublished per curiam opinion, affirmed a Tax Court decision that upheld an IRS assessment against an individual for nearly $5 million in back taxes, finding that the Tax Court properly exercised jurisdiction, it didn’t err in assigning him the burden of proof or in holding him liable for back taxes, and it didn’t abuse its discretion in procedural rulings. [FOR 9TH CIRCUIT COURTS DICTA ON IMPORTANT OF CONSISTENCY BETWEEN CIRCUITS IN TAX MATTERS] [William Goddard v. Commissioner;  CA9, No. 20-73023, 12/17/2021]   
  1. IRS Revokes Organization’s Exemption
    • The IRS revoked the tax-exempt status of an organization after finding that it failed to establish that it operated exclusively for exempt purposes [LTR 202150025, 10/2/2021, REL. 12/17/2021]
  1. Money Manager Ran Donkey-Breeding Operation Like a Business
    • A hedge fund manager convinced the Tax Court in Huff v. Commissioner that a miniature-donkey-breeding venture he launched as a way to boost his adult daughter’s income was a legitimate business and not a hobby. [Tax Notes Today, 12/22/2021, article by Kristen Parillo]
    • Wealthy Couple’s Miniature Donkey Breeding Farm Was for Profit
      • The Tax Court held that a wealthy couple who wanted to supplement their adult daughter’s income by establishing a miniature donkey breeding farm engaged in the breeding activity with an actual and honest profit motive, finding that they are entitled to the loss deductions they claimed for the activity and are not liable for accuracy-related penalties. [William R. Huff et al.; No. 22604-17; T.C. Memo. 2021-140, 12/21/2021]
  1. Reporting Requirement Waived for Some Discharged Student Loans
    • The IRS has announced   that student loan servicers should not file information returns or furnish payee statements under section 6050P to report the amount of qualifying forgiveness regarding covered loans made under the Paycheck Protection Program. [ Notice 2022-1; 2022-2 IRB 1, 12/21/2021]
  1. A Look Ahead: John Doe Summonses to Increase in Crypto Crackdowns
    • Despite criticism from tax professionals, the IRS shows no intention of letting up on the use of John Doe summonses when uncovering information concerning cryptocurrency exchanges. [Tax Notes Today, 12/23/2021, article by Mary Katherine Browne]
  1. Insurance Company Seeks Rescission of Malpractice Policies
    • An insurance company filed a complaint in a U.S. district court against a law firm and an attorney to rescind legal malpractice policies issued to the firm because the firm and attorney materially misrepresented information in their policy applications regarding their involvement in syndicated conservation easement tax transactions. [ Westport Insurance Corp. v. Kowan & Cordon LLC et al.; No. 1:21-cv-05163, 12/17/2021]

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 I have relied on Tax Analysts® to provide reliable and timely analysis of Federal tax developments for over 30 years. The “headnotes” you see here are from “Tax Notes Today” In my opinion, the preeminent source of accurate information and thoughtful analysis of important developments and trends in Federal taxation.

(*** 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.)