Nichols’ Tax Update Podcast: Issue 21-33 

  1. IRS Offers Safe Harbor for Employers Using Retention Credit
    • New IRS guidance will allow employers to exclude some items from their gross receipts to be able to claim the employee retention credit provided in coronavirus pandemic response laws.   [Tax Notes Today, 8/9/2021, article by Caitlin Mullaney]
    • Safe Harbor Allows Exclusions From Gross Receipts for ERC Purposes
      • The IRS has provided (Rev. Proc. 2021-33) a safe harbor allowing a taxpayer to exclude some items from gross receipts under sections 448(c) and 6033 solely for purposes of determining eligibility to claim the employee retention credit introduced by the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136). [Rev. Proc. 2021-33; 2021-34 IRB 1, 8/10/2021] 
  2. IRS Extends Deadline to Use Work Opportunity Credit
    • The IRS has provided transition relief to employers wanting to claim the federal income tax credit for hiring members of groups that face barriers to employment.  [Tax Notes Today, 8/9/2021, article by Caitlin Mullaney]
    • IRS Provides Relief for Employers Claiming Work Opportunity Tax Credit
      • The IRS has provided transition relief (Notice 2021-43) for some employers claiming the work opportunity tax credit under section 51 for some employees beginning work after December 31, 2020. The relief is a response to legislation allowing the designation of an empowerment zone as defined in section 1393(b) to be extended from December 31, 2020, to December 31, 2025. [Notice 2021-43; 2021-35 IRB 1. 8/10/2021]    
  3.  IRS Announces Limits on Depreciation Deduction for Cars
    • The IRS has announced (Rev. Proc. 2021-31) the depreciation limitations for owners of passenger cars first placed in service in 2021 and the amounts to be included in income by lessees of passenger cars first leased in 2021. [ Rev. Proc. 2021-31; 2021-34 IRB 1, 8/6/2021] 
  4. IRS Denies Exempt Status to Tourism Group
    • The IRS denied tax-exempt status to an organization formed to conduct a marketing program to attract visitors to a geographical region and its businesses, finding that the group failed to show its activities further a public interest instead of private interests. [LTR 202131013, 5/11/2021, rel. 8/6/2021] 
    • IRS Denies Exempt Status to Operator of Farmers Market
      • The IRS denied tax-exempt status to the operator of an outdoor farmers market because its primary purpose of providing space to local farmers and vendors to exhibit and sell their products does not qualify for exemption under section 501(c)(3). [LTR 202131012, 5/11/2021, rel. 8/6/2021]   
  5. Car Salesman Missed the Mark With Marketing Business 
    • The Tax Court said “no deal” to a car salesman who claimed earnings from his marketing efforts as self-employment income.[Tax Notes Today, 8/13/2021, article by Caitlin Mullaney]
    • Salesman’s Incentive Payments Were Income; Some Deductions Denied
      • The Tax Court, in a summary opinion, held that incentive payments a car salesman received from the car manufacturer should be treated as income and found that he failed to substantiate many of his claimed miscellaneous expense deductions. The court held that he and his wife had unreported dividend income and capital gains and they are liable for accuracy-related penalties. [Dion E. Monroe et ux; No. 16305-17S; T.C. Summ. Op. 2021-24, 8/11/2021] 
  6. Bankruptcy Court Finds Tax Distributions Were Not Fraudulent
    • A U.S. bankruptcy court granted summary judgment in adversary proceedings filed by a trustee to avoid as fraudulent conveyances tax distributions a debtor company made to shareholders, finding that the tax distributions were for reasonably equivalent value because they were bargained for in exchange for the shareholders agreeing to convert from a corporate form to a limited liability company. [Craig Jalbert v. Agnes Carol McClelland et al.; No. 17-5071, 8/10/2021] 

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