Nichols Tax Update Issue 21-35

  1. Fact Sheet Lays Out Information on Advance Child Tax Credit
    • The IRS has issued a fact sheet (FS-2021-11) on how to use the advance child tax credit update portal to sign up for direct deposit of monthly payments, change bank account information, or stop payments. The fact sheet includes additional information on the advance child tax credit. [ FS-2021-11; 8/20/2021]
  1. Income From Leasing Fiber Optic Assets Is Rents From Real Property
    • The IRS ruled that amounts paid by unrelated third parties for the use of fiber optic cable and other assets under agreements with a corporation constitute rents from real property and that the provision of related services does not give rise to impermissible tenant service income. [ LTR 202133003; 2/5/2021, rel. 8/20/2021]
  1. IRS Revises Audit Technique Guide on Property Foreclosures
    • The IRS has revised a prior audit technique guide for examining cases involving real estate property foreclosures and cancellation of debt income that focuses on the tax consequences for individual taxpayers.  (90 pages, 6 page “active” index) [ Publication 5550 (8/2021)]
  1. Practice Unit Covers Reportable Transaction Understatement Penalty
    • The IRS has issued a practice unit on the section 6662A accuracy-related penalty that is imposed on understatements that are attributable to listed transactions as defined by section 6707A(c)(2) and other reportable transactions as defined by section 6707A(c)(1), if a significant purpose of the transaction is the avoidance or evasion of federal income tax. (20 slides, 2 page ‘active” index0 [ PEN-P-002; 8/20/2021]
  1. Insolvent Real Estate Developer Not Entitled to NOL Deduction
    • A real estate developer whose business failed during the housing market crash of 2009 isn’t eligible to deduct losses from an alleged net operating loss carryover because he was not carrying on the business, the Tax Court held in Estate of Charles P. Morgan v. Commissioner. [Tax Notes Today, 8/24/2021, article by Kelley Taylor] [Estate Of Charles P. Morgan et al. v. Commissioner; No. 592-18; T.C. Memo. 2021-10]
  1. TIGTA Finds Flaws in IRS Exams of S Corp Officer Compensation
    • The IRS can do more to prevent S corporation owners from avoiding employment taxes, the Treasury Inspector General for Tax Administration said in a report dated August 11. [TIGTA Report   2021-30-042; 8/11/2021, rel. 8/24/2021]
  1. Accountants Press Congress for Clarification on Retention Credit
    • Congress should clarify an IRS notice that excludes some family members employed in small businesses from calculations for the employee retention credit, according to the National Society of Accountants [Tax Notes Today; 8/27/2021, article by William Hoffman] (Notice 2021-49)

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