Welcome to the Federal Tax Update Podcast, hosted by Lynn Nichols. This is presented as a member benefit by the South Carolina Association of CPAs. It is produced to provide current information about developments in U.S. tax law, such as cases, ruling, IRS pronouncements and expert comments on hot topics.

The commentary is brief, and you should not take a position on the items discussed until you thoroughly examine it with authoritative sources. All topics can be found discussed in further length at Tax Notes Today.

“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,’ the preeminent source of accurate information and analysis of important developments and trends in Federal taxation,” Nichols says.

You can contact Lynn Nichols at lynnnicholscpa@outlook.com or 714.321.3387.

Topics in this installment include:

  1. Vacation Property Rentals Did Not Qualify as Rental Activity

The Ninth Circuit, in an unpublished per curiam opinion, affirmed a district court decision that held that a couple couldn’t treat the rental of three vacation properties as rental activity under section 469, finding that the management companies that handled the rentals were not customers for purposes of proving that the average stay by renters was greater than seven days. [Greg A. Eger; CA 9, No. 19-17022, 8/14/2020]

  1. Proposed Regs Address Qualified Plan Loan Offset Amounts

The IRS has published proposed regulations (REG-116475-19) regarding amendments to section 402(c) made by the Tax Cuts and Jobs Act to provide an extended rollover period for a qualified plan loan offset. [REG-116475-19; 85 F.R. 51369-51374, 8/20/2020]

  1. IRS Announces Applicable Federal Rates for September

The IRS has announced (Rev. Rul. 2020-16) the applicable federal interest rates for September. [Rev. Rul. 2020-16; 2020-37 IRB 1, 8/17/2020]

  1. IRS Announces Electronic Filing of Amended Returns

The IRS has announced (IR-2020-182) that taxpayers can now file Form 1040-X, “Amended U.S. Individual Income Tax Return,” electronically. [IR-2020-182, 8/17/2020]

  1. Couple Allowed to Claim Deductions for Property Donated to Town

The Tax Court held that a couple was entitled to claim carryover charitable contribution deductions for property the husband donated to a town, finding that they substantially complied with the qualified appraisal requirements in section 170, that the contributions were not part of a quid pro quo exchange, and that the fair market values they claimed were correct. [Peter C. Emanouil et ux.; No. 5089-17; T.C. Memo. 2020-120, 8/17/2020]

  1. IRS Advises Practitioners to Make a Plan for Data Protection, Reporting Theft

The IRS has reminded (IR-2020-184) tax professionals that federal law requires them to have a written information security plan, and the agency recommends that they also create an emergency response plan should they experience a data theft. These are among the basic security steps for all practitioners but especially those working remotely or social distancing in response to COVID-19, the IRS says. [IR-2020-184, 8/18/2020]

  1. IRS Issues Practice Unit on LIFO Pooling Requirement

The IRS has released a practice unit on the last-in, first-out inventory method pooling rules, which differ by method and type of business. (19 pages) [COR-C-018, 8/19/2020]

  1. Practice Unit Addresses Distributions Not From Accumulated E&P

The IRS has released a practice unit on the taxability of distributions from an S corporation that either does not have accumulated earnings and profits or makes distributions from sources other than accumulated E&P. (33 pages) [SCO-T-007, 8/19/2020]

  1. Estate Planners Want Answers on Aspects of Carried Interest Rules

Practitioners generally welcomed the IRS and Treasury’s approach in recent proposed regulations on specific gift transfer transactions with carried interest, but they’re calling for the government to clarify an open issue on grantor trusts. [Tax Notes Today; 8/21/2020, by Eric Yauch]

  1. Draft Form 1040 for 2020 Includes Line for Relief Payment Claims

The IRS released a draft Form 1040 for the 2021 filing season that includes a line that could allow taxpayers to claim any unpaid portion of their 2020 economic impact payments. [Tax Notes Today; 8/21/2020, by William Hoffman]

A federal tax specialist for 50 years, Lynn Nichols provides tax consulting services to CPA firms on complex federal income tax issues, professional standards in tax practice and effective tax practice management. Check out his Tax Updates video playlist.

Click and subscribe to the SCACPA YouTube channel so you don’t miss another update on guidance from the experts.