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 and connect on LinkedIn.

  1. Income From Charity’s Job Placement Service Is Taxable

In technical advice, the IRS ruled that income a public charity receives by operating an online job placement service is taxable as unrelated business income. [TAM 202039018; 6/29/2020, rel.9/28/2020]

  1. Who Is a Partner?

Lee A. Sheppard examines recent judicial and Treasury actions defining who a partner is and considers what they mean for entity formation. [Tax Notes Today; 9/28/2020, Article by Lee A. Sheppard]

  1. IRS Allows Fraternity to Receive Unusual Grant

The IRS ruled that a cash contribution to a fraternity constitutes an unusual grant because it is from a disinterested party, the amount is unusual or unexpected, and it will adversely affect the charity’s status as normally being publicly supported. [LTR 202039020; 6/29/2020, rel. 9/28/2020]

  1. IRS Announces Final Regs on Periodic Payment Withholding

The IRS has announced (IR-2020-223) final regulations (T.D. 9920) updating the federal income tax withholding rules for some periodic retirement and annuity payments made after Dec. 31, 2020. [IR-2020-223; 9/28/2020]

IRS Issues Final Regs on Periodic Retirement and Annuity Payments

The IRS has issued final regulations (T.D. 9920) that provide rules for federal income tax withholding on some periodic retirement and annuity payments to implement an amendment made by the Tax Cuts and Jobs Act. [T.D. 9920; 9/28/2020]

  1. Couple Not Entitled to Deduct Rental Losses

The Tax Court held that a couple isn’t entitled to deductions for real estate losses that are limited by the passive activity loss rules of section 469, finding that the couple failed to prove that the husband materially participated in the property’s short-term rental activities for the years at issue. [Ronald J. Lucero et ux.; No. 588-18; T.C. Memo. 2020-136, 9/29/2020]

  1. Business Meals Are Still Partially Deductible, Treasury Says

The IRS and Treasury have issued final rules on the deductibility of entertainment expenses that still allow for partial write-offs of business meals. [Tax Notes Today; 10/1/2020, Article by Frederic Lee]

IRS Issues Final Regs on Business Expenses

The IRS has issued final regulations (T.D. 9925) that address the elimination of the deduction under section 274 for expenditures regarding entertainment, amusement or recreation activities and provide guidance to determine whether an activity is generally considered to be entertainment. [T.D. 9925; 9/30/2020]

7, IRS Issues Fact Sheet on Closing a Corporation

The IRS has issued a fact sheet (FS-2020-14) on actions a corporation must take when ceasing operations, providing information on typical final forms and schedules that a corporation going out of business must file.

IRS Issues Fact Sheet on Closing a Partnership

The IRS has issued a fact sheet (FS-2020-15) on actions partners must take to close their partnership, providing information on typical final forms and schedules that a partnership must file when ceasing operations.

IRS Issues Fact Sheet on Closing a Business

The IRS has issued a fact sheet (FS-2020-16) on actions a sole proprietor must take to close their business, providing information on typical final forms and schedules that a business owner must file when ceasing operations.

  1. IRS Reviews Shouldn’t Slow NOL Carryback Refunds

Taxpayers looking to use a coronavirus relief provision allowing businesses to carry back business losses to prior tax years don’t have to worry about their refunds getting bogged down by the IRS, according to an agency official.

  1. Debtor to Provide Information So Bank Can Report Settlement to IRS

A U.S. bankruptcy court held that a debtor, her husband, and her attorney must provide W-9 forms to Wells Fargo Bank NA regarding a settlement payment to be made directly to the attorney so that Wells Fargo can issue the appropriate Form 1099 information returns, finding that the debtor and her husband can argue to the IRS that the payment wasn’t income to them. [Christine R. Coppola v. Wells Fargo Bank NA; No. 17-01621, 9/30/2020]

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.

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