NOTE: New Covid relief legislation became reality during the production of this blog. SCACPA is glad to note that deductibility of PPP Loans is a component of this economic recovery package. Look to the SCACPA Blog for updates, and watch for a special edition of this podcast soon where Lynn Nichols will address the provision.

“JUST IN TIME” SCACPA CPE (and FREE for Members!): “Covid-19 Relief Package: What You Need to Know (LITX63)” – Friday, Jan. 8, 8:30-11 a.m. Instructor: Bradley Burnett. Register today!

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 or 714.321.3387 and connect on LinkedIn.


  1. Latest Form 1040 Asks for More Income Information

The IRS heads into the 2021 filing season with a Form 1040 that seeks more and better taxpayer data for information matching and improved tax compliance, a longtime tax policy adviser said. [Tax Notes Today; 12/14/2020, article by William Hoffman]

  1. Ninth Circuit Affirms Note Balance Is Includable in Gross Receipts

The Ninth Circuit, in an unpublished per curium opinion, affirmed a Tax Court decision that held that a solar equipment manufacturer was required to use the accrual method of accounting because it needed to account for inventory and under that method the balance of a promissory note was includable in its gross receipts for its 2015 fiscal year. [King Solarman Inc.; CA 9; No. 20-70373, 12/11/2020]

  1. Partnership’s Tax Insurance Premiums Aren’t Deductible, IRS Says

In a legal memorandum, the IRS explained that the costs paid for insurance premiums that reimburse partners for an adjustment that reduces tax benefits from a charitable contribution made by the partnership are not deductible as ordinary and necessary business expenses nor are the premiums deductible as other types of expenses. [ILM 202050015; 11/9/2020, rel. 12/11/2020]

  1. IRS Adds Question to CARES Act FAQ on College Aid Grants

The IRS has updated a list of frequently asked questions on the tax treatment of higher education emergency financial aid grants received under the Coronavirus Aid, Relief, and Economic Security Act, noting that the IRS will not require that the grants be reported under section 6050S. [FAQs: Higher Education Emergency Relief Fund and Emergency Financial Aid Grants under the CARES Act; 12/15/2020]

  1. Fate of Tax Extenders Tied to COVID-19 Relief Negotiations

Extending a batch of expiring tax credits is looking more likely but hinges on the success of the ongoing negotiations over another COVID-19 relief package. [Tax Notes Today; 12/17/2020, Article by Jad Chamseddine]

  1. Debt Modification Rules Become More Complicated Amid Pandemic

Distressed businesses may be increasingly renegotiating terms with their creditors without understanding the nuances of the debt modification rules or assessing options to avoid potentially alarming tax consequences. [Tax Notes Today; 12/18/2020, Article by Emily Foster]

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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