Welcome to the Federal Tax Update Podcast, hosted by Lynn Nichols, CPA. This is presented as a member benefit by the South Carolina Association of CPAs. The commentary is brief, and you should not take a position on the items discussed until you thoroughly examine it with authoritative sources.
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. He is also a speaker for the South Carolina Tax Team, click here to see a list of their upcoming courses.
- Practitioners are disappointed by the absence of goods sold offsets and a financial accounting percentage of completion method safe harbor in newly proposed regulations on the Tax Cuts and Jobs Act’s tax accounting provisions. The IRS has issued procedures (Rev. Proc. 2019-37) for obtaining automatic consent to change accounting methods to comply with section 451 and recently released proposed regulations under reg. section 1.451-3 (REG-104870-18) and 1.451-8 (REG-104554-18).
- IRS publishes proposed regulations on exempt organization donor disclosures. The IRS has published proposed regulations (REG-102508-16) updating the section 6033 reporting regulations for tax-exempt organizations to reflect amendments to the provision, including changes regarding donor disclosures under prior guidance.
- IRS is not responsible for paying return preparer’s fee from refund. The Court of Federal Claims dismissed for lack of jurisdiction a return preparer’s suit alleging that the government must pay the tax return preparation fee his client promised to pay from his refund, because the IRS must remit tax refunds to the taxpayer, not the tax return preparer, and is not bound by the agreement with his client.
- IRS’s built-in gain and loss rules eliminate a safe harbor option. Proposed regulations that limit a corporation’s losses following a change in ownership could be more restrictive for some companies by eliminating an option for computing built-in gain and loss. The IRS has published proposed regulations (REG-125710-18) on the items of income and deduction that are included in the calculation of built-in gains and losses under section 382. Comments and hearing requests are due by Nov. 12.
- Audits of partnerships that cease to exist could have odd results. Partners who were owners of an entity just before it ceased to exist could be on the hook for adjustments related to other partners who exited the scene earlier, under the centralized audit regime.
- A Tennessee high school student is liable for taxes after winning a car in a drawing for attendance and good grades. The Tax Court found that the value of the Jeep Renegade was not excludable as a gift under section 102 or as a prize under section 74.
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