AICPA Tax Insider (Apr. 16, 2020) Inherited IRA Strategies and More

IRS launches tool for nonfilers to receive stimulus payments

The IRS has launched an online portal for taxpayers who are eligible to receive an economic impact payment but who are not normally required to file an income tax return because their income is too low.

Inherited IRA strategies after the SECURE Act

By Randy A. Fox

Find out about other possibilities to avoid inherited IRAs, including charitable remainder trusts.

IRS grants broad coronavirus-related tax relief

The IRS granted relief for a broad array of tax filing and payment deadlines that fall between April 1 and July 15, expanding on previous relief, as requested by the AICPA.

Guidance on NOL carryback and tentative carryback adjustments

The IRS issued procedures to elect to forgo net operating loss carryback and extensions of time to file tentative carryback adjustments.

Partnerships can file amended returns to get CARES Act benefits

To allow those partnerships to take advantage of the beneficial tax provisions in the Coronavirus Aid, Relief, and Economic Security Act, the IRS is allowing partnerships to file amended returns for 2018 or 2019.

Business interest expense election guidance for farming, real estate

Real property or farming trades or businesses can withdraw their decision to elect out of Sec. 163(j)’s business interest expense limitation for a 2018, 2019, or 2020 tax year, the IRS said in guidance.

AICPA Document Summaries Week of 2020.04.13

C CORPORATIONS

Corporation barred from challenging underlying employment tax liabilities

The Tax Court held that a corporation that had failed to timely request a conference with the IRS Appeals Office was barred from challenging its underlying employment tax liabilities and associated penalties and additions to tax. The court upheld the IRS’s notice of intent to levy to collect the corporation’s outstanding 2010 and 2011 liabilities and, further, concluded that the IRS settlement officer acted within his discretion in upholding the levy action. Patrick’s Payroll Services, Inc., T.C. Memo. 2020-47 (4/14/20).

INDIVIDUALS

IRS launches ‘Get My Payment’ website

The IRS launched a website that lets taxpayers check on when they can expect to receive their economic impact (or recovery rebate) payment and update their direct deposit information. Get My Payment (4/15/20) (see related news story).

Failure to show husband was a real estate professional precludes treating losses as nonpassive

The Tax Court held that a married couple cannot treat as nonpassive certain rental real estate losses they previously treated as passive under Sec. 469 because they failed to prove that the husband was a real estate professional. The court refused to rely on the couple’s “self-serving and uncorroborated testimony” and concluded that their explanation of the work done by the husband and the hours spent on that work was untrustworthy. Hakkak, T.C. Memo. 2020-46 (4/13/20).

Whistleblower Office did not abuse its discretion in rejecting taxpayer’s claim

The Tax Court held that the IRS Whistleblower Office did not abuse its discretion in rejecting a taxpayer’s claim on the ground that the claim was speculative and did not provide specific or credible information regarding any federal tax violation. The court noted that the IRS could not verify that the target taxpayers had misclassified employees as independent contractors, as the whistleblower had alleged based on information he received from his girlfriend who ran a competing business. Kansky, T.C. Memo. 2020-43 (4/13/20).

Court sustains collection action against taxpayer who owed trust fund recovery penalties

The Tax Court sustained an IRS collection action against a taxpayer for trust fund recovery penalties (TFRPs) assessed against the taxpayer for six quarterly periods ending Sept. 30, 2010, through Dec. 31, 2011. According to the court, the IRS Appeals Office correctly determined that the taxpayer was barred from challenging his liability for the TFRPs in accordance with Sec. 6330(c)(2)(B). Shepherd, T.C. Memo. 2020-45 (4/13/20).

INTERNATIONAL

IRS waives Sec. 911(d) minimum time requirements for certain countries

The IRS added the Democratic Republic of the Congo, Haiti, Iraq, Sudan, and Venezuela to the list of countries for which the minimum time requirements under Sec. 911(d) are waived for tax year 2019. Rev. Proc. 2020-14 (4/13/20).

IRS PROCEDURE

Taxpayers can temporarily fax Forms 1139 or 1045 due to COVID-19

The IRS announced that taxpayers who are claiming a refund under Sections 2303 or 2305 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136, which provide for the carryback of certain net operating losses and accelerated recovery of corporate minimum tax credits, can temporarily submit those claims by fax on Form 1139, Corporation Application for Tentative Refund, or Form 1045, Application for Tentative Refund. Normally, those forms must be mailed to the IRS or delivered via private delivery service. Temporary Procedures to Fax Certain Forms 1139 and 1045 Due to COVID-19 (4/13/20).

IRS posts FAQs on estate tax return filing delays

The IRS posted FAQs on its website regarding problems encountered in the delivery of estate tax returns to the Kansas City Service Center using private delivery services. FAQs: Estate Tax Form 706 Deliveries Returned Due to COVID-19(4/13/20).

PARTNERSHIPS

Building facade easement not protected in perpetuity

The Sixth Circuit affirmed a Tax Court decision that a facade easement was not protected in perpetuity, as required by Sec. 170(h)(5)(A), when the donation agreement allowed the donor to make changes to the facade of the building if the donee did not act within 45 days to stop the changes. Hoffman Properties II, LP, No. 19-1831 (6th Cir. 4/14/20).

TAX ACCOUNTING

IRS adjustment to couple’s depreciation method resulted in a Sec. 481 adjustment

The Tax Court denied a couple’s motion for summary judgment and held that IRS adjustments to the couple’s depreciation methods with respect to rental property constituted a change in method of accounting that resulted in a Sec. 481 adjustment. In auditing the couple’s rental property deductions, the IRS reallocated a larger portion of the couple’s cost basis to nondepreciable land for one rental property and reclassified most of their cost basis on a second rental property into a MACRS class with a much longer recovery period. Pinkston, T.C. Memo. 2020-44 (4/13/20).

IRS procedure addresses mortgage modifications under CARES Act

The IRS issued a revenue procedure that provides safe harbors under which modifications to certain mortgage loans in connection with a forbearance program enacted by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136, are not treated as replacing the unmodified obligation with a newly issued obligation, as giving rise to prohibited transactions, or as manifesting a power to vary for purposes of determining the federal income tax status of certain securitization vehicles that hold the loans. The revenue procedure also describes a safe harbor under which certain securitization vehicles, such as real estate mortgage investment conduits (REMICs), are not treated as having improper knowledge of an anticipated default on the grounds that they acquired a mortgage loan with respect to which the borrower had participated in a forbearance program. Rev. Proc. 2020-26 (4/14/20).

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal..

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