AICPA Tax Insider (June 11, 2020): student loan tax incentives; remote signatures; Notice 2020-23; and more

New tax incentive for employers to help with student loans

By Dave Strausfeld, J.D.

Employers can make tax-free contributions in 2020 to help employees with their student loan payments, under a provision in the CARES Act. Here’s how.

IRS permits remote signatures for plan loan consents

In another response to the COVID-19 pandemic, the IRS is allowing retirement plan participants who want to take coronavirus-related distributions from their retirement plans to provide remote signatures, even for spousal consents.

Understanding the filing relief for ‘time-sensitive acts’ in Notice 2020-23

By John Keenan, J.D., Matt Cooper, J.D., and Chaim Gordon, J.D.

Practitioners must carefully review Notice 2020-23 to understand the full scope of filing relief granted by the IRS in response to hardships caused by the coronavirus pandemic.

Qualified opportunity zone rules are relaxed

In response to the COVID-19 pandemic, the IRS further postponed the 180-day deadline to invest in a qualified opportunity fund from July 15, 2020, to Dec. 31, 2020, extended other deadlines, and relaxed some qualified investment rules.

AICPA recommends changes to e-signature requirements

In a letter to the IRS, the AICPA asked the Service to permanently expand its electronic signature procedures.

Future-proofing the tax system with small businesses in mind

By Alexander Scott, J.D., LL.M.

Among the changes that need to be made is eliminating the “strict use” requirement for the home office deduction.


AICPA Document Summaries

INDIVIDUALS

Couple liable for tax and penalties after failing to report wage and Subpart F income

The Tax Court held that a couple failed to report certain wage income, as well as Subpart F income, on their 2006 and 2007 tax returns. The court also agreed with the IRS that the couple were liable, under Sec. 6664, for substantial-understatement penalties because the IRS provided sufficient evidence showing that the couple’s understatement of income tax for each of the years at issue was due to negligence and the IRS proved it had gotten the requisite supervisory approval timely. The court rejected the taxpayers’ argument that they relied on the CPA they hired because they did not tell her about all their foreign bank accounts, among other omissions. Flume, T.C. Memo. 2020-80 (6/9/20).

Court takes midpoint of IRS and taxpayer’s valuations in determining easement’s value

In valuing a taxpayer’s conservation easement that covered part of a Colorado ranch he had purchased, the Tax Court relied on the midpoints of the valuations determined by each side’s experts and concluded that the diminution in the value of the taxpayer’s ranch was $648,776 and the conservation easement’s value was $372,919. The Tax Court also sustained the IRS’s adjustments to the taxpayer’s Schedule F travel-related and car and truck expenses deductions because the taxpayer failed to adequately substantiate his deductions. Johnson, T.C. Memo. 2020-79 (6/8/20).

IRS PROCEDURE

Taxpayer did not meet requirements of equitable estoppel; deficiency notice is valid

The Tax Court held that there was no substantial evidence of unconstitutional conduct by the IRS, and therefore, the notice of deficiency issued by the IRS to a taxpayer was valid. The court also concluded that the taxpayer did not meet the requirements of equitable estoppel after noting that the taxpayer agreed to, and made, payments on a deficiency and that was not detrimental reliance for the purposes of equitable estoppel. Howe, T.C. Memo. 2020-78 (6/8/20).      

TAX ACCOUNTING

IRS issues adjusted applicable dollar amount for determining 2019–2020 PCORTF fee

The IRS issued a notice that provides that the adjusted applicable dollar amount that applies for determining the Patient-Centered Outcomes Research Trust Fund (PCORTF) fee for policy years and plan years ending on or after Oct. 1, 2019, and before Oct. 1, 2020, is equal to $2.54. The notice addresses the recent extension of the fee by the Further Consolidated Appropriations Act, 2020, P.L.116-94, and provides relief for calculating the average number of lives for policy years and plan years that end on or after Oct. 1, 2019, and before Oct. 1, 2020. Notice 2020-44 (6/8/20).

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

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