AICPA Tax Insider (July 23, 2020): Like Kind Exchanges, Reinstated PTIN User Fees, New Form 1065 (Partnership Tax Form) and More!

An update on like-kind exchanges

By Greg Bryant

Recently issued proposed regulations, which permit the exchange of personal property when it is incidental to the exchange of real property, are generally good news for property owners with plans to make Sec. 1031 exchanges.

Understanding the employee retention tax credit

The main guidance about the new business tax credit is found in the IRS’s answers to frequently asked questions.

IRS updates annual Dirty Dozen tax schemes for 2020

The IRS issued its top 12 “Dirty Dozen” tax scams, warning people to be vigilant to avoid these schemes all year round. New to the list is the “offer-in-compromise mills.”

Partnership form being redesigned for 2021

The IRS proposes modifying the partnership form (Form 1065) to help standardize the format of 

IRS reinstates PTIN user fees

The IRS said it would once again begin charging fees to issue preparer tax identification numbers (PTINs) to tax return preparers for 2021. The fee was reduced in response to court cases that 

Filing protective claims for refund/Tax Section odyssey

By Mark Heroux, J.D.

While a U.S. Supreme Court decision looms on the constitutionality of the Patient Protection and Affordable Care Act, CPAs will need to decide if they should file protective claims for refund in case it is invalidated.

Tax document summaries for the week of July 20–24, 2020, covering individuals, international, and IRS procedure.

INDIVIDUALS

Couple escapes liability for 40% penalty but not for two 20% penalties

The Tax Court held that the IRS did not secure timely written supervisory approval for a 40% penalty assessed under Secs. 6662(b)(6) and (i) for a couple’s failure to disclose a transaction lacking economic substance. However, the Tax Court also found that the IRS did secure timely approval for two alternative 20% penalties, determined for negligence or a substantial understatement of income tax under Secs. 6662(b)(1) and (2). The court rejected the couple’s assertion that the IRS did not conduct a meaningful review of the penalty determination, noting that a supervisor’s signature sufficed to demonstrate its approval. Oropeza, T.C. Memo. 2020-111 (7/21/20).

INTERNATIONAL

Final regs. on GILTI subject to high foreign tax rate

The IRS issued final regulations on the treatment of global intangible low-taxed income (GILTI) subject to a high rate of foreign tax. T.D. 9902 (7/21/20) (see related news story).

Prop. regs. on GILTI high-tax exclusion

The IRS issued proposed regulations conforming the Sec. 951A global intangible low-taxed income (GILTI) high-tax exclusion with the Subpart F high-tax exception. REG-127732-19 (7/21/20) (see related news story).

IRS PROCEDURE

IRS should not have prevented taxpayer from disputing liability at CDP hearing

The Tax Court held that, if a taxpayer who the IRS said was a responsible person with respect to unpaid employment taxes received Letter 1153 but did not receive the subsequent correspondence (Letter 5157), then, in the trust fund recovery penalty (TFRP) hearing held by the IRS Office of Appeals, that office did not allow the taxpayer to dispute his underlying TFRP liability pursuant to Sec. 6330(c)(2)(B). The court said the taxpayer should not have been precluded from later disputing that liability at a Collections Due Process (CDP) hearing and that Appeals might have thus abused its discretion. Barnhill, 155 T.C. No. 1 (7/21/20).

IRS issues inflation adjustments for premium tax credit items

The IRS issued calendar-year 2021 indexing adjustments for the applicable percentage table in Sec. 36B(b)(3)(A)(i) for calculating an individual’s premium tax credit under Sec. 36B. The IRS also updated the required contribution percentage in Sec. 36B(c)(2)(C)(i)(II), which is used to determine whether an individual is eligible for affordable employer-sponsored minimum essential coverage under Sec. 36B, for plan years beginning after calendar year 2020. Rev. Proc. 2020-36(7/21/20).

IRS creates Enterprise Digitalization and Case Management

The IRS announced the creation of the Enterprise Digitalization and Case Management office, which is designed to improve IRS business processes and modernize its systems. IR-2020-166 (7/21/20).

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

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