Show notes
Lynn Nichols Federal Tax Update Podcast
August 20, 2018, edition
Listen as Lynn Nichols provides commentary on 8 Items pertaining to current developments in U.S. tax law. This week's topics include:
- Final Regs Provide Substantiation Rules for Charitable Contributions
The IRS has issued final regulations on the substantiation and reporting rules for charitable contributions at various monetary thresholds and for donated clothing and household items. The final regs also address the new definitions of qualified appraisal and qualified appraiser for noncash contributions and recordkeeping requirements for all cash contributions.
[T.D. 9836; 7/27/2018]
- Tax Court Correctly Dismissed Employment Tax Liability Challenge
The Eighth Circuit held that the Tax Court properly dismissed on jurisdictional grounds an attorney's claim that he did not owe additional employment tax on payments he received as the sole owner and officer of an S corporation, finding that because there was no actual controversy involving a determination that he was an employee for FICA purposes, the Tax Court was deprived of jurisdiction.
[Azarian, Martin S. P.A. v. Commissioner; CA 8; No. 17-2134; 7/27/2018]
Eighth Circuit Sides With IRS in Employment Tax Dispute
Challenges to reasonable compensation determinations for S corporations must allege taxpayer employment issues for the Tax Court to have jurisdiction.
[Tax Notes Today; 7/31/2018; Article by Eric Yauch]
- Horse Breeding Organization Is Denied Exemption
The IRS denied an organization's application for tax-exempt status because its primary activity, conducting a horse breeding program, does not further exempt purposes and the organization serves the private interests of horse breeders.
[LTR 201830023; 5/1/2018; rel. 7/27/2018]
- IRS Revokes Exempt Status of Social Horse Club
The IRS revoked the tax-exempt status of a social club organized to promote interests in horses and horsemanship because its investment and non-member income exceeded the 35 percent threshold, and its non-member income exceeded the 15 percent threshold on a regular basis.
[LTR 201830018; 1/11/2018; rel. 7/27/2018]
- IRS Isn't Exercising Its Authority Over Unregulated Preparers
The IRS failed to assess more than $121 million in preparer tax identification number penalties, despite evidence of "incompetent and unscrupulous" conduct by unregulated return preparers.
[Tax Notes Today; 7/31/2018; Article by William Hoffman]
- Tax Court Finds Individual's Mary Kay Activity Wasn't for Profit
The Tax Court, sustaining accuracy-related penalties, held that an individual didn't engage in her Mary Kay consulting activity for profit but attempted to shelter her taxable wage income by deducting otherwise nondeductible personal expenses, such as trips to Disney World and Europe, as business expenses.
[Nix, Kimberly S. v. Commissioner; No. 4000-16; T.C. Memo. 2018-116; 7/30/2018]
- Debate Over Parsonage Allowance Continues in Dueling Briefs
Supporters of a 64-year-old tax break for clergy housing are continuing their fight to preserve it after a court declared it unconstitutional last fall.
[Tax Notes Today; 8/1/2018; Article by Fred Stokeld]
Clergy Urge Court to Hold Rental Allowance Constitutional
In a reply brief for the Seventh Circuit, a group of ministers and churches argued that section 107, which allows ministers to exclude from income a rental allowance paid as part of their compensation, is constitutional because it is an exemption and not a transfer of funds and because it applies the convenience-of-the-employer doctrine to ministers.
[Annie L. Gaylor et al. v. Steven T. Mnuchin et al.; No. 18-1277; No. 18-1280; 7/30/2018]
- Yacht Deductions Disallowed, but Penalties Deep-Sixed
The Tax Court jettisoned a taxpayer's claim that his sport fishing yacht deductions were marketing expenses but chose not to weigh him down with accuracy penalties.
[Tax Notes Today; 8/3/2018; Article by Kristen Parillo]
Property Developer Fishing for Yacht Deductions Comes up Empty-Handed
The Tax Court held that a Florida property developer wasn't entitled to deduct expenses for a fishing yacht that he claimed was a marketing tool, finding that the expenses were for entertainment and he failed to provide substantiation. The court didn't impose accuracy-related penalties because the IRS failed to show supervisory approval.
[Becnel, Damon R. v. Commissioner; No. 14707-14; T.C. Memo 2018-120; 8/2/2018]
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