DOCSLIB.ORG

Selected Recent Federal Income Tax Developments Ira B

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Selected Recent Federal Income Tax Developments Ira B College of William & Mary Law School William & Mary Law School Scholarship Repository William & Mary Annual Tax Conference Conferences, Events, and Lectures 1998 Selected Recent Federal Income Tax Developments Ira B. Shepard Repository Citation Shepard, Ira B., "Selected Recent Federal Income Tax Developments" (1998). William & Mary Annual Tax Conference. 355. https://scholarship.law.wm.edu/tax/355 Copyright c 1998 by the authors. This article is brought to you by the William & Mary Law School Scholarship Repository. https://scholarship.law.wm.edu/tax SELECTED RECENT FEDERAL INCOME TAX DEVELOPMENTS Questions to The Honorable Mary Ann Cohen Chief Judge, United States Tax Court By Professor Ira B. Shepard University of Houston Law Center December 5, 1998 i. Pages 1-2 (#A2): In Straight the Tax Court penalized the I.R.S. $5,000 because the revenue agent made changes to her report and later testified inconsistently about the matter, thereby causing the taxpayer to incur extra attorney's fees. Fees were not awarded under §7430, presumably because the taxpayer did not prevail in the case. What sanctions are available in these circumstances? ii. Page 23 (#C2):Estate of Davis is a valuation case, and you told us in prior years that valuation cases and other factual cases are typically memorandum opinions. What was special about this one that causes you to characterize it as a published opinion? Note, also, the Eisenberg case at #C3. II:./ Page 25 (#D6): Last year we discussed Winn, which was withdrawn simultaneously with the release of the opinion in Mel T. Nelson. Can you say anything more about the change of position? Iv. Page 55 (#D2): Will the legislative solution to the unfairness of Elgart avoid the large number of cases involving motions to dismiss for lack ofjurisdiction whenever a petition is filed a day or two late? V. Page 60 (#15a): What changes can we expect to see in the Tax Court as a result of the new burden of proof shift? vi. Page 60 (#F15d): What changes can we expect to see in the Tax Court as a result of the increase in the amount from $10,000 to $50,000 for cases to be eligible for the simplified procedure ("S") election? vii. Pages 61-62 (#F16): What changes can we expect to see in the Tax Court as a result of the opinion of the Sixth Circuit in Estate of Mueller? TABLE OF CONTENTS I. ACCOUNTING ...............................................................................................................................1 A . Accounting M ethods .................................................................................................................... 1 B . Inventories ................................................................................................................................... 2 C . Installm ent M ethod .............................................................................................................. 4 D . Y ear of Receipt or Deduction ................................................................................................. 5 II. BUSINESS INCOM E AN D DEdUCTION S .............................................................................. 7 A . Depreciation, Depletion and Credits ........................................................................................ 7 B. Expenses .................................................................................................................................... II C. Losses and At Risk ..................................................................................................................... 16 D. Business Incom e ........................................................................................................................ 18 Im. CAPITAL GAIN AND LOSS ............................................................................................... 19 A . In general ................................................................................................................................... 19 IV. CORPORATION S ..................................................................................................................... 21 A . Entity and Formation .................................................................................................................. 21 B. Distributions and Redemptions ............................................................................................. 22 C. Liquidations ............................................................................................................................... 23 D. S Corporations .................................... ........................................ ...... .... 24 E. Affiliated Corporations ......................................................................................................... 26 F. Section 482 ................................................................................................................................ 26 G. Reorganizations and Corporate Divisions ............................................................................... 26 H. Accumulated Earnings ........................................................................................................... 28 I. Tax Shelters ............................................................................................................................... 28 V. EMPLOYEE COMPENSATION AND PLANS ........................................................................ 30 A . In G eneral .................................................................................................................................. 30 VI. EXEMPT ORGANIZATIONS AND CHARITABLE GIVING ............................................ 33 A . Exem pt Organizations ........................................................................................................... 33 B. Charitable Giving ....................................................................................................................... 34 VII. INTEREST ................................................................................................................................ 35 A . In General ................................................................................................................................. 35 VIII. N ONTAXABLE EXCHAN GES ........................................................................................... 38 A . Section 1031 .............................................................................................................................. 38 B. Section 1032 .............................................................................................................................. 38 C. Sections 1034 (and 121) ........................................................................................................ 38 D . Section 1038 .............................................................................................................................. 39 E . Section 1041 .............................................................................................................................. 39 F. Section 1045 .............................................................................................................................. 40 IX. PARTN ERSH IPS ...................................................................................................................... 40 A . Partnership Audit Rules ........................................................................................................ 40 B. Miscellaneous ............................................................................................................................ 41 X. PERSONAL AND INDIVIDUAL INCOME AND DEDUCTIONS ......................................... 42 A . Deductions and Credits ........................................................................................................ 42 B. M iscellaneous Incom e ........................................................................................................... 45 XI. PROCEDURE, PENALTIES AND PROSECUTIONS .......................................................... 46 A . Penalties and Prosecutions .................................................................................................... 46 B. Discovery: Summ onses and FOIA ........................................................................................ 51 C. Litigation Costs .......................................................................................................................... 54 D. Statutory N otice ......................................................................................................................... 55 E. Statute of Limitations ........................................................................................................... 55 F. M iscellaneous ............................................................................................................................ 57 XII. TAX SHELTERS ....................................................................................................................... 63 A . In General .................................................................................................................................. 63 XIII. W ITHHOLDING AND EXCISE TAXES ............................................................................. 63 A . Employee/Independent Contractor ......................................................................................... 63 B . Excise Tax ................................................................................................................................
Load more

Recommended publications
  • Basic Income Tax, Second Edition © William P
    Basic Income Tax, Second Edition © William P. Kratzke This work is licensed under a Creative Commons-ShareAlike 4.0 International License Original source: The Center for Computer-Assisted Legal Instruction (CALI) http://www.cali.org/books/basic-income-tax-second-edition Contents Basic Income Tax, Second Edition ................................................................................1 About the Author .....................................................................................................................1 Notices .......................................................................................................................................1 About CALI eLangdell Press.....................................................................................................2 Preface ......................................................................................................................................3 Chapter 1 The Government Raises Money: Introduction to Some Basic Concepts of Taxes and Taxing Income .........................................................................................4 1.1 Introduction to Some Basic Concepts..............................................................................4 The Ramsey Principle ......................................................................................................6 1.2 Taxing Income.....................................................................................................................8 Multiple-Choice ................................................................................................................9
    [Show full text]
  • Preface (PDF Download)
    Preface Ensure student success with the Focus Casebook Series. THE FOCUS APPROACH In a law office, when a new associate attorney is being asked to assist a supervis- ing attorney with a legal matter in which the associate has no prior experience, it is common for the supervising attorney to provide the associate with a recently closed case file involving the same legal issues so that the associate can see and learn from the closed file to assist more effectively with the new matter. This exper- iential approach is at the heart of the Focus Casebook Series. Additional hands-on features, such as Real Life Applications, Applying the Concepts, and Federal Income Taxation in Practice provide more opportunities for critical analysis and application of concepts covered in the chapters. Professors can assign problem-solving questions as well as exercises on drafting documents and preparing appropriate filings. CONTENT SNAPSHOT This casebook focuses on clear communication of federal income tax fundamen- tals. On completion of the course, students will have not only the comprehensive substantive knowledge base needed for advanced study in the federal tax arena, but also a healthy degree of familiarity with various tax-related resources. The student will emerge with the ability to perform well in a clinical or practice setting. ■ Chapter 1 is introductory and includes basic background with respect to the constitutional authority to tax income and the roles of Congress, the Treasury Department, and the Internal Revenue Service. The chapter also covers standard tax legislation procedure and key sources of tax law and guidance. ■ Chapter 2 addresses the concept of realization and the current definition of “income.” It also introduces foundational tax terminology (e.g., basis, realiza- tion, recognition, etc.) and the fundamentals of the tax computation process.
    [Show full text]
  • Realization, Recognition, Reconciliation, Rationality and the Structure of the Federal Income Tax System
    Michigan Law Review Volume 88 Issue 7 1990 Realization, Recognition, Reconciliation, Rationality and the Structure of the Federal Income Tax System Patricia D. White University of Michigan Law School Follow this and additional works at: https://repository.law.umich.edu/mlr Part of the Taxation-Federal Commons, and the Tax Law Commons Recommended Citation Patricia D. White, Realization, Recognition, Reconciliation, Rationality and the Structure of the Federal Income Tax System, 88 MICH. L. REV. 2034 (1990). Available at: https://repository.law.umich.edu/mlr/vol88/iss7/3 This Article is brought to you for free and open access by the Michigan Law Review at University of Michigan Law School Scholarship Repository. It has been accepted for inclusion in Michigan Law Review by an authorized editor of University of Michigan Law School Scholarship Repository. For more information, please contact [email protected]. REALIZATION, RECOGNITION, RECONCILIATION, RATIONALITY AND THE STRUCTURE OF THE FEDERAL INCOME TAX SYSTEM Patricia D. White* TABLE OF CONTENTS I. THE BASIC STRUCTURE OF ANY TAX SYSTEM •••••••••• 2040 A. The Role of Realization. 2044 B. The Role of Reconciliation . 2053 II. THE DESCRIPTIVE POWER OF RECONCILIATION • • • • • • • • 2057 A. The Claim of Right Doctrine. 2057 B. The Tax Benefit Rule. 2060 C. Recapture Provisions . 2064 III. THE NORMATIVE ROLE OF RECONCILIATION .•••••••••• 2071 A. Simple Bo"owing . 2072 B. Purchase Money Mortgages, Footnote 37, and the Issue in Tufts ..................................... 2075 1. The Implications of Coherence . 2075 2. A Significant Cost of Coherence. 2088 IV. POSTSCRIPT TO PARTS II AND III: WHEN To RECONCILE • • • • • . • • • • • • • • • • • • • • • • • . • • • • • • • • • • • • • • • • • • • • 2093 CONCLUSION • • • • • • • • • • • • • • • • . • • • • • . • • • • • . • • • • • • • . • • • • • • • • • • 2095 Federal income tax reform is much talked about these days.
    [Show full text]
  • Executive Pay Clawbacks and Their Taxation
    Boston University School of Law Scholarly Commons at Boston University School of Law Faculty Scholarship 2021 Executive Pay Clawbacks and Their Taxation David Walker Boston Univeristy School of Law Follow this and additional works at: https://scholarship.law.bu.edu/faculty_scholarship Part of the Business Organizations Law Commons, and the Tax Law Commons Recommended Citation David Walker, Executive Pay Clawbacks and Their Taxation, No. 21-01 Boston University School of Law, Law and Economics Research Paper (2021). Available at: https://scholarship.law.bu.edu/faculty_scholarship/1051 This Article is brought to you for free and open access by Scholarly Commons at Boston University School of Law. It has been accepted for inclusion in Faculty Scholarship by an authorized administrator of Scholarly Commons at Boston University School of Law. For more information, please contact [email protected]. EXECUTIVE PAY CLAWBACKS AND THEIR TAXATION Boston University School of Law Law & Economics Series Paper No. 21-01 2021* David I. Walker Boston University School of Law *Forthcoming, 24 Fla. Tax Rev. (2021) Electronic copy available at: https://ssrn.com/abstract=3773046 EXECUTIVE PAY CLAWBACKS AND THEIR TAXATION FORTHCOMING, 24 FLA. TAX REV. (2021) DAVID I. WALKER* ABSTRACT Executive pay clawback provisions require executives to repay previously received compensation under certain circumstances, such as a downward adjustment to the financial results upon which their incentive pay was predicated. The use of these provisions is on the rise, and the SEC
    [Show full text]
  • Publication 538, Accounting Periods and Methods
    Userid: CPM Schema: tipx Leadpct: 100% Pt. size: 10 Draft Ok to Print AH XSL/XML Fileid: … ons/P538/201901/A/XML/Cycle04/source (Init. & Date) _______ Page 1 of 21 15:46 - 28-Feb-2019 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Department of the Treasury Contents Internal Revenue Service Future Developments ....................... 1 Publication 538 Introduction .............................. 1 (Rev. January 2019) Photographs of Missing Children .............. 2 Cat. No. 15068G Accounting Periods ........................ 2 Calendar Year .......................... 2 Fiscal Year ............................. 3 Accounting Short Tax Year .......................... 3 Improper Tax Year ....................... 4 Periods and Change in Tax Year ...................... 4 Individuals ............................. 4 Partnerships, S Corporations, and Personal Methods Service Corporations (PSCs) .............. 5 Corporations (Other Than S Corporations and PSCs) .............................. 7 Accounting Methods ....................... 8 Cash Method ........................... 8 Accrual Method ........................ 10 Inventories ............................ 13 Change in Accounting Method .............. 18 How To Get Tax Help ...................... 19 Future Developments For the latest information about developments related to Pub. 538, such as legislation enacted after it was published, go to IRS.gov/Pub538. What’s New Small business taxpayers. Effective for tax years beginning
    [Show full text]
  • Report of the Tax Fairness Commission Commonwealth of Massachusetts March 1, 2014
    Report of the Tax Fairness Commission Commonwealth of Massachusetts March 1, 2014 I. EXECUTIVE SUMMARY Introduction The Tax Fairness Commission was established by the Massachusetts Legislature in 2013 as part of the Act Relative to Transportation Finance. The Commission was charged with analyzing a broad array of the Commonwealth’s tax laws and focused on the equity of current tax policies. The fifteen member bipartisan Commission met publicly eight times from September 2013 until February 2014. The Commission reviewed data and analysis prepared by the Department of Revenue, the Institute on Taxation and Economic Policy, the Joint Committee on Revenue, Massachusetts Budget and Policy Center, the Massachusetts Taxpayers Foundation, the Pioneer Institute, and others. After fully engaging in a broad, comprehensive, and lively debate, the Commission now issues this report. Finding The Commission concluded the following: That the overall tax system in Massachusetts is regressive, meaning middle- and low- income taxpayers pay a larger share of their income in taxes than high-income taxpayers. Recommendations The Commission voted on a number of proposals that strive to make the overall tax system fairer in Massachusetts. By majority vote, the Commission recommends the following: • Institute a graduated income tax through a Constitutional amendment. • Institute the following package proposal: o Increase the state funded match of the federal EITC from its current 15% rate and retain its refundability. o Expand the property tax circuit breaker, which is currently limited to senior citizens, to make all low-income individuals and families eligible. o Raise the current personal exemption on single filers, heads of households, and married filing jointly.
    [Show full text]
  • Tax Planning with Life Insurance William L
    College of William & Mary Law School William & Mary Law School Scholarship Repository William & Mary Annual Tax Conference Conferences, Events, and Lectures 1987 Tax Planning with Life Insurance William L. Haas Repository Citation Haas, William L., "Tax Planning with Life Insurance" (1987). William & Mary Annual Tax Conference. 574. https://scholarship.law.wm.edu/tax/574 Copyright c 1987 by the authors. This article is brought to you by the William & Mary Law School Scholarship Repository. https://scholarship.law.wm.edu/tax 1986 TAX REFORM - THE AFTERMATH WEALTH TRANSFER TAX PLANNING WITH LIFE INSURANCE By: William L. Haas Tax and Investment Group 33 Bedford Street Lexington, MA 02173 617 861-9720 The Tax Reform Act of 1986 maintains the importance of insurance for risk protection and it enhances it's value for savings, investment, and tax purposes. 1. Tax reform as it relates to the insurance company and product had been significantly addressed by TEFRA in 1982 and DEFRA in 1984. The industry was able to escape the most threatening reform proposals suggested for 1986 legislation. a. The most important proposal threatening the industry was to impose a tax on inside build up of cash values. This proposal was defeated. But changes in the area are still anticipated. b. The most threatening proposal which was enacted was probably the limitation on interest deduction for financing insurance. 2. The 1986 legislation adversely affected products which directly or indirectly competed in markets where the insurance product is now anitipated to make major inroads. a. Traditional tax shelters offering current deductions appear a thing of the passt.
    [Show full text]
  • Constructive Receipt of Income Neil Harl Iowa State University, [email protected]
    Volume 8 | Number 2 Article 1 1-17-1996 Constructive Receipt of Income Neil Harl Iowa State University, [email protected] Follow this and additional works at: http://lib.dr.iastate.edu/aglawdigest Part of the Agricultural and Resource Economics Commons, Agricultural Economics Commons, Agriculture Law Commons, and the Public Economics Commons Recommended Citation Harl, Neil (1996) "Constructive Receipt of Income," Agricultural Law Digest: Vol. 8 : No. 2 , Article 1. Available at: http://lib.dr.iastate.edu/aglawdigest/vol8/iss2/1 This Article is brought to you for free and open access by the Journals at Iowa State University Digital Repository. It has been accepted for inclusion in Agricultural Law Digest by an authorized editor of Iowa State University Digital Repository. For more information, please contact [email protected]. Agricultural Law Digest An Agricultural Law Press Publication Volume 8, No. 2 January 17, 1997 Editor: Robert P. Achenbach, Jr. Contributing Editor Dr. Neil E. Harl, Esq. ISSN 1051-2780 CONSTRUCTIVE RECEIPT OF INCOME — by Neil E. Harl* The doctrine of constructive receipt of income is taxpayer’s attorney requested that the checks be reissued to repeatedly litigated in large part because there is no bright reflect payment in the later year. The ruling held that the line test for when the concept applies.1 Yet the doctrine is amounts were not deemed constructively received in the immensely important to farmers and ranchers on the cash earlier year. The ruling noted that the mere fact that a check method of accounting.2 is issued in one year and received in another does not make the check taxable in the year issued.
    [Show full text]
  • Effects of Federal Tax Policy on Agriculture
    Effects of Federal Tax Policy on Agriculture. By Ron Durst and James Monke. Food and Rural Economics Division, Economic Research Service, U.S. Depart- ment of Agriculture, Agricultural Economic Report No. 800. Abstract This report analyzes the effects of the current Federal tax code on farming and evaluates tax proposals to assist beginning farmers. Investment, management, and production decisions in agriculture continue to be influenced by Federal tax laws. Farmers continue to benefit from both Federal income and estate tax policies tar- geted to agriculture. These provisions exert upward pressure on farmland values and help support ongoing trends that increase the number of very small and large farms. However, the influence of the current tax structure with lower marginal tax rates and a broader income base is less than in earlier decades and may be small relative to government farm programs. Tax proposals to assist beginning farmers would likely increase the availability of land for lease or purchase, but would do little to make land more affordable. Keywords: Federal tax policy, income tax, social security tax, structure, small farms, estate and gift tax, capital gains, farm losses Disclaimer: Readers should not construe information in this report as advice given by the U.S. Department of Agriculture but should consult with their own attorneys or the Internal Revenue Service for tax advice. Washington, DC 20036-5831 April 2001 Contents Summary . .iv Introduction . .1 Federal Taxes and Farmers . .1 Farm Typology and Data . .2 Federal Income Tax Policies . .5 Individual Tax Rates and Taxable Income . .5 The Farm Income Tax Base . .6 The Farm Household Income Tax Base .
    [Show full text]
  • Technical Explanation of the Tax Reform Act of 2014, A
    TECHNICAL EXPLANATION OF THE TAX REFORM ACT OF 2014, A DISCUSSION DRAFT OF THE CHAIRMAN OF THE HOUSE COMMITTEE ON WAYS AND MEANS TO REFORM THE INTERNAL REVENUE CODE: TITLE V ─ TAX EXEMPT ENTITIES Prepared by the Staff of the JOINT COMMITTEE ON TAXATION February 26, 2014 JCX-16-14 CONTENTS Page INTRODUCTION .......................................................................................................................... 1 TITLE V − TAX EXEMPT ENTITIES ......................................................................................... 2 A. Unrelated Business Income Tax ....................................................................................... 2 1. Clarification of unrelated business income tax treatment of entities exempt from tax under section 501(a) (sec. 5001 of the discussion draft and sec. 511 of the Code) .......................................................................................................................... 6 2. Name and logo royalties treated as unrelated business taxable income (sec. 5002 of the discussion draft and secs. 512 and 513 of the Code) ..................... 7 3. Unrelated business taxable income separately computed for each trade or business (sec. 5003 of the discussion draft and sec. 512 of the Code) ...................... 7 4. Exclusion of research income from unrelated business taxable income limited to publicly available research (sec. 5004 of the discussion draft and sec. 512(b)(9) of the Code) .......................................................................................
    [Show full text]
  • Us Preimmigration Tax Planning
    US PREIMMIGRATION TAX PLANNING - 12th Annual International Estate Planning Institute March 10, 2016 SUMMER AYERS LEPREE, ESQ. Summer A. LePree, Esq., Partner, Bilzin Sumberg Baena Price & Axelrod, LLP, 1450 Brickell Avenue, Suite 2300, Miami, FL 33137. Telephone: 305-350-7274. E-mail address: [email protected] Summer Ayers LePree is a Partner in Bilzin Sumberg's Tax Group, where she focuses her practice on international taxation. She has extensive experience advising clients on international restructurings, treaty planning techniques, and other international and domestic corporate and partnership tax matters, as well as significant experience with international tax planning and structuring for high net worth private clients, including pre-immigration planning, expatriation, and US income and transfer tax aspects of foreign trusts and estates. Summer has represented clients before the Unites States Tax Court, the Internal Revenue Service, and the United States Treasury. Summer is a frequent speaker and author on various topics in international tax law. She also lectures regularly for the New York University Summer Institute in International Taxation and Federal Tax Institute and sits on panels for various industry organizations, including the American Bar Association and the International Bar Association. Summer was selected by the Daily Business Review for the esteemed 2015 "On the Rise" award, an honor that only 40 South Florida Lawyers under the age of 40 were selected to receive. In addition, Summer was recognized in the 2016 edition of Best Lawyers in America, in the field of Tax Law. She also currently serves as the Vice Chairperson of the United States Activities of Foreigners and Tax Treaties Committee.
    [Show full text]
  • Recent Federal Income Tax Developments Ira B
    College of William & Mary Law School William & Mary Law School Scholarship Repository William & Mary Annual Tax Conference Conferences, Events, and Lectures 1999 Recent Federal Income Tax Developments Ira B. Shepard Repository Citation Shepard, Ira B., "Recent Federal Income Tax Developments" (1999). William & Mary Annual Tax Conference. 374. https://scholarship.law.wm.edu/tax/374 Copyright c 1999 by the authors. This article is brought to you by the William & Mary Law School Scholarship Repository. https://scholarship.law.wm.edu/tax RECENT FEDERAL INCOME TAX DEVELOPMENTS By Ira B. Shepard Professor of Law University of Houston Law Center Houston, Texas 77204 Tele: 713-743-2246 Fax: 713-743-2131 e-mail: ishepardpuh.edu Tennessee Tax Institute December 2, 1999 1. ACCOUNTING A. Accounting Methods 1. TAM 9848001 (7/16/98). Dentist custom-ordered crowns, bridges and dentures from independent laboratories for individual patients. Therefore, he does purchase and sell merchandise inventory. The TAM stated that neither a small year-end inventory nor custom-ordering was sufficient to prevent the accrual method from being required. Nevertheless, the dentist was not required to maintain inventories because the production, purchase or sale of merchandise was not a significant income- producing factor under Reg. § 1.471-1. 2. Updated procedures for taxpayers to obtain automatic consent to change accounting methods. Rev. Proc. 98-60, 1998-51 I.R.B. 16 (12/10/98), clarifying, modifying, amplifyin and superseding Rev. Proc. 97-37, 1997-2 C.B. 455. Updates the procedures by which a taxpayer may obtain automatic consent to change the methods of accounting set forth in the procedure.
    [Show full text]