Keeping CPAs Up to Date on Tax Matters
A site devoted to articles on current developments in federal taxes geared toward CPAs in tax practice.
The Department of Justice has filed an emergency request for the US Supreme Court to remove the injunction against enforcement of the Corporate Transparency Act the Fifth Circuit had put back in place on December 26, 2024.
Read MoreThe Department of Justice has filed to ask the Supreme Court to take action to remove the stay recently reimposed by the Fifth Circuit Court of Appeals of the enforcement of the Corporate Transparency Act.
DOJ’s Request for Supreme Court Action to Remove Stay on Enforcement of CTA
Read MoreTo close out 2024, the IRS released Revenue Procedure 2025-7 providing temporary relief provisions for allowing taxpayers to specifically identify specific blocks of digital assets sold from a brokerage account in 2025. This relief is in addition to special rules adopted earlier this year in Revenue Procedure 2024-28 for allocating unallocated basis as taxpayers transition to the provisions of Reg. §1.1012-1(j).
Read MoreFinCEN updated their website on December 27, 2024 to reflect the latest reversal of direction by the courts in the BOI deadline matter, noting that, for now, there is a stay of the deadline to file BOI reports in place and that voluntary submissions will continue to be accepted during the period the stay is in effect.
Read MoreOn December 26, 2024, an order was issued vacating a previous stay that had been granted regarding the enforcement of the Corporate Transparency Act (CTA) and its corresponding Reporting Rule. The stay had been granted by a motions panel of the Fifth Circuit Court of Appeals on December 23, 2024, but was vacated by the merits panel of the same court. The order vacating the stay was made to “preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments”
Read MoreThe plaintiffs in Texas Top Cop Shop, Inc., et al. v. Merrick Garland, Attorney General of the United States, et al. are requesting an en banc rehearing based on several arguments related to the panel decision to grant a stay of the district court’s preliminary injunction. The plaintiffs contend that the panel decision conflicts with Supreme Court precedent, improperly weighed the equities, and failed to consider key aspects of the case.
Read MoreAs reported by Reuters yesterday, the plaintiffs in the Texas Top Cop Shop, Inc. case are filing a petition for an en banc rehearing of the matter by the entire Fifth Circuit. They are asking for a decision by January 6, 2025.
Plaintiffs-Appellees’ Emergency Petition for Rehearing En Banc - Texas Top Cop Shop, Inc.
The Tax Court’s decision in Denham Capital Management LP v. Commissioner, TC Memo 2024-114 addresses whether a state law limited partner’s distributive share of partnership income is subject to self-employment tax. The court concluded that the partners were not “limited partners, as such” under section 1402(a)(13), and their distributive shares were included in the partnership’s net earnings from self-employment (NESE). This conclusion is consistent with the court’s prior ruling in Soroban Capital Partners LP v. Commissioner, 161 T.C. 310 (2023), which held that a partner’s status as a limited partner for purposes of the limited partner exception is determined by a functional analysis of their roles and responsibilities, not solely on their state law designation
Read MoreFollowing the Fifth Circuit’s stay of the injunction against the Corporate Transparency Act (CTA), FinCEN extended the reporting deadlines for beneficial ownership information. These extensions were implemented because the Department of the Treasury recognized that companies might need additional time to comply due to the period when the preliminary injunction was in effect.
Read MoreThe Fifth Circuit Court of Appeals on December 23, 2024 issued an order[^1] staying the nationwide injunction issued by the US District Court for the Eastern District of Texas blocking enforcement of the Corporate Transparency. Thus, entities in existence on January 1, 2024 will be required to have filed their BOI report by January 1, 2024 unless they qualify for an exemption.
Read MoreThe Ninth Circuit Court of Appeals, in a split decision, upheld[^1] the Tax Court’s holding in the case of The Morning Star Packing Co. LP et al. v. Commissioner, TC Memo 2020-142 that the all events test had not been met by a taxpayer with respect to costs to restore, rebuild, recondition, and retest their manufacturing facilities recorded at the end of the taxpayers’ tomato products packaging season.
Read MoreThe IRS has issued proposed regulations[1] that would revise Circular 230, removing provisions found at sections 10.3 through 10.6 of the current Circular 230 that related to the regulation of registered return preparers, clarify that practice before the IRS includes “preparation and submission of tax returns in connection with representing a client in a matter before the IRS,” eliminate Section 10.27 of the current Circular 230 that bars the acceptance of contingent fees (but now making accepting such fees disreputable conduct in certain situations), expand the definition of competency to include requiring that a federally authorized tax practitioner (FATP) must maintain certain minimum qualifications of technological competency related to tax practice as well as make additional changes.
Unless otherwise provided for in the proposed regulations, these regulations would become effective 30 days after being published in final form in the Federal Register.[2]
Read MoreIn the matter of Surk LLC v. Commissioner,[1] the Tax Court was presented with the question of basis computations related to an interest in a partnership. In a tax year that is now closed for assessment, the taxpayer mistakenly deducted losses that exceeded the limitation set forth in Internal Revenue Code Section 704(d). The central issue is whether the taxpayer should reduce its basis in subsequent years by the amount of those disallowed losses or should compute the basis by treating those losses as if they were never deducted.
Read MoreOn August 21, 2024, the National Taxpayer Advocate issued a statement on the Employee Retention Credit in the form of a blog post.[1] This statement aimed to provide taxpayers with comprehensive information regarding the subsequent procedures for those who have recently received a Notice of Disallowance for their Employee Retention Credit (ERC) claim. Additionally, the statement addressed perceived issues within the process currently and prospectively employed by the Internal Revenue Service (IRS) for these claims.
Read MoreThere has been extensive discussion about the risk CPAs face when assisting clients with filing Beneficial Ownership Interest (BOI) Reports under the Corporate Transparency Act (CTA), particularly concerning unauthorized practice of law provisions in various states. However, there has been little guidance from enforcement entities on what actions are permissible for CPAs and EAs in this area. This week, the New Jersey Supreme Court’s Committee on the Unauthorized Practice of Law issued a letter to the New Jersey Society of CPAs, providing some much-needed guidance.
Read MoreThe IRS has released IR-2024-2024-177[1] reminding taxpayers that marijuana remains a Schedule I substance for now, and that IRC §280E continues to apply until such time as the drug is removed from that schedule when and if the Justice Department finalizes the proposed rule. The news release states that:
Until a final federal rule is published, the Internal Revenue Service today reminded taxpayers that marijuana remains a Schedule I controlled substance and is subject to the limitations of Internal Revenue Code.[2]
Read MoreIn the case of Connelly v. United States, US Supreme Court, Docket 23-146, June 6, 2024[1], the U.S. Supreme Court resolved inconsistent holdings in lower courts. In a unanimous opinion, the Court, authored by Justice Thomas, found that although life insurance proceeds received by the corporation that were intended to be used to redeem a deceased majority shareholder had to be included in valuing the corporation as of the date the shareholder died, the estate could not use the obligation to redeem those shares to reduce the value of the corporation when valuing the interest.
Read MoreConsistent with its stance from 2021 to 2023, the Internal Revenue Service (IRS) has announced, via Notice 2024-35[1], that penalties will not be imposed on taxpayers who fail to take the required minimum distributions (RMDs) from most individual retirement accounts (IRAs) and defined contribution plans inherited from decedents who passed away post-2019.
The Proposed Regulations released in 2022, addressing the amended RMD regulations for IRAs and defined contribution plans as instituted by the SECURE Act, stipulated that taxpayers inheriting an IRA or defined contribution account from an individual who passed away after 2019, and who had reached their required beginning date for distributions, were mandated to receive distributions based on the life expectancy of the designated beneficiary. This was to occur each year for the nine years following the decedent's death, with the total remaining balance to be distributed by the end of the tenth year.
Read MoreOn January 19, 2024, the House of Representatives’ Ways and Means Committee advanced HR 7024, titled “Tax Relief for American Families and Workers Act of 2024,” with a decisive vote of 40-3. This bill represents a consensus reached earlier in the week between Chairman Smith of the Ways and Means Committee and Chairman Wyden of the Senate Finance Committee.
In an article by Cady Stanton and Doug Sword, published on the Tax Notes Today website on January 19, 2024, under the title “W&M Advances Tax Deal; May Vote in Late January or Early February (subscription required),” the authors suggest that the bill could potentially be presented on the House floor as early as the week of January 29.
Read MoreThe SECURE 2.0 Act of 2022 introduced the option for sponsors of §401(k), §403(b), or government §457(b) defined contribution plans to incorporate a Pension-Linked Emergency Savings Account (PLESA) feature. Notice 2024-22 from the IRS delivers preliminary guidance concerning the anti-abuse rules applicable to these plans.
In IRS News Release IR-2024-11, released at the same time as the Notice, the IRS provides a brief summary of the reasons for the notice:
Guidance on reasonable measures employers who offer PLESAs can take to discourage potential manipulation of the PLESA matching contribution rules can be found in Notice 2024-22, posted today on IRS.gov. The notice also requests public comment and explains how to submit comments.
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