Lynn Nichols Federal Tax Update Podcast

March, 27 2019, Episode 36

Listen as Lynn Nichols provides commentary on 4 Items pertaining to current developments in U.S. tax law. 

1. Supporters of Clergy Housing Allowance Savor Court Win

Supporters of a long-standing clergy housing tax preference are breathing easier now that the provision has survived a court challenge over its constitutional

[Tax Notes Today; 3/18/2019, Article by Fred Stokeld]

Seventh Circuit Holds Housing Allowance Exclusion Constitutional

The Seventh Circuit reversed a district court decision and held constitutional section 107(2), which allows ministers to exclude from income a housing allowance paid to them as part of their compensation, finding that the exclusion doesn’t violate the Establishment Clause.

[Annie Laurie Gaylor et al. v. Steven T. Mnuchin et al.; No. 18-1277; No. 18-1280, 3/15/2019]

 

1. Group Representing Auto Service Shops Denied Exemption

The IRS denied tax-exempt status to an organization seeking exemption as a business league because it operates primarily to help its independent auto service shop members obtain competitive supply pricing rather than helping the independent auto service industry as a whole.

[LTR 201907007; 9/10/2018, rel. 2/15/2019]

 

AND ANOTHER CASE IN WHICH EXEMPT STATUS IS REVOKED

 Baseball Team Loses Exemption

The IRS revoked the tax-exempt status of an organization established to support a baseball team and promote baseball in the community after concluding the organization is a for-profit enterprise that does not operate primarily for exempt purposes.

    [LTR 201907009; 10/24/2018, rel. 2/15/2019]

 

1. Individual Liable for Penalties for Timeshare Donation Scam

A U.S. district court, granting the government summary judgment, held that an individual who promised tax savings to individuals who donated their timeshares to a tax-exempt entity that he created based on his inflated appraisals of the timeshares is liable for penalties under section 6700. The court held that the penalty amounts remain in dispute.

[James Tarpey; USDC MT Butte Div., No. 2:17-cv-00094, 3/19/2019]

 

1. Pilot’s Deductions for World War II Fighter Plane Denied

The Tax Court held that a pilot wasn’t entitled to deductions in excess of the income he received for the restoration and maintenance of a World War II fighter plane because his activities were not for profit and he wasn't entitled to other unsubstantiated deductions. Also, the court held that the IRS didn’t meet its burden under section 6751 regarding penalties.

[Edward G. Kurdziel Jr.; T.C. Memo. 2019-20, 3/21/2019]