DiscoverSCACPA's Weekly Federal Tax UpdateFederal Tax Update with Lynn Nichols #43
Federal Tax Update with Lynn Nichols #43

Federal Tax Update with Lynn Nichols #43

Update: 2019-08-01


Lynn Nichols Federal Tax Update Podcast
August, 01 2019, Episode 43

Listen as Lynn Nichols provides commentary on 8 Items pertaining to current developments in U.S. tax law.

  1. IRS Makes Few Changes in Final Rule on 501(c)(4) Notifications

Final regulations explaining how organizations should notify the IRS of their intent to operate as section 501(c)(4) social welfare entities are almost unchanged from the temporary and proposed regs and generally reject recommendations from the public.

[Tax Notes Today, 7/22/2019, Article by Fred Stokeld]


  1. Deemed Distribution Requires Downward Basis Adjustment

In partially redacted technical advice, the IRS concluded that a deemed distribution of a partnership interest in an assets-over merger of two partnerships is considered an exchange that requires a mandatory downward basis adjustment under section 743(b) when the resulting partnership has a substantial built-in loss.

[TAM 201929019, 4/30/2019, rel., 7/19/2019]


  1. LB&I Division Announces 6 New Compliance Campaigns

The IRS Large Business and International Division has approved six new compliance initiatives that were identified through LB&I data analysis and suggestions from IRS employees.

[LB&I Div. Announcement on July 19,2019]


  1. IRS Working on Guidance for Applying SALT Cap to Passthroughs

Treasury and the IRS are developing proposed rules on the application of the $10,000 cap on the state and local tax deduction to passthroughs, and practitioners fear the guidance will seek to invalidate an emerging SALT cap workaround.

[Tax Notes Today, 7/23/2019, Article by Amy Hamilton]

110,000 Entities Participate in Connecticut SALT Cap Workaround 

About 110,000 passthroughs are participating in Connecticut’s workaround to the $10,000 cap on the state and local tax deduction featuring an entity-level tax and offsetting state credit for members, according to Revenue Commissioner Scott Jackson.

[Tax Notes Today, 7/26/2019, Article by Amy Hamilton]


  1. IRS Reminds Tax Pros of Data Security Plan Requirement

The IRS has reminded (IR-2019-131) professional tax return preparers that federal law requires them to create a written information security plan to protect their clients’ data. This release is one in a series of the "Tax Security 2.0 -- Taxes-Security Together" campaign.

[IR-2019-131, 7/23/2019]

  1. Practitioners in Tight Spot on Self-Charged Interest

The government punted on the treatment of self-charged interest in the proposed business interest limitation regulations, forcing practitioners to take a best guess on its treatment without authority to rely on.

[Tax Notes Today, 7/26/2019, Article by Eric Yauch]


  1. IRS Gives Eligible Partnerships Extension to File Return

The IRS has issued guidance (Rev. Proc. 2019-32) granting an extension to eligible partnerships to file a superseding Form 1065, “U.S. Return of Partnership Income,” and furnish a corresponding Schedule K-1 (Form 1065), “Partner’s Share of Income, Deductions, Credits, etc.,” to each of its partners.

[Rev. Proc. 2019-32; 2019-33 IRB 1, 7/25/2019]

  1. Worker Wins Damages After Employer Sends False Information to IRS

A U.S. district court, in a broader breach of contract case, awarded damages under section 7434 to an employee who claimed her employer submitted false information to the IRS by classifying her as an independent contractor rather than as an employee.

[Valerie Vanderbilt v. Boat Bottom LLC, et al.; USDC S FL Key West Div.,             No. 4:18-cv-10261]









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Federal Tax Update with Lynn Nichols #43

Federal Tax Update with Lynn Nichols #43