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In Home COVID Testing, PPE

On Behalf of | Sep 14, 2021 | IRS Updates |

The cost of home testing for COVID-19 and personal protective equipment considered medical expenses within meaning of Code Sec. 213(d) are eligible to be paid or reimbursed under various FSAs, HRAs, and HSAs. This means these costs can be paid or reimbursed by the various tax advantaged medical expense accounts.  (IR 2021-181, 09/08/2021)

IRC 162 Business Deductions: Ordinary & Necessary Expenses: Acting: Expenses relating to acting activity determined as trade or business during years at issue were allowed by the USTC for those items “inherently connected with acting,” including photography/headshot expenses, casting agency, and improving acting skills. Other expenses such as business management and personal assistant only partially qualified with expenses for legal and consulting services determined to not be connected to acting business disallowed. (Gayle Gaston v. Commissioner, (2021) TC Memo 2021-107, 2021 RIA TC Memo ¶2021-107)

IRC 404: Retirement Deductions & Timing: Contributions made to sole proprietor profit-sharing plan using deferred compensation program payments impermissible for plan set up for prior job.  Taxpayer made contributions years after she retired and engaged in new acting trade or business that didn’t ultimately generate profit. (Gayle Gaston v. Commissioner, (2021) TC Memo 2021-107, RIA TC Memo ¶2021-107)

IRC 7403: Collection, Lien Foreclosure, Nominees, Etc.: On Summary Judgment, Govt.’s established taxpayer operating trust that was taxpayer’s nominee for which taxpayer served as one of several co-trustees. Said trust never filed returns or had any identifying number, and that taxpayer acted as properties’ owner; DOJ also identified property transfers being were fraudulent under New Mexico law. (U.S. v. Simones, DC NM, 128 AFTR 2d ¶2021-5173)

IRC 6081: Hurricane Ida: For taxpayers located in or whose books are records are located in all counties in Mississippi affected have until 11/1/2021 to file returns and pay taxes that were due beginning 8/28/2021; this includes 2020 returns with valid extensions expiring 10/15/2021. Relief is further applicable to quarterly estimated income tax payments due on 9/15/2021 as well as Forms 941 and excise returns normally due on 11/1/2021. Penalties assessed between 8/28/2021 and 9/13/2021 are to be abated if deposits are made by 9/13/2021. (Extensions were provided to Louisiana taxpayers in IR 2021-175 (8/31/2021) and some New Jersey and New York taxpayers in IR 2021-179 (9/9/2021). (IR 2021-180)

IRC 7426: Temp Restraining Order on Collection/Alter Ego Determination: Individual business owner, her operating management corp. (C2), and defunct corp. (C1) denied TRO on IRS levies against C1’s taxes, as owner is named alter ego of C2 and C2 as nominee of C1. Additionally, the issue of irreparable injury was also not established. (Nielsen v. U.S., DC TX, 128 AFTR 2d ¶2021-5175)

IRC 7701: Entity Classification & Foreign Entity: IRS granted 120-day extension for entity to file Form 8832 and be treated as partnership as it acted reasonably and in good faith and granting relief would not prejudice govt.’s interests. (PLR 202136001)

Bankruptcy Tax Claims & IRS: Chap. 11 case where taxpayer overruled on objecting to IRS proof of claim against taxes on unreported relief of indebtedness income for year bank discharged taxpayer’s disputed loan obligation. Taxpayer claimed loan taken without her knowledge or authority in his name without his authority or knowledge; a Forms 1099-C or 1098 was never received and he was not aware of loan nor of the discharge. (In Re: Anderson, Bktcy Ct CA, 128 AFTR 2d ¶2021-5176)