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Dec 2022 Tax Updates By Tax Attorney Chaya Kundra

On Behalf of | Dec 12, 2022 | Blog |

IRC 2056: Estate granted 120-day extension to make Sec. 2056(b)(7) QTIP election with respect to marital trust where taxpayer acted reasonably and in good faith and granting relief would not prejudice Gov.’s interests. (PLR 202249006)

IRC 6330 (CDPH & no face to face): H under state criminal investigation and taxpayers claimed economic hardship; however, Court found that Appeals Officer properly considered their claims and still found an ability to full pay their debt.  Even though the taxpayers had requested OIC, IA, and/or CNC status—the Form 656 was not submitted and IA terms not proposed. Also, appeals officer properly determined that they weren’t entitled to face to face hearing. (Kevin T. Lipka, et vir. v. Commissioner, (2022) TC Memo 2022-116, 2022 RIA TC Memo ¶2022-116)

Proposed CFC (Controlled Foreign Corp) Regs to facilitate income reporting by consolidated groups ensuring location of stock ownership of a foreign corporation within the group does not affect the amount of the group’s income by reason of IRC Sec. 951(a)(1)(A), Sec. 951A(a). (Prop Reg §1.1502-80(j)).  The application would be to tax years for which the original consolidated Federal income tax return is due (without extensions) after the date a Treasury decision adopting these rules as final regulations is published in the Federal Register. (Preamble to Prop Reg REG-113839-22)

IRS revoked IRC Sec. 501(c)(3) org.’s exempt status as of its effective stated date, where it could not show that it operated exclusively for exempt purposes, that it wasn’t private foundation under Code Sec. 509 and that no part of its net earnings inured to benefit of any private shareholder or individual. (PLR 202249016)

Rev Proc 2021-52, 2021-51 IRB 883 Updated as to IRC 6662 and accuracy related penalties: identified circumstances under which specific disclosure on income tax return is adequate for purpose of reducing understatement of tax under Code Sec. 6662(d) (relating to substantial understatement aspect of accuracy-related penalty), and for purpose of avoiding tax return preparer penalty under IRC 6694(a) (relating to understatements due to unreasonable positions) with respect to tax returns. This applies to any tax return filed on 2022 tax forms for tax year beginning in 2022, and to any tax return filed in 2023 on 2022 tax forms for short tax years beginning in 2023. (Rev Proc 2022-41, 2022-50 IRB 527)

IRC 6663: Fraud Penalties upheld by USTC for years where for which taxpayer/business professional failed to report income from certain foreign accounts which the taxpayer considered from his amended returns.  Said accounts were used as evidence of underreported income and the taxpayer failed to show error in Court’s fraud findings, which were based in part on his amended returns, and the Swiss deferred prosecution agreement, along with his implausible explanations, that he held significant funds in the accounts and that his original returns were false. The alternate attempt to challenge penalties IRC Sec. 6751(b) grounds also failed and because of fraud finding, there was no time-bar to assessments under Code Sec. 6501(c)(1). (Harrington v. Comm., CA 10, 130 AFTR 2d ¶2022-5417)

IRC 7422: Refund Actions: Magistrate judge recommended complaint be dismissed because taxpayer was unable to show prerequisite administrative claim being filed with IRS. Administrative claim “for all periods,” appeared to have been for trust fund tax recovery penalties, not income taxes. (Gardiner v. U.S., DC LA, 130 AFTR 2d ¶2022-5422)

Come join us the third Wednesday of every month at noon as we speak about tax topics, strategies and issues impacting our clients and our world.  Some things looking into 2023 include the expansion of state tax into areas such as passenger transportation platforms, remote workers, remuneration by electronic currency and so forth.

We wish you a happy and joyful 2023!!!