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Tax Updates In October 2023

On Behalf of | Oct 11, 2023 | Blog |

IRC §61: Fringe Benefits & Noncommercial Flight Valuation

IRS provides Standard Industry Fare Level cents-per-mile rates and terminal charge in effect for 2nd half of 2023 to determine value of non-commercial flights on employer-provided aircraft under Reg. § 1.61-21(g). (Rev Rul 2023-19, 2023-41 IRB 1059)


IRC §25E & Transfer of Clean Fuel Credits
The IRS has issued proposed regs and a revenue procedure speaking to the purchase of qualifying previously-owned or new clean vehicles with the intention to transfer the credit to dealers who are entities eligible to receive advance payments of either credit. The proposed regs also would provide guidance for dealers to become eligible entities to receive advance payments of previously-owned clean vehicle credits or new clean vehicle credits, and rules regarding recapture of the credits. (Preamble to Prop Reg REG-113064-23, IR 2023-186, Fact Sheet 2023-22, Rev Proc 2023-33, IRB 2023-43)


Prop Regs: Triangular Reorganizations and Nonrecognition Transactions
The proposed regs adopt, with modifications, the regs described in Notice 2014-32 and Notice 2016-73. (Preamble to Prop Reg REG-117614-14)


IRC §170 & Charitable contributions of Artwork.

IRS has cautioned higher-income taxpayers about taking deductions for contributions of artwork that are sold by promoters at “discount” to alleged value, which is then claimed by donor-taxpayer as charitable deduction. Red flags of such schemes are set forth, along with steps to be followed for properly claiming art donation. (IR 2023-185)


IRC §6330: CDP, Failure to Timely File Penalties & Proof of Reasonable cause

Taxpayer allegedly mailed return on evening of last day of extended deadline that was never received by the IRS while taxpayer’s later submitted e-filed return was clearly late and penalties were upheld. While taxpayer claimed he had reasonable cause for his delinquency, because IRS filing instructions didn’t clarify risks of using regular vs. certified or registered mail, because IRS didn’t notify him that his paper return wasn’t filed until date later e-filed return was processed, because return preparer didn’t advise him to use certified or registered mail, and/or because USPS didn’t deliver his return to IRS, none of those qualified as reasonable cause for these purposes. (John Peter Zaimes v. Commissioner, (2023) TC Memo 2023-121, 2023 RIA TC Memo ¶2023-121)


IRS § 7433: Damages Against U.S. for Wrongful Collection & Need To Exhaust Administrative Remedies

Former federal employee’s claims for damages from govt.’s allegedly wrongful collection actions dismissed on finding that taxpayer failed to provide specific factual allegations as to taxes assessed/paid, make viable claim for relief or allege meeting the prerequisite of exhausting administrative remedies prior to suit. (Tran v. Summers, DC MA, 132 AFTR 2d ¶2023-5239)


IRC § 6662: Accuracy-Related Substantial Understatement Penalties: Split-Dollar Life Ins. Transactions, Refunds & Summary Judgment.

Dentist-husband’s and spouse’s refund complaint relating to husband’s participation in ins. transaction found to constitute compensatory split-dollar life ins. arrangement, failed on summary judgment as under split-dollar reg, husband was treated as receiving benefit in form of cost of current life ins. protection provided to him and amount of policy cash value to which he had “current access”.  Further, IRS deficiency notices showed understatements were substantial per IRC § 6662(d). (McGowan, et al. v. U.S., DC OH, 132 AFTR 2d ¶2023-5232)