BISKCPEasy Weekly Tax Update
With E. Lynn Nichols, CPA
March 9, 2015
CITATIONS
1. American Opportunity Tax Credit May Be Refundable In Some Cases
In e-mailed advice, the IRS explained when part of the section 25A(i) American
opportunity tax credit would be refundable if the taxpayer claiming the credit is the student
who incurred the expenses.
(ECC 201509030: 2/27/2015)
2. Re-adoption Not Required to Claim Adoption Tax Credit
In e-mailed advice, the IRS advised that although Rev. Proc. 2005-31 allows a taxpayer to
choose the year of finality of an adoption if a foreign-country adoption is followed by a readoption in the United States, a re-adoption is not required to claim the adoption tax
credit.
(ECC 201509037; 2/27/2015)
3. Property Fails to Qualify for Petroleum Outlet Depreciation
In a legal memorandum, the IRS concluded that retail motor fuel outlets are nonresidential
real property with a 39-year recovery period for purposes of section 168(a) because less
than 50 percent of revenue and floor space are devoted to petroleum sales.
(ILM 201509029; 2/27/2015)
4. Estimated Tax Penalty Relief Provided to Some Farmers, Fishermen
The IRS has announced that farmers and fishermen who miss this year's March 2 tax
deadline because they are receiving corrected premium tax credit forms from the health
insurance marketplace will have until April 15, 2015, to file their 2014 tax returns and pay
any tax due.
(IR-2015-36; 2/27/2015)
5. Marijuana Business Petitions Tax Court for Penalty Abatement
A licensed medical marijuana business in Colorado petitioned the Tax Court for a
redetermination and abatement of failure to deposit penalties, arguing that it was unable
to comply with the electronic tax payment requirement because the nature of its business
prevented it from obtaining a bank account.
(Allgreens LLC v. Commissioner; United States Tax Court; No. 28012-14; 11/24/2014)
IRS Responds to Marijuana Business's Challenge to Penalties
The IRS filed its response to a medical marijuana business's Tax Court petition seeking
an abatement of failure to deposit penalties, admitting that an IRS settlement officer
determined that the business was making every effort to comply with the law but still
denied an abatement request.
(Allgreens LLC v. Commissioner; United States Tax Court; No. 28012-14; 1/29/2015)
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6. 1099-C Issued Six Years Too Late – Taxpayer Does Not Have COD Income
The Tax Court, in a summary opinion, held that an individual didn't have COD income in
2007, finding that a Form 1099-C the Federal Emergency Management Agency issued to
her in that year was in error because the debt she owed FEMA had been extinguished in
2001 when the statute of limitations for a government claim against her expired.
(Suzanne Moore Bacon; T.C. Summ. Op. 2015-15; 3/2/2015)
7. Taxpayers Can Claim EITC Using Later Acquired SSN
At the request of Senate Finance Committee member Chuck Grassley, R-Iowa, the IRS
reviewed the relevant statutes and found that a chief counsel advice allowing a taxpayer
to claim the EITC for a tax year using a Social Security number acquired in a later year is
correct, Commissioner John Koskinen said in a February 25th letter
(2/25/2015)
8. No Spousal Relief for Deficiency Related to Her Schedule C
The Tax Court, in a summary opinion, held that an individual wasn't entitled to innocent
spouse relief from a joint tax liability with her former husband, finding that she had actual
knowledge of the items that gave rise to the deficiency and because the disallowed
deductions that resulted in the deficiency were for her food truck business.
(Sandra L. Panetta ; T.C. Summ. Op. 2015-16; 3/2/2015)
9. Tax Injunction Act (TIA) Does Not Bar Suit on Colorado's Use Tax Law
The Supreme Court unanimously held that the federal Tax Injunction Act does not bar a
suit to enjoin enforcement of Colorado's sales and use tax reporting statute, reversing the
Tenth Circuit's decision.
(Direct Marketing Ass'n v. Brohl; United States Supreme Court; No. 13-1032; 3/3/2015)
10. Publication on Tax-Exempt Status for Organizations
The IRS has released Publication 557 (rev. Feb. 2015), Tax-Exempt Status for Your
Organization, explaining rules and procedures for organizations to obtain recognition of
exemption from federal income tax under section 501(a) and discusses the procedures to
obtain an appropriate ruling or determination letter recognizing the exemption.
(Publication 557; 2/27/2015)
11. Proposed Consolidated Return Regs Revise Next-Day Rule
The IRS has issued proposed regulations that revise the rules for reporting some items of
income and deduction that are reportable on the day a corporation joins or leaves a
consolidated group.
(REG-100400-14/ 3/6/2015)
12. Taxpayer Cannot Recharacterize Transactions to Avoid Audit Adjustment
A U.S. district court refused to alter or amend its prior opinion that denied a couple a tax
refund and held them liable for a late-filing penalty, finding that they could not
recharacterize a transaction to obtain more favorable tax treatment and they failed to
provide reasonable cause for the late filing of their return.
(Estate of Harold Stuller ; USDC C IL; No. 3:11-cv-03080; 3/4/2015)
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