BISKCPEasy Weekly Tax Update
With E. Lynn Nichols, CPA
February 9, 2015
CITATIONS
1. Welsh Pony “Breeders” Liable for Deficiencies, Penalties
The Ninth Circuit, in an unpublished per curiam opinion, affirmed a Tax Court
decision holding a couple liable for tax deficiencies and penalties, finding no error by
the Tax Court in determining that they were not engaged in their horse breeding and
training activity for profit or in the court's imposition of accuracy-related penalties.
(Peter C. Bronson; CA 9; Nos. 12-72342, 12-72343; 2/3/2015)
2. Accrual method is Required for Reporting Income From Tax Deed Sales
The Tax Court held that three entities held properties acquired by tax deed primarily
for sale to customers in the ordinary course of their businesses, that they couldn't
use the installment method to account for sales by contract, and that they should
have included income from sales in their reported net earnings from selfemployment.
(SI Boo LLC et al.; T.C. Memo. 2015-19; 2/4/2015)
3. IRS Won't Acquiesce in Partnership Cancellation of Debt Decisions
In an action on decision, the IRS has announced it won't acquiesce in four Tax Court
decisions on the cancellation of debt, asserting that a general partner who
guaranteed the partnership's debt and was not himself in bankruptcy may not
exclude from gross income under section 108(a) the debt that was canceled in the
partnership's title 11 case.
(AOD 2015-01; 2015-6 IRB 1; 2/9/2015)
4. Transition Rule in Accounting Method Change Procedures Revised
The IRS has revised guidance that provides the general procedures for obtaining
automatic consent for specifically identified changes in methods of accounting and
for obtaining non-automatic consent to change a method of accounting.
(Revision to Rev. Proc. 2015-13; 2/2/2015)
5. TIGTA Says IRS Needs to Improve Law Enforcement Responses
The IRS's law enforcement assistance program did not always process requests in a
timely or accurate manner or maintain return data documentation provided to law
enforcement, and it needs to improve law enforcement's awareness of the program,
the Treasury Inspector General for Tax Administration said in a November 28 report.
(2015-40-003; 11/28/2014)
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6. Noncustodial Father Denied Dependency Deductions, Tax Credits
The Tax Court, in a summary opinion, held that a noncustodial father wasn't entitled
to claim dependency exemption deductions for his three children or a child tax credit
because he didn't provide a declaration from the children's mother stating that she
would not claim them as dependents on her return.
(Carlos Calderon; T.C. Summ. Op. 2015-9; 2/5/2015)
7. OPR Questions Use of Cancellation of Debt Form as Collection Technique
In an e-mailed alert, the IRS Office of Professional Responsibility has addressed
whether Circular 230 is violated if, in trying to collect a fee from a delinquent or
nonpaying client, a tax practitioner files Form 1099-C, "Cancellation of Debt," and
reports the unpaid balance as a discharged debt.
(E-mailed Alert; 2/5/2015)
8. Publication Outlines the IRS Collection Process
The IRS has released Publication 594 (rev. Jan. 2015), The IRS Collection Process,
providing a general description of the series of actions that the IRS may take to
collect overdue taxes.
(Publication 594; rev. 1/2015)
9. IRS Launches Online Directory of Tax Return Preparers
The IRS has announced the availability of a new, online public directory of tax return
preparers for taxpayers to use in finding a tax professional with their preferred
credentials and qualifications to help those taxpayers prepare their tax returns.
(IR-2015-22; 2/5/2015)
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