SCACPA Podcast 014

SCACPA's Weekly Federal Tax Update

Lynn Nichols Federal Tax Update Podcast

May 7, 2018, edition

Listen as Lynn Nichols provides commentary on 5 Items pertaining to current developments in U.S. tax law. This week’s topics include:

OUR PROGRAM THIS WEEK INCLUDES . . . . . .

1. Appeals Filed in ‘Devastating’ Clergy Housing Allowance Decision

A group of ministers has joined the government in appealing a court decision on the parsonage housing allowance that they say could impose a tax burden on many churches and harm their communities.

[Tax Notes Today; 4/23/2018; Article by Fred Stokeld]

Government Urges Court to Allow Minister Rental Allowance Exclusion

In a brief for the Seventh Circuit, the government urged the court to reverse a decision that held unconstitutional section 107(2), which allows ministers to exclude from income a rental allowance paid to them as part of their compensation, arguing that the exclusion has a secular purpose and effect and doesn’t violate the Establishment Clause.

Clergy Argue Rental Allowance Exclusion Is Constitutional

A group of ministers and churches filed a brief in the Seventh Circuit urging the court to reverse a decision that held unconstitutional section 107(2), which allows ministers to exclude from income a rental allowance paid to them as part of their compensation, arguing that it is a logical adaptation of the convenience-of-the-employer doctrine.

2. Fact Sheet Outlines Tax Law Changes to Depreciation Deductions

The IRS has released a fact sheet on the new rules and limitations for depreciation and expensing under the Tax Cuts and Jobs Act, addressing changes to section 179 expensing, first-year bonus depreciation, depreciation limits on luxury cars, the treatment of some farm property, and the applicable recovery period for real property.

[FS-2018-9, 4/20/2018]

3. Government Argues Corporation Wasn’t Entitled to Expense Deductions

In a brief for the Tenth Circuit, the government argued that employees who participated in an S corporation’s employee stock ownership plan were related persons under section 267 and the S corporation couldn’t deduct any accrued but unpaid expenses owed to either its direct or indirect shareholders, including ESOP participants.

[Steven M. Petersen et al. v. Commissioner; No. 17-9003; No. 17-9004]

Shareholders Argue Tax Court Erred in Decision on ESOP Participants

In a brief for the Tenth Circuit, shareholders of an S corporation argued that the Tax Court erred in holding that employees who participated in the S corporation’s employee stock ownership plan were related persons under section 267 and by disallowing the corporation’s deductions for unpaid payroll and vacation pay.

4. Court to Decide if School Treasurer Knew of Lapse in Tax Payments

A U.S. district court, denying summary judgment to the government, found material factual disputes in an employee payroll tax case filed by the volunteer treasurer of a private school’s board of directors who argued he was not responsible for collecting or paying payroll taxes for the school.

[Bibler, David H. v. United States; USDC S OH, No. 2:I7-cv-I34, 4/23/2018]

5. Financial Satisfaction Rising Thanks to Tax Cuts, AICPA Finds

According to a survey conducted by the Harris Poll and published by the American Institute of CPAs on April 26, Americans’ personal financial satisfaction reached a record high in the first quarter of 2018, reflecting the cuts to personal taxes under the 2017 tax law, and 68 percent of respondents said they were satisfied with their personal finances.

[AICPA News Release, 4/26/2018]