SCACPA Podcast 015

SCACPA's Weekly Federal Tax Update

Lynn Nichols Federal Tax Update Podcast

May 15, 2018, edition

Listen as Lynn Nichols provides commentary on 7 Items pertaining to current developments in U.S. tax law. This week’s topics include:

OUR PROGRAM THIS WEEK INCLUDES . . . . . .

1. IRS Announces Healthcare Tax Credit Relief for Some Small Employers

The IRS has announced the release of guidance that provides relief for some small employers that wish to claim the small business healthcare tax credit for 2017 and later years.

[ IR-2018-108, 4/27/2018

Healthcare Tax Credit Relief Given to Some Small Employers

The IRS has provided relief for an eligible small employer that properly claimed or claims a section 45R credit for all or part of a tax year beginning after December 31, 2015, but that for all or part of the remainder of the credit period has a principal business address in a location in which a qualified health plan through a Small Business Health Options Program exchange is not available.

[Notice 2018-27, 4/27/2018]

2. Doctor’s Patient Safety Consulting Corporation Denied Exempt Status

The Tax Court held that a corporation established to provide consulting services to medical providers and government programs through patient safety initiatives was not qualified for tax-exempt status because it would operate for the benefit of its founder and sole employee, who is a doctor and certified patient safety and risk management expert.

[Abovo Foundation Inc. v. Commissioner; No. 18673-15X; T.C. Memo. 2018-57

3. Practice Unit Addresses Claims of Passthrough Losses, Deductions

The IRS released a practice unit that provides guidance on determining whether a shareholder has sufficient basis to claim losses and deductions passed through from an S corporation.

[SCO/P/53_05_01_03-06 (2016) ,,

4. IRS Revises Housing Limits Under Foreign Earned Income Exclusion

The IRS has revoked prior guidance that provided adjustments to the limitation on housing expenses that can be excluded under section 911 because it used an incorrect amount for the maximum foreign earned income exclusion to calculate the housing cost amount for 2018.

[Notice 2018-44; 2018-21 IRB 1, 5/1/2018]

5. Alternative Rules Being Considered for Interest Deduction Issues

The solution to business interest deduction limitation issues that require guidance to implement — such as what qualifies as a trade or business — could come from analogous rules in other code sections.

[Tax Notes Today; 5/3/2018, article by Emily Foster]

6. Application of 199A Basis Limitation Seen as Challenging

The basis limitation for the passthrough deduction under the new tax law could have unintended consequences unless guidance is released.

[Tax Notes Today; 5/3/2018, article by Eric Yauch]

TAX SHELTER NEWS ! ! !

7. Benistar Participants Bound by Stipulation to Accept Penalty

Court held that a couple who challenged an accuracy-related penalty related to their participation in a Benistar 419 pre-retirement plan failed to show their situation differed from that of small business owners in other Benistar cases and thus could not escape their stipulation to be bound by that decision regarding the penalty.

[Kennan, Jerry L. et ux. v. Commissioner; No. 8917-09; T.C. Memo. 2018-60, 5/3/2018]

Bad Debt Deductions Properly Denied in DAD Shelter Cases

The Tax Court, in consolidated cases, held that the IRS properly disallowed two partnerships’ section 166 bad debt and expense deductions stemming from distressed asset/debt tax shelter transactions and held both liable for accuracy-related penalties.

[Derringer Trading LLC et al. v. Commissioner; Nos. 20872-07, 6268-08; T.C. Memo. 2018-59, 5/3/2018]