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Taxation Law Section 

Join us for the Next Tax Section Meeting on December 12, 2019.  Please remember to register as we provide lunch.  We will look forward to seeing you there!  All are welcome!!!

DRAFT INSTRUCTIONS FOR 2019 F. 1041 RELEASED — draft instructions for the 2019 Form and the separate Schedule K-1.

IRS Increases its Use of Sec. 6020(b), Estimated Returns & Enforcement.  Pro se  taxpayer/newspaper publisher/internet radio broadcaster has deficiencies estimated by the IRS assessed against him.  “Reams” of bank statements, checks, and money orders showing he received income both directly and through media ventures he alone controlled were sufficient to overcome his tax protester type arguments. Francis Steffan Hayes v. Commissioner, (2019) TC Memo 2019-147, 2019 RIA TC Memo ¶2019-147

IRC 2511, Gift Taxes, Arm’s Length Transactions. On remand, Tax Court found that married taxpayers proved that IRS's expert's valuation of disguised gifts made to sons in connection with merger transaction between their manufacturing co. and son's co. was arbitrary and excessive, insofar as 90th percentile profit margin sub calculation expert made in connection with profit reallocation calculation was erroneous and resulted in excessive gift tax determination.. (William Cavallaro v. Commissioner, (2019) TC Memo 2019-144, 2019 RIA TC Memo ¶2019-144)

IRC 6015 & Denial of Inn Spse Relief. Taxpayer was denied Code Sec. 6015(f) relief from her and ex-husband/intervenor's self-reported joint liabilities for 2d of 2 years at issue: despite meeting threshold relief factors, she ultimately failed overall factors test due to knowledge/evidence; taxpayer was aware at time she signed return that ex-husband was having trouble paying bills and other financial difficulties and that she even took over joint bank account management, after receiving several overdraft notices and knowing ex-husband had unilaterally taken line of credit on family home before applying for 2nd mortgage. (Jane M. Lassek, et al. v. Commissioner, (2019) TC Memo 2019-145, 2019 RIA TC Memo ¶2019-145)

Retirement Plan Limits Increase for 2020. IRS has announced the 2020 cost-of-living adjustments (COLAs) with respect to retirement plan limits. (Notice 2019-59, 2019-46 IRB; IR 2019-179, 11/6/2019)

Errors Do Not Equal Opt Out.  In a Private Letter Ruling, IRS determined that errors in an S corporation’s return did not constitute an election by the taxpayer not to use the installment method. (PLR 201943004)

Taxpayer First Act directs the IRS to develop and submit a “comprehensive customer service strategy” to Congress containing short-, medium- and long-term plans to make the customer experience for taxpayers resemble the kinds of experiences they receive in the private sector. The bill is to “provide assistance to taxpayers that is secure, designed to meet reasonable taxpayer expectations, and adopts appropriate best practices of customer service provided in the private sector, including online services, telephone call back services, and training of employees providing customer services.” IRS is able to hire temporary employees who specialize in IT and the IRS can hire up to 40 people in technical positions at once to four-year stints who are paid higher base salaries than it otherwise could. 

Estate Refused Injunction Against IRS. The estate was found to have failed to show that a refund suit would be inadequate or that it would sustain irreparable harm if it paid the assessment. (Est. of Lafevre, (DC IN 10/24/2019) 124 AFTR 2d ¶2019-5385)

IRC 7609-3rd Party Summons & Bad Faith/Fraud.  District court denies taxpayers' petitions to quash 3d-party summonses, found that Gov made prima facie showing of good faith, summonses issued to determine whether taxpayers committed fraud; court also determined that IRS didn't violate Code Sec. 7605(b)'s one inspection rule since, even though IRS audited their personal returns after already auditing their wholly owned corp.'s returns, those audits involved different taxpayers; there was no abuse of discretion in court's decision to deny them evidentiary hearing as plausible inference of bad faith was not raised. Rains v. U.S., CA 9, 124 AFTR 2d ¶2019-5384


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Chaya Kundra


Section Meetings

December 12, 2019
January 9, 2020
February 6, 2020
March 12, 2020
April 9, 2020
May 14, 2020

Meetings will be held on the 2nd Thursday of the month at Noon at the offices of Kundra & Associates, P.C., located at 110 N Washington St., Suite 406, Rockville, MD 20850, except otherwise noted.

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