- Notice 2018-80 states that future proposed regulations will provide that accrued market discount is not includible in income under section 451(b).
- The IRS released a draft version of the instructions for Form 1040, “U.S. Individual Income Tax Return” to be filed by individual taxpayers for tax year 2018.
- The U.S. Court of Appeals for the Second Circuit issued a decision that reversed and remanded to the U.S. Tax Court a case concerning the treatment of variable prepaid forward contracts (VPFCs) that were modified.
- The U.S. Court of Appeals for the Ninth Circuit reversed and remanded in part a judgment of a federal district court in a taxpayer’s suit for refund of individual income tax. The refund was based on an overstatement of net income reported on the return of the taxpayer’s S corporation (a return that was filed by a bankruptcy trustee), and the issue addressed by the Ninth Circuit was whether statements or forms attached by the taxpayer to his amended returns satisfied the requirement under section 6037(c)(2)(A)(ii) for a “statement identifying the inconsistency” between the S corporation’s return and the taxpayer’s return (as the shareholder of the S corporation).
- Tax relief has been provided for certain individual and business taxpayers in identified counties in North Carolina and South Carolina that were affected by Hurricane Florence. In general, the tax relief includes more time to file returns, pay taxes, and perform certain other time-sensitive acts for those taxpayers affected by Hurricane Florence.
- Notice 2018-77 provides the 2018-2019 special per diem rates for taxpayers to use in substantiating the amount of ordinary and necessary business expenses incurred while traveling away from home.
- Notice 2018-71 provides guidance—in a “question and answer” (Q&A) format—about the employer credit for paid family and medical leave under section 45S (as added to the Code by the new tax law in the United States).
- The IRS and Treasury Department are considering guidance to address whether a business can qualify as an “active trade or business” if entrepreneurial activities—as opposed to investment or other non-business activities—take place with the purpose of earning income in the future, but no income has yet been collected. The IRS noted that some ventures during phases of research and development often collect no income (or negligible income) but incur significant financial expenditures. The day-to-day operational and managerial functions performed by these ventures historically have evidenced an “active” business.
- A reminder notes that the deadline for making a one-time claim for 2017 biodiesel and alternative fuel incentives is 29 September 2018.
- The new U.S. tax law includes new rules for limiting the deduction of business interest expense. A KPMG report explains the application of new section 163(j); compares the new rules with the prior rules; and discusses selected issues the new statute has created for taxpayers, with a focus on non-partnership entities.
- Minnesota’s tax court held that a taxpayer’s purchase of certain machinery and equipment to support and expand its document-retrieval system was not eligible for the sales tax exemption that is provided for “capital equipment” because the taxpayer’s system only allowed access to a client’s own data (and not access by all users). The court also concluded that the electricity used to power the equipment also was not exempt from sales tax.
- The Texas Comptroller, in a private letter ruling, concluded that the taxpayer (an online clothing retailer) had an obligation to collect sales and use tax because the presence of its clothing in the state during the “try on” period (that is, the seven-day period that customers were allowed to keep the clothing before completing the purchase) created substantial nexus. The taxpayer continued to own the clothing during the seven-day period, and did not recognize revenue from sales of the clothing until after the seven-day period expired.
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- The U.S. House of Representatives passed a bill that would extend through September 30, 2023, a number of aviation trust fund-related taxes that currently are scheduled to expire on September 30, 2018.
Read TaxNewsFlash-Legislative Updates