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© 2016 Land Grant University Tax Education Foundation, Inc. 647

INDEX

Subject Index

#100-shareholder limit, for S corporations, 612008 Farm Bill. See Food, Conservation, and

Energy Act of 2008, and conservation reserve program payments

4-H Club and FFA projects, 354–363401(k) plan, as a choice for small businesses,

78–79

AA-B trusts and A-B-C trusts failure to fund B trust, 105–106 modifying, 103–105 overview, 98–99 undoing an existing, 103–105 when advantageous, 101–103 when unnecessary, 99–101ABLE accounts, new legislation, 497Accounting procedures, for de minimis safe

harbor, 270–271Accuracy-related penalties, 378–380Additional child tax credit, 478–479Additional first-year depreciation (AFYD), new

legislation, 487–489

Additional Medicare tax. See Medicare tax, additional

Advance premium tax credit (APTC) general information, 124, 141 and Medicaid or CHIP, 158 and PTC for year of marriage, 142–155Affiliated service groups, and Affordable Care

Act mandates, 130Affordable Care Act (ACA) employer mandate, 124–135, 383 excise tax, 124, 135, 136, 162, 174, 383 individual mandate, 138–141 introduction, 123 market reforms, 124, 132–135 new IRS guidance, 162–174 premium tax credit (PTC), 140–141 PTC for year of marriage, 142–155 reporting requirements, 136 return preparer due diligence, 156–161 and self-employed taxpayers, 137–138 small employer responsibilities, 136–138 special enrollment periods, 155–156 tax representative, and Form 2848, 246, 249Agricultural issues 4-H Club and FFA projects, 354–363 CCC loan with commodity sale, reporting,

353–354

Subject Index � � � � � � � � � � � � � � 647 Cases Index � � � � � � � � � � � � � � � � �663

FINAL COPYRIGHT 2016 LGUTEF

648 INDEX

Attribution rules, and the Affordable Care Act, 128–130

Audits changing the location of, 253–254 partnership rules, new, 422–426, 494–495Authorized and unauthorized activities, for

return preparers, 7–9Automobiles, employer-provided, 176–179,

182

BBack-door Roth IRAs, 83–86Backup withholding, 298Bad-debt deduction business bad debts, 557–560 limits on, 558–559, 562 nonbusiness bad debts, 560–563 and recovery of bad debt, 565 rules for bad debts, 563–565 timing of, 559–560, 562Bank Secrecy Act (BSA), 446, 447Bankruptcy, and cancellation-of-debt income,

544, 547, 551, 552, 553, 556Basis. See also Depreciation adjustments, 117, 430–437 and charitable contribution deductions,

190–191 definition, 114 of disallowed-loss property, 40–41 of easements, 346–348 estate basis reporting, 503–504 I.R.C. § 754 adjustments, 430–437 of jointly owned property, 120–121 of a life estate, 114–119 limitations for flow-through entities, 290–292 partnership’s basis general rule, 430 reduction, and cancellation-of-debt income,

548–553 after S corporation shareholder’s death,

416–417 statute of limitations for overstatement of,

506Biofuel plant property, additional first-year

depreciation, 489

conservation reserve program payments, 338–345

cooperatives, and DPAD, 233–235 easements, 345–350 farm debt, and cancellation-of-debt income,

545, 547, 553 food inventory, contributions of, 324–325 hoop structures, cost recovery of, 330–338 multiple entities, tax benefits of, 363–365 tangible property regulations, new,

322–323 unharvested crops, valuation of, 350–352 vines and trees, bonus depreciation on,

325–330Airplane, business and personal use of,

179–180Aliens, resident vs. nonresident, 461. See also

Individual taxpayer identification number (ITIN); Nonresident aliens

Alternative minimum tax, and DPAD, 225American opportunity tax credit (AOTC) due diligence in determining, 2–6 new legislation, 478–480Amish taxpayers, 199–201Annual Filing Season Program (AFSP), and

practice before the IRS, 8, 249, 250Annuity, valuation of, 116Antiloss importation provisions, 495Appeals, IRS. See also Penalties and waivers conference, when and how to request, 255 mediation alternatives, 257 and penalties, overview, 390–391 process, 256Applicable financial statement (AFS), 272, 322Applicable large employer (ALE) Affordable Care Act requirements, 124 aggregated ALE groups, 125–130 attribution rules, 128–130 coverage requirement, 130–132, 134 determination of, 125 Architectural services, and DPAD, 240At-risk limits, 51–52Attorneys, practice before the IRS, 250


INDEX

Subject 649

Cancellation-of-debt (COD) income and capital gain income, distinguishing

between, 554 canceled debts, repayment of, 553 exceptions to, 544–546 and grantor trusts and disregarded entities,

545 information reporting, 569–570 and qualified personal residence debt, 544,

547, 554–556 and qualified real property business

indebtedness, 545 recognition of, 543–544 reduction in tax attributes, 546–553Capital gain income, distinguishing from

cancellation-of-debt income, 554Capital gains tax, and A-B trusts, 100Capital losses, unused, 110–111Caregivers, household. See Household

caregiversCasualty gains and losses of business property, 309–313 casualty definition, 304 and federal disaster areas, 318–320 of personal use property, 304–309CCC loan with commodity sale, reporting,

353–354Cents-per-mile rule, employer-provided auto,

176–177Charitable deductions for food inventory contributions, 190–192,

324–325 partner’s Schedule K-1 reporting, 287 unused, 109–110Charitable distribution from IRA, 193–194, 485Child and dependent care credit, 182Child tax credit (CTC), due diligence in determining, 2–6 new legislation, 478Circular 230 and competent practice, 28 and legal advice, 7 and representation before the IRS, 8 and tax advice, 8–9

Bipartisan Budget Act of 2015 (BBA), new audit rules, 422, 423–426, 494–495

Built-in gains tax, S corporation calculation, 408–409 definition, 405 lookback period, 494 net recognized built-in gain, calculation,

407–408 net unrealized built-in gain, calculation,

406–407 shareholder income, effect on, 409 year-end calculations, 409–410Business credits, new legislation, 491–494Business debt, 557–560, 563–565Business property, casualty loss rules,

309–318Business use of vehicle, calculation, 176–180

CC corporations charitable contributions deduction, 190–191 new filing deadlines, 498 and S corporation built-in gains tax,

405–410 and S corporation election termination, 411Cafeteria plans and employer flex contributions, 167–168 and employer payment plan, market

reforms, 165–166 examples, 170, 171 S corporation tax treatment, 404Canada-US Income Tax Treaty, 467, 470,

471Canadian resident decedents, 467Canadian source income, questions for tax

practitioners, 473–474Canadian tax returns estates and gifts, 471 general personal income tax, 467–468 passive income, 468 pensions, 470–471 real estate sales, 469–470 rental property, 468–469 US resident decedents, 471–472


650 INDEX

DData security. See also Identity theft case study, 25 and e-file program, 17–18 IRS security procedures, new, 259–262 legal requirements, 16–19 and privacy notices, 18, 30–31 and reporting security incidents, 21–22 resources for, 22 security program, development of, 19–21 and transcripts, IRS, 252–253 De minimis safe harbor for tangible property,

268–272, 279, 322–323Deadlines. See Filing deadlines, new legislation

onDebt. See Bad-debt deduction; Business debt;

Cancellation-of-debt (COD) income; Information reporting, debt-related; Nonbusiness debt

Debt instruments, reacquisition of in 2009 and 2010, 546

Deceased spouse’s unused exemption (DSUE), and portability, 99–100

Deductions bad-debt, 557–565 cost recovery, new legislation on, 486–490 individual, new legislation on, 482–483Defending Public Safety Employees’

Retirement Act, 495–496Defined benefit plan distributions from, 70Dependent care assistance, and S corporations, 405 and flexible spending arrangements,

183–184Dependents. See Child and dependent care

credit; Dependent care; Individual taxpayer identification number (ITIN), and dependents, new rules

Depreciable property, and related parties, 37–38, 40–41, 48–50

Depreciation. See also Basis additional first-year depreciation, new

legislation, 487–489

and tax practitioner’s fee, 11 and written advice, 8–9, 10Community property states, basis rules, 120,

121Commuting rule, employer-provided auto,

177–178Computer software, and DPAD, 235–236Conflicts of interest definition of, 13 disclosure and consent, 14–15 and divorce, case study, 23 and engagement letters, 9 identifying possible, 14 and related parties, case study, 24 waiver and example of waiver, 14–15Construction activities, and DPAD,

237–240Constructive ownership in controlled corporations, 38–39 of stock, 35–37Conservation easement credits, 302–304, 483Conservation reserve program payments,

338–345Consolidated Appropriations Act of 2016

(CAA of 2016), energy credits, 481–482, 493

Controlled corporations and constructive ownership, 38–39 and stock ownership, 38Controlled entity, definition of, 37–38Controlled groups, Affordable Care Act

mandates, 125–130 Cooperatives, agricultural and commodity sale with CCC loan,

353–354 and DPAD, 233–235Corporate taxpayers and IRS penalties, 375–376 time for payment of estimated taxes, 506Cost recovery deductions, new legislation,

486–490. See also DepreciationCPAs, practice before the IRS, 250Crowdfunding, 206–209


INDEX

Subject 651

Domestic production activities deduction (DPAD)

and agricultural cooperatives, 233–235 computing DPAD, 220–224 introduction, 213–214 limitations on DPAD amount, 224–225 and pass-through entities, 228–233 Puerto Rico, special rules, 490 reporting DPAD, 226–228 and specific industries, 235–243 terminology, 214–220Domestic production gross receipts (DPGR).

See also Domestic production activities deduction (DPAD)

allocations and calculation, 220–223 definition, 215–216Domicile, definition for gift tax purposes, 466Due diligence accounting firm liability, 6 and Affordable Care Act, 156 case studies, 24, 26 in determining EITC, AOTC, and child tax

credit, 2–6 and relying on client information, 10, 23

EEarly Interaction Initiative, IRS, 264–265Earned income tax credit (EITC) due diligence in determining, 2–6, 23 penalties for failure to exercise due diligence,

2 and Form 8867, 2, 4 new legislation, 480–481 retention of records for, 6Easements credits, 302–304 definition, 345 payments, and taxation of, 345–348 replacement property, 348–350Educational assistance programs general rule, 60 related party limitation, 60–61 S corporation fringe benefit, 404–405

basis of life estate, 117, 120, 121 bonus depreciation rules, 325, 326–327 and cancellation-of-debt income, 542–543 conventions, 337 cost recovery deductions, new legislation,

486–490 claiming, 337–338 hoop structures, cost recovery of, 330–338 MACRS rules, 325 and partnership basis adjustment, 437 recovery period, general rules, 330–331 regulation changes, 276 safe harbors for tangible property, 268–277,

322–323 UNICAP rules, 326 and vines and trees, 325–330Differential wage payments tax credit, 493Disability insurance, S corporation tax

treatment, 403Disallowed loss. See Loss disallowance, and

related partiesDisaster relief payments, 318–319Discharge of debt, and 36-month nonpayment

period, 568–569. See also Cancellation-of-debt (COD) income

Disclosure of client data. See also Security breach, reporting

examples of consent to disclosure, 24, 28, 27, 30, 31

unauthorized, penalties for, 395 when permissible, 16–17Disproportionate distribution, of partnership

assets, 421–422Disqualified persons, self-directed IRA, 65Disregarded entity, ownership by partnership,

429Distributions, retirement plan early distributions, 70–72 inherited accounts, 76–77 regular, 67–70 required minimum distributions, 72–75 required minimum IRA distributions to

charity, 193–194, 485Divorce, and property transfers, 62


652 INDEX

Estates basis, 114–121 basis reporting, new legislation, 503–504 Canadian tax returns, 471 carryforwards, unused, 108–110 estate tax exemption, portability, 98 failure to file Form 1041, 112–113 income tax, 106–113 inherited accounts, distributions from, 77 nonresident aliens, estate tax for, 466–467 planning, 98–106 preportability tax planning, 98–99 qualified production activities income, 233 as S corporation shareholder, 411–412 state estate tax, 103Executor, for estate, 107, 112Expanded affiliated group (EAG), and DPAD,

223–224Expensing limits, new legislation, 489Extension, for filing information returns,

381–382

FFailure-to-file (FTF) and failure-to-pay (FTP)

penalties, 370–373Failure-to-deposit penalties, 376–378Fair auction, tax consequences for buyers at,

362–363Family shareholder provision for counting

S corporation shareholders, 61Fantasy sports, 209–212Farming. See Agricultural issuesFATCA. See Foreign Account Tax Compliance

Act (FATCA)FBAR (Report of Foreign Bank and Financial

Accounts). See also Streamlined filing compliance procedures (SFCP); Offshore Voluntary Disclosure Program (OVDP)

delinquent submission procedure, 454 filing requirement, 447, 498 penalties and relief, 391–393, 447 and power of attorney, 248–249Federal disaster areas, casualty loss rules,

318–320

Educator expenses, new legislation, 482E-file, security standards, 17–18Electricity production, income from, and

DPAD, 241Electronic data, protecting, 16–22. See also Data

security; Identity theftElectronic filing waiver, 381Embedded services, and domestic production

gross receipts, 215–216Employee vs. independent contractor

characterization. See Independent contractor vs. employee characterization

Employer mandate, Affordable Care Act applicable large employer (ALE)

determination, 125 controlled groups, for ALE status,

125–130 coverage requirements, 130–132,

132–134 fringe benefit payments, and affordable

coverage, 171 and group health plans, 132, 134 IRS enforcement, 132, 135 and market reforms, 132–135 overview, 124, 133 transition rules, 131–132Employer payment plan (EPP), and market

reforms, 162, 163, 165, 166Employer-provided autos and airplanes,

176–180Employer shared responsibility payment

(ESRP), 124, 132, 133. See also Employer mandate

Employment taxes, delinquent, and IRS initiative, 264–265

Energy credits business, 491, 493 individual, 481–482Engagement letter, contents and example of,

9–13Engineering services, and DPAD, 240Enrolled agents, practice before the IRS,

249–250Equitable relief. See Joint liability relief,

proposed regulations


INDEX

Subject 653

Forms (IRS) 926, Return by a U.S. Transferor of Property

to a Foreign Corporation, failure to file, 394

1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, 437–440

1040NR, U.S. Nonresident Alien Income Tax Return, 461, 462

1041, U.S. Income Tax Return for Trusts and Estates, 112–113

1065, U.S. Return of Partnership Income, Schedule K-1, 284–288, 290–293

1095-A, 1095-B, and 1095-C (Affordable Care Act), 156–161

1099-A, Acquisition or Abandonment of Secured Property, 566, 569

1099-C, Cancellation of Debt, 566, 567, 568, 569

1099-MISC, Miscellaneous Income, and 4-H projects and fair auctions, 363

1099-PATR, Taxable Distributions Received From Cooperatives, 353–354

1120S, U.S. Income Tax Return for an S Corporation, Schedule K-1, 284, 288–293

2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, 375

2553, Election by a Small Business Corporation, 417, 418

2848, Power of Attorney and Declaration of Representative, 107, 246–249

3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, failure to file, 393

3520-A, Information Return of Foreign Trust With a U.S. Owner, failure to file, 393–394

5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, failure to file, 394

5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business, failure to file, 394

Federal Trade Commission rules. See Financial Privacy Rule (FTC); Safeguards Rule (FTC)

FFA. See 4-H Club and FFA projectsFiling deadlines, new legislation on,

497–498Film and television production, cost recovery,

490Financial Privacy Rule (FTC), 18FIRPTA. See Foreign Investment in Real

Property Tax Act of 1980 (FIRPTA)First-time abatement (FTA), 388–389First-time homebuyer, IRA penalty exception,

72Flexible spending arrangement and dependent care, 183–184 and health care, 162, 168 Flow-through entities. See Pass-through entities;

Partnership; S corporation; Schedule K-1 (Forms 1065 and 1120S)

Food or beverage sales, and DPAD, 240–241

Food, Conservation, and Energy Act of 2008, and conservation reserve program payments, 340–341

Food inventory, charitable contributions of, 190–192, 324–325, 490

Foreign Account Tax Compliance Act (FATCA), 446, 447, 455

Foreign assets, reporting requirements, 446–457

Foreign earned income, and additional child tax credit, 479. See also FBAR; Foreign assets; International tax penalties

Foreign financial institutions under investigation, list, 474–476

Foreign Investment in Real Property Tax Act of 1980 (FIRPTA)

exceptions to withholding, 464 liability for withholding, 463 property subject to, 463 reporting withholding tax, 465 withholding certificate, 464–465Foreign issues checklist, for tax practitioners,

472–474


654 INDEX

Gross income, exclusions from, and new legislation, 483–486

Group health plans, and the Affordable Care Act, 132, 134, 135, 162–165, 171

HHealth Insurance Marketplace. See Affordable

Care Act (ACA)Health flex contribution, 166, 167–169Health insurance, S corporation tax treatment,

401–403. See also Affordable Care ActHealth reimbursement arrangement (HRA),

and market reforms, 162–165, 166–167Health savings account, S corporation tax

treatment, 403High-low method, for travel substantiation, 59Higher-education. See also Educational

assistance programs expenses, IRA distributions for, 71 expenses, new legislation, 496–497 health care arrangements, 174 student loans, and cancellation-of-debt

income, 547–548 and work college program, 484Hobby or business income, and fantasy sports,

210–211Hoop structures, cost recovery of, 330–338Horticultural cooperatives, and DPAD,

233–235Hot asset regulations, I.R.C. § 751, 420–422Household caregivers, taxation of wages,

180–183Housing exclusion, for ministers, 196–197

IIdentity theft. See also Data security Form 14039, Identity Theft Affidavit,

261–262 IRS impersonation scam, 258 IRS security procedures, 259–262 recognizing, 258 resources for, 263 victims of, assisting, 259Improvements, qualified, 272–277, 486

8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships, failure to file, 394

8867, Paid Preparer’s Earned Income Credit Checklist, 2–5

8903, Domestic Production Activities Deduction, 226–228

8938, Statement of Specified Foreign Financial Assets, failure to file, 393

14654, Certification by U.S. Person Residing in the United States for Streamlined Domestic Offshore Procedures, 451, 452–453, 454

W-7, Application for IRS Individual Taxpayer Identification Number, 458, 459–460

Fraud. See Tax fraudFringe benefits. See also Cafeteria plans;

Dependent care; Educational assistance programs

and Affordable Care Act employer mandate, 171

S corporation, 400–405Full retirement age, and social security, 87Future State Initiative, IRS, 263–264

GGain exclusion, primary residence, 118Gain or loss nonrecognition. See

Nonrecognition of gain or lossGain or loss recognition, and cancellation-of-

debt income, 542–543Gains and losses, casualty, 308–320Gambling, and fantasy sports, 210Generation-skipping transfer tax exemption,

and estates, 102–103Gift tax, and nonresident aliens, 466Gifts Canadian tax treatment of, 471 of assets, 41 unused charitable deductions,

109–110 of passive activity interest, 54Grantor trusts and disregarded entities, and

cancellation-of-debt income, 545


INDEX

Subject 655

for S corporations, 288–290, 414–416 withholding tax, FIRPTA, 465Information returns. See Information reporting Information security, resources for, 22. See

also Security breach, reporting; Security program; Data security

Innocent spouse relief. See Joint liability relief, proposed regulations

Insolvency, and cancellation-of-debt income, 544, 547, 551, 552, 553, 556

Installment sales and cancellation-of-debt income, 543, 546 and lease options, 204, 205 and related parties, 45–48Insurance, S corporation tax treatment,

401–404. See also Affordable Care ActInternational tax penalties, 391–395Inventory, loss of, 313IRAs and 4-H Club and FFA project income,

361–362 back-door Roth, 83–86 and charitable distributions, 193–194, 485 distributions from, 67–70 early distribution penalty, 70–72 inherited accounts, distributions from,

76–77 required minimum distributions, 72–77 Roth IRA distributions, 69–70 self-directed, 64–67 SIMPLE IRA, as a choice for small

businesses, 80–81 SIMPLE IRA, rollover to, 496 and social security, examples, 94–96 traditional IRA distributions, 68I.R.C. § 179 deduction, 44, 50, 286–287, 334,

335, 337, 363–364, 489I.R.C. § 199 pass-through rules, 228–229 I.R.C. § 267(b) and (c), 34–35 I.R.C. § 280A, 54–55, 57I.R.C. § 318, 35–37I.R.C. § 351, 49I.R.C. § 501(c)(3) tax-exempt organizations

update, 437–443

Incidental expenses, and travel substantiation, 60

Income in respect of a decedent (IRD), 111, 417

Independent contractor vs. employee characterization

business impact of, 296–297 common-law factors, 293–295 and the Affordable Care Act, 125 information reporting, 297–298 introduction, 293 IRS determination, request for, 295–296 and Uber drivers, 296Indian employment credit, 492Indian reservation property, recovery periods,

487Individual mandate, Affordable Care Act,

138–142. See also Employer mandate; Small business, and the Affordable Care Act

Individual shared responsibility payment (ISRP), 138, 140–141

Individual taxpayer identification number (ITIN). See also Nonresident aliens

changes to program, 458, 459, 505 and dependents, new rules, 458 Form W-7, 459–460 and Notice 2016-48, new procedures,

460–461 obtaining, 458, 460, 505Information reporting Affordable Care Act, 136 bad debts, 560, 562–563 casualty gains and losses, 304–320 de minimis errors, safe harbor for, 506 debt-related, 566–570 delinquent international returns, 454 DPAD, 226–228 filing requirements and due dates, 380–381,

497–498 foreign assets, 446–448 independent contractors, 297–298 on-demand platforms, 282 partnerships, 286–288 penalties, 380–382


656 INDEX

Life insurance, S corporation tax treatment, 403–404

Like-kind exchanges general rules, 42 and easements, 348–349 and related parties, 42–44Limited owners, and self-employment tax,

426–428Livestock. See Agricultural issuesLoan guarantees, and bad debt, 564–565Loss disallowance, and related parties, 37,

40–41Loss deductions. See also Casualty gains and

losses at-risk limits, 51–52 general rule for, 52 limitations for flow-through entities,

290–293 passive activities, 53, 293Low-income housing tax credit, 481, 484, 491

M MACRS rules, depreciation, 325Manufactured, produced, grown, or extracted

(MPGE), 216–220. See also Domestic production activities deduction (DPAD)

Market reforms, Affordable Care Act, 132–135, 162, 174

Marketplace. See Affordable Care Act (ACA)Matching expense deductions, from related

party transactions, 39–40Meals and lodging, S corporation tax treatment,

404Medical device excise tax, suspension of, 505Medical expenses and health reimbursement arrangements,

135, 164–165 and household employee, 183 and IRA contributions, 71Medicare tax, additional and conservation reserve program payments,

342–344 and DPAD, 225Mine safety equipment, cost recovery, 489

I.R.C. § 501(c)(4) tax-exempt organizations, new filing requirements, 443–444

I.R.C. § 707(b)(1) and (2), 37, 50I.R.C. § 751 hot asset regulations, 420–422I.R.C. § 754 basis adjustments, 430–437I.R.C. § 861 method, 221 I.R.C. § 1239, 37–38, 48–49I.R.C. § 1563(d) and (e), 38–39I.R.C. § 6695 return preparer penalties, 397IRS audits, changing the location of, 253–254 Early Interaction Initiative, 264–265 e-file security standards, 17–18 Exempt Organizations, 439, 440, 441 Future State Initiative, 263–264 impersonation scam, 258 information reporting, burden of proof,

569–570 Office of Appeals, 254–257 reforms, 506–507 representation before, 8, 249–250 security procedures, new, 259–262 transcript services, 251–253

JJoint liability relief, proposed regulations,

183–189Joint tenants. See Jointly owned propertyJointly owned property, basis after death of

co-owner, 120–121

KKiddie tax, and 4-H Club and FFA projects,

358–361

LLease option introduction, 201 recharacterization as a sale, 204–205 tax effects, 201–203Lease value rule, employer-provided auto,

178–179Life estate, basis of, 114–119


INDEX

Subject 657

Mine team rescue training, tax credit, 492Minimum essential coverage (MEC), 124, 138.

See also Affordable Care Act; Group health plans; Premium tax credit

Ministers, income and deductions, 195–199Mortgage cancellation of home mortgage debt, 484 insurance premium deductions, 482 secondary liability, 562Motorsports entertainment property, recovery

period, 487Multiple entities, tax-planning benefits,

363–368

NNatural gas, and DPAD, 241–243Net investment income tax (NIIT) and A-B trusts, 100–101 and conservation reserve program payments,

342Net method, and fantasy sports income,

211–212Net operating loss (NOL) and bad-debt deductions, 565 and cancellation-of-debt income, 542, 547 unused carryforward of deduction, 109Net recognized built-in gain, 407–408. See also

Built-in gains tax, S corporationNet unrealized built-in gain (NUBIG), 406–407,

408. See also Built-in gains tax, S corporationNew legislation, table of expiration dates,

507–511Nonaccrual-experience method, for business

bad debts, 560Nonattorneys, practice before Tax Court, 8Nonbusiness debt, 561–565Nondepreciable property, sale to related party,

45Nonrecognition of gain or loss like-kind exchanges, 42–44 property transfers, 62Nonresident aliens estate tax for, 466–467 exemptions for spouse and children, 462

gift tax for, 466 income tax returns, 461–462 individual taxpayer identification numbers,

458–461 taxation of, 461–465Nonsigning tax return preparer, 5Notice 2006-108, 2006-51 I.R.B. 1118, 338–340Notice 2016-48, 2016-33 I.R.B. 235, new ITIN

procedures, 460–461

O Office of Appeals (IRS), 254–257Offshore Voluntary Disclosure Program

(OVDP) changes to, 455 frequently asked questions, 455–457 and FBAR penalty relief, 392 overview, 455 penalties, 455, 456Oil and gas industry, and domestic production

gross receipts, 241–243On-demand platforms, 282 Online fund-raising. See CrowdfundingOnline tax providers. See E-file security

standardsOpt-out payments, employer health plans, 166,

169–170

PPartnership. See also Pass-through entities audit rules, new, 422–426, 494–495 basis adjustments, I.R.C. § 754, 430–437 disregarded entity ownership, 429 distribution of property, 431, 432 and DPAD, 228–233 failure to file return, 372–373 filing deadlines, new, 498 hot asset regulations, I.R.C. § 751, 420–422 interest, buyout, 50–51 reporting, Schedule K-1 (Form 1065),

286–288 Schedule K-1 overview, 285–286 self-employment tax for limited owners,

426–428


658 INDEX

transfer of interest, 431–432, 433, 435–436Parsonage allowance, 196–197Passive activity general rule for loss deduction, 52 gift of interest, 54 limitations for flow-through entities, 293 sale to related person, 53–54 sale to unrelated person, 53Passive income, Canadian tax treatment of,

468Pass-through entities. See also Partnership;

S corporation and DPAD, 228–233 and Schedule K-1 (Forms 1065 and 1120S),

284–293PATH (Protecting Americans from Tax Hikes)

Act of 2015 business credits, 491–494 charitable deductions of food inventory,

190, 191, 324–325, 490 cost recovery deductions, 486–490 depreciation changes, 276, 326–327 energy credits, 481, 482 exclusions from gross income, 483–486 expiration dates table, 507–511 filing deadlines, 497–498 higher education and tuition, 496–497 IRA charitable distributions, 193 IRS reforms, 506–507 ITIN renewal, 505 partnership audit rules, 494–495 preparer penalty, 499 retirement and savings, 495–497 S corporation provisions, 494 tax credit due diligence requirements, 2 tax credits, individual, 478–479 tax-exempt organizations, 442 timber gains, 504–505 withholding tax on real property sales,

463Patient Protection and Affordable Care Act.

See Affordable Care Act (ACA)Payroll taxes, delinquent, and IRS initiative,

264–265

Penalties and waivers (IRS) accuracy-related penalties, 378–380 Affordable Care Act coverage, 383–384 appeals, 390–391 civil fraud penalty, 379 defenses and relief, 384–390 due diligence penalty and waiver, 6–7 erroneous-claim penalty, 380 failure-to-deposit penalties, 376–378 failure-to-file (FTF) and failure-to-pay

(FTP) penalties, 370–373 FBAR penalties and relief, 391–393,

453–454, 456 foreign financial accounts, failure to file, 447,

448 Form 1041, consequences of failure to file,

112–113 individual and business penalties, 370–383 information reporting penalties, 380–382 international penalties, 391–395 introduction, 369 joint liability relief, 186 new legislation, 499–502 preparer penalties, 395–397 reasonable cause relief, 371–372, 382–383,

384–387, 393, 396–397, 419, 454 relief, individual and business, 384–390 required minimum distribution, failure to

take, 75 streamlined filing compliance procedures

(SFCP) penalties, 453–454 table summarizing, 389–390 trust fund recovery penalty, 264 unreasonable position penalty, 395–396Per diem method, for travel substantiation,

58–59Personal information, definition of, 21–22.

See also Security breach, reporting; Security program; Data security

Personal residence debt, qualified, 554–556 Personal use property, casualty loss rules,

304–309Personal use of vehicle, calculation,

176–180


INDEX

Subject 659

and nonresident aliens, income reporting, 462

personal use, casualty loss rules, 304–309 related parties, sales between, 40–41 sales proceeds, and non-US taxpayer,

463–465 self-directed IRA, purchase by, 64–65 tangible, regulations update, 268–277,

322–323 transfers between spouses, 62Protecting Americans from Tax Hikes Act of

2015. See PATH (Protecting Americans from Tax Hikes) Act of 2015

Protecting client data, tax practitioner’s obligation. See Data security

PTIN holders, practice before the IRS, 250Public safety employees, early retirement

distributions, 495–496

QQualified charitable distributions (QCDs),

193–194Qualified production activities income (QPAI).

See also Domestic production activities deduction (DPAD)

allocating at entity level, 232 calculating at entity level, 230–232 definition, 214–215Qualified terminable interest property (QTIP)

election, and estate planning, 102, 104, 105Qualifying production property (QPP), 216–

220. See also Domestic production activities deduction (DPAD)

RRacehorses, cost recovery deduction, 486Railroad track maintenance tax credit, 492Real estate. See PropertyReal property. See PropertyReasonable Cause Assistant (RCA), 387Reasonable cause relief, of IRS penalties,

371–373, 382–383, 384–387, 393, 396–397, 419, 454

Records, retention of for EITC, AOTC, and child tax credit, 6

Planting and grafting, new bonus depreciation rules, 326–330, 488

Portability, estate tax exemption, 98–100Power of attorney for Affordable Care Act matters, 249 and estates, 106–108 for FBAR matters, 248–249 and Form 2848, revised, 246–249Practice of law, authorized and unauthorized,

7–9, 25–26Premium tax credit (PTC) and applicable large employers, 124, 132 and child turning 26, 156 eligibility and other coverage, 157–158, 163,

166–167, 169, 171 employer-sponsored coverage after

Marketplace enrollment, 159–160 general information, 124, 141–142 and health reimbursement arrangement,

163, 166–167 and self-employed taxpayers, 137–138 for year of marriage, calculation with

example, 142–155Preproductive period costs, vs. preparatory

costs, 326Primary residence, gain exclusion, 118Privacy notices, practitioner’s duty to give,

18Professional standards, conflict with, 10Prohibited transactions, for IRAs, 65–66Property. See also Basis; Depreciation business, casualty loss rules, 309–318 Canadian tax treatment of real estate sales,

469–470 Canadian tax treatment of rental property,

468–469 and cancellation-of-debt income, 542–543,

545, 547 and domestic production gross receipts, 215,

237–240 easements, 345–350 Foreign Investment in Real Property Tax

Act of 1980 (FIRPTA), 463–465 IRA, financing purchase, 65


660 INDEX

tangible property regulations, new, 278–284 vacation rental rules, 283–284Repair regulations, for rental property,

278–282Replacement property, and easement, 348–349Report of Foreign Bank and Financial

Accounts. See FBARRepresentation before the IRS, 8, 249–250 in Tax Court, 8Required minimum distributions (RMDs) calculation of, 73–74 definition, 72–73 failure to take, 75 and inherited accounts, 76–77 and qualified charitable distributions, 193 from retirement plans, 72–75Res judicata and collection of tax from an heir, 113 and innocent spouse relief, 184–185Research credit, 491Restaurant and retail establishments 15-year recovery period, 486 safe harbor for, 272–275Retirement, new legislation, 495–496. See also

Retirement plans; Social security benefitsRetirement plans back-door Roth IRA, 83–86 distributions from, 67–77 early distributions from, 70–72 required minimum distributions, 72–77 self-directed IRAs, 64–67 for small businesses, choosing, 78–82Return preparer and Affordable Care Act, best practices,

156–161 authorized and unauthorized activities, 7–9 deceased, 248 definition of, 16, 395 nonsigning, 5 obligation to protect client data, 17–18 penalties, 395–397 representation before the IRS, 8, 249–250

Recovery exclusion, and tax benefit rule, 300–302

Related parties at-risk limitations, 51–52 and cancellation-of-debt income, 543 constructive ownership of stock, 35–37 debt transactions, new legislation, 495 definitions, 34–38 depreciable property, gain from, 48–50 disclosing information between, 17 educational assistance programs, 60–61 installment sales, 45–48 and I.R.C. § 179, 44 like-kind exchanges, 42–44 matching expense deductions, 39–40 partnership interest buyout, 50–51 passive activity, sale of, 52–54 property transfers between spouses, 62 rental property, 54–58 S corporation 100-shareholder limit, 61 sale of property at a loss, 40–41 travel expenses, substantiation of, 58–60Reliance on client-provided information, and

due diligence, 10, 23Remainder interest, life estate, 118, 119Remainderperson. See Remainder interest, life

estateRemodel-refresh project. See Restaurant and

retail establishments, safe harbor forRental property 14-day rule, 282–283 Canadian tax treatment of, 468–469 to family member, 55–56 general rule for deduction disallowance,

54–55 improvements and repairs to, 278–282 IRA, self-directed, management of, 66–67 not-for-profit, 58 personal use days, 55, 282–284 repairs or improvements to, 278–282 reporting expenses, 57 shared equity financing arrangement, 56–57 short-term rentals, 282–284


INDEX

Subject 661

electing the safe harbor, 275–277 for retail and restaurant establishments,

272–275 routine maintenance, 279–280 for small taxpayers, 278–279Safeguards Rule (FTC), 18. See also Security

programSales tax, deduction of state and local, 483Schedule K-1 (Forms 1065 and 1120S) basis limitations, 290–292 format, 284–285 losses, flow-through, 290–293 partnership reporting, 286–288 passive activity limitations, 293 S corporation reporting, 288–290Securities, worthless, and bad debt, 563–564Security of personal information. See Data

security; Security programSecurity breach, reporting, 21–22, 25Security program development of, 18 objectives, 19–21 requirements, 19Self-directed IRA definition, 64 prohibited transactions, 65–66 real property, purchasing, 64–65 rental property, managing, 66–67 UBTI and UDFI, 67Self-employed health insurance deduction, and

S corporations, 402Self-employed taxpayers, and the Affordable

Care Act, 137–138Self-employment tax and 4-H and FFA projects, 355 and conservation reserve program payments,

338–345 and disregarded entities, 429 for limited owners, 426–428 and ministers, 195–196 and multiple entities, 364–365SEP IRA, as a choice for small businesses,

79–80. See also IRAs

signing, 5 submissions to the IRS, 8 unenrolled, 246–247 willful and reckless conduct penalty, 499Roth IRA. See also IRAs back-door Roth, 83–86 distributions, 69–70 and social security benefits, examples, 94–96Routine maintenance safe harbor, for rental

property, 279–280

SS corporation 100-shareholder limit, and related parties, 61 built-in gains tax, 405–410, 494 charitable contributions of food inventory,

192 closing of the books, 414–416 death of shareholder, 411–417 election, 417–420 fringe benefits, 400–405 partnership comparison, 411, 416 penalties, IRS, 375–376 relief for late election, 418–420 reporting, Schedule K-1 (Form 1120S),

288–290 Schedule K-1 overview, 285–286 shareholder income reporting, 414–415 stock, basis adjustment of, 494S election and built-in gains tax, 405, 407, 408 and death of shareholder, 411, 412 effect of, 418 Form 2553, filing, 418 introduction, 417 relief for late or defective elections, 418–420Safe harbors for calculating W-2 wages,

231–232Safe harbor for de minimis errors on

information returns, 506Safe harbors for rental property, 278–282Safe harbors for tangible property de minimis, 268–272, 322–323


662 INDEX

Stop-work provisions, and engagement letter, 10–11

Streamlined filing compliance procedures (SFCP)

application, 449–454 and FBAR penalty relief, 392 overview, 448–449 penalties, 453–454 willful vs. nonwillful conduct, 450–451Student health plans, and market reforms,

174Student loans, and cancellation-of-debt income,

547–548Surface Transportation and Veterans Health

Care Choice Improvement Act of 2015 (2015 Transportation Act), 498, 505, 506

TTangible property regulations. See also Safe

harbors for tangible property and farm clients, 322–323 update of, 268–277Tax advice vs. legal advice, 7–8Tax benefit rule, 299–304Tax Court, representation in, 8Tax credits. See Additional child tax credit;

American opportunity tax credit (AOTC); Child tax credit (CTC); Business credits, new legislation; Deductions, new legislation on; Earned income tax credit (EITC); Energy credits; Low-income housing tax credit; Premium tax credit (PTC); Small business, health care tax credit

Tax Equity and Fiscal Responsibility Act (TEFRA), 422–423

Tax-exempt organizations, update, 437–444Tax-exempt status, determination, 439,

440–442Tax fraud. See also Penalties and waivers (IRS)civil fraud penalty, 379–380 and disclosing client information, 17, 393 identity theft, 258–263Tax return preparer. See Return preparerTEFRA. See Tax Equity and Fiscal

Responsibility Act (TEFRA)

Separation of liability. See Joint liability relief, proposed regulations

Shared equity financing arrangement, 56–57Signing tax return preparer, 5SIMPLE IRA plan. See also IRAs choice for small businesses, 80–81 rollover from traditional IRA, 496Simplified employee pension plan. See SEP

IRASmall business and the Affordable Care Act, 124, 134,

136–138 health care tax credit, 137 retirement plan, choosing, 78–82 simplified overall method, and domestic

production gross receipts, 221, 222, 231–232

stock, exclusion from gross income, 486Small Business Health Options Program

(SHOP), 136–137Social security benefits 2016 amounts, 87 amounts, overview, 86–87 examples, 93–96 law changes, 87–88 and life expectancy, 89 minimizing tax on, 93–96 resources for, 96 taxability of, 91–92 when to start taking, 88–91 working while receiving, 90–91Social security tax, religious exemptions,

199–200Specific charge-off method, for business bad

debts, 559–560Split entities, tax benefits of, 367–368State estate tax, 103Step transaction doctrine, 86State tax credits, and tax benefit rule, 302Stock related party ownership, 35–37 qualified small business, gain from sale

excluded, 486 S corporation, basis adjustment of, 492


INDEX

Subject 663

valuation of, 350–352UNICAP rules, and depreciation, 326Unreimbursed medical expenses, and IRA

distributions, 71Unrelated business taxable income, 67 Unrelated debt-financed income, 67

VVehicles employer-provided, 176–179 energy credits, 482Vines and trees, bonus depreciation on,

325–330

WW-2 wages, calculating at entity level, 230–232Withholding tax on real estate sales non-US resident withholding, 463–465 state withholding, 463Work opportunity tax credit, 493–494Worker classification, impact of, 296–297. See

also Independent contractor vs. employee classification

Wrongfully incarcerated individual, and exclusions from gross income, 485

Cases Index

ADVO, Inc. & Subsidiaries v. Commissioner, 141 T.C. 9 (2013) [A taxpayer who distributed direct mail ads was not eligible for the domestic production activities deduction because the taxpayer did not bear the benefits and burdens of ownership while the advertising material was printed.], 218

Benton v. Commissioner of Internal Revenue, 197 F.2d 745 (5th Cir. 1952) [The parties to a contract intended the contract to be a lease with an option to purchase, and the Tax Court’s finding that the lease agreement was a conditional sale was erroneous.], 204

Bledsoe v. United States, 20 A.F.T.R. 2d (RIA) 5282 (N.D. Okla. 1967) [The taxpayer sold road easements that covered a portion of

Timber valuation, 352, 504–505Trade or business determination and 4-H and FFA projects, 355 and farming, 340Trade Preference Extension Act of 2015 (TPE

Act), corporate tax payments, 506 penalties, new information reporting,

499–502 and tax credits, 479, 480Traditional 401(k) plan. See 401(k) planTranscripts, IRS, 251–253Transit fringe benefit exclusion, 484–485Travel expenses, substantiation of accountable plans, 58 general substantiation rules, 58 high-low method, 59 per diem method, 58–59 and related parties, 59–60Trees and vines, bonus depreciation on, 325–

330. See also Timber valuationTrust fund recovery penalty, 265Trusts. See also Estates A-B and A-B-C trusts, 98–106 decanting, 105 inherited accounts, distributions from, 77 qualified production activities income, 233 as S corporation shareholder, 412–413 tax exemption, portability, 98Tuition. See also Higher-education; Student

loans section 529 account distribution, 497 qualified deduction, 483

UUnauthorized disclosure or use of tax return

information, 395Unauthorized practice of law. See Practice of

law, authorized and unauthorizedUber drivers, classification of, 296Unenrolled return preparer, 246–247 Unharvested crops in easement, 348


664 INDEX

Commissioner v. Tufts, 461 U.S. 300 (1983) [When a taxpayer sells or disposes of property subject to a nonrecourse obligation that exceeds the fair market value of the property, the amount realized on the sale includes the outstanding amount of the obligation.], 554

Corduan v. Commissioner, T.C. Summary Opinion 2001-74 [Filing Form 1099-A does not necessarily imply that the debtor received cancellation-of-debt income.], 569

Cozzi v. Commissioner, 88 T.C. 435 (1987) [Income from discharge of indebtedness must be included in income when there is an identifiable event that indicates that the debt was discharged.], 569

Estate of Farrier v. Commissioner, 15 T.C. 277 (1950) [The donor made a gift of cattle before recognizing any income on the cattle. Thus, profit realized on a later sale of the cattle by the donee is taxed to the donee.], 357

Federal Home Loan Mortgage Corporation v. Commissioner, 125 T.C. 248 (2005) [In a lease with an option to purchase, an option fee is an open transaction, and there is no ascertainable income or gain until the option is terminated or exercised.], 201

Gardner v. Conway, 234 Minn. 468 (Minn. 1951) [Determination of a difficult or complex question of law is the practice of law.], 7–8

Gibson & Associates, Inc. v. Commissioner, 136 T.C. 195 (2011) [A taxpayer’s receipts for renovation activities were domestic production gross receipts to the extent the renovations materially increased the value of the property, substantially prolonged the useful life of the property, and/or adapted the property to a new or different use.], 237

Helvering v. Horst, 311 U.S. 112 (1940) [A taxpayer cannot assign to another taxpayer income that the taxpayer earns, creates, and enjoys such that the income is taxed at the other taxpayer’s marginal tax rate.], 357

Inaja Land Co., Ltd. v. Commissioner, 9 T.C. 727 (1947), acq. 1948-1 C.B. 2 [A flood easement did not directly affect the

the taxpayer’s property, but the amounts received for the easements reduced the basis of the taxpayer’s entire property (before the taxpayer had to report any gain) because the easements restricted the taxpayer’s use of the remaining property.], 347

Briggs v. Commissioner, T.C. Summary Opinion 2004-22 [The taxpayer did not have to reduce her wage income by her Schedule C (Form 1040) losses for purposes of computing the earned income limitation on the standard deduction.], 358

Brown & Williamson Tobacco Corp. v. United States, 369 F. Supp. 1283 (W.D. Ky. 1973) [Tobacco storage sheds were storage facilities and not buildings because they were not reasonably adaptable to purposes other than for storage of tobacco.], 335

Bundy v. United States, 59 A.F.T.R. 2d (RIA) 87-682 (D. Neb. 1986) [A flat storage building that consisted of steel walls and a roof on a concrete slab was not a single-purpose livestock or horticultural structure.], 332

Calvin v. United States, 354 F.2d 202 (10th Cir. 1965) [In the absence of any express statutory language, only the taxpayer who sustains a loss is entitled to the deduction.], 109

Carlson v. Commissioner, 116 T.C. 87 (2001) [Assets that are exempt from creditors under state law must be included in determining whether a taxpayer qualifies to exclude cancellation-of-debt income from gross income because of insolvency.], 544

Clark v. Commissioner, T.C. Memo. 2015-175 [Debt was considered discharged when the creditor did not receive payment for a 36-month period.], 569

Commissioner v. Groetzinger, 480 U.S. 23 (1987) [To be engaged in a trade or business, the taxpayer must be involved in the activity with continuity and regularity, and the taxpayer’s primary purpose for engaging in the activity must be for income or profit.], 340


INDEX

Cases 665

apply even when there is hostility between family members.], 35

Morehouse v. Commissioner, 140 T.C. 16 (2013) [The Tax Court held that the taxpayer was liable for self-employment tax on CRP payments.], 341, 342

Morehouse v. Commissioner, 769 F.3d 616 (8th Cir. 2014) [The US Circuit Court of Appeals for the Eighth Circuit overturned the Tax Court ruling and held that CRP payments are payment for the rental of real estate and are exempt from self-employment tax.], 341, 342

Oregon Trail Mushroom Company v. Commissioner, T.C. Memo. 1992-293 [The court applied the Treas. Reg. § 1.48-1(e)(1) appearance test and functional test to determine that a mix and storage site and a mechanical unit used in growing mushrooms were buildings.], 332

Parker v. Commissioner, 117 F.3d 785 (5th Cir. 1997) [The IRS has no duty to investigate a third-party payment report that is not contested by the taxpayer.], 569

Portillo v. Commissioner, 932 F.2d 1128 (5th Cir. 1991) [The IRS had a duty to investigate whether amounts reported to the taxpayer on a contested Form 1099 were accurate and supported by books, receipts, or other records.], 569

Raymond S. McGaugh v. Commissioner, T.C. Memo. 2016-28 (2016) [At the taxpayer’s request, the custodian of the taxpayer’s self-directed IRA wired funds from the IRA to a corporation to purchase stock of the corporation. The corporation issued the stock more than 60 days later. The Tax Court found that the transaction was not a taxable distribution from the IRA because no stock passed through the taxpayer’s hands.], 64–65

Ronald Moran Cadillac, Inc. v. U.S., 385 F.3d 1230 (9th Cir. 2004) [If an otherwise deductible amount is deferred by I.R.C. § 267(a)(2), and prior to the time it is includable in the payee’s gross income, the related party relationship between the payer and the payee ceases to exist, the

taxpayer’s entire property, but the taxpayer could reduce the basis of the entire property (prior to reporting any gain on the sale of the easement) because the extent of future flooding was unknown.], 347

Iske v. Commissioner, T.C. Memo. 1980-61, aff’d 636 F.2d 1225 (8th Cir. 1980) [The taxpayer could exclude eminent domain payments for power line easements to the extent the taxpayer’s basis was allocable to the immediate acreage covered by the easements.], 346

Jackson v. Commissioner, T.C. Memo. 1999-226 (1999) [A taxpayer rented a house to her parents and reported in income rent received equal to the fair rental value of the house. The taxpayer actually received a lesser amount of rent, so the house was not rented at fair rental value, and the taxpayer could not deduct expenses related to the rental (other than interest and taxes).], 55

James E. Thiessen and Judith T. Thiessen v. Commissioner, 146 T.C. No. 7 (2016) [The taxpayers engaged in a prohibited transaction when they used a corporation owned by their self-directed IRA to acquire assets of another business, and they personally guaranteed a note for the purchase of the assets. The note was an extension of credit from the taxpayers to the IRA, and it caused a deemed distribution of the IRA assets.], 66

Maines v. Commissioner, 144 T.C. 123 (2015) [An investment credit and a wage credit that reduced the taxpayers’ state tax liability was not taxable federal income because the taxpayers did not deduct the state tax liability on their federal return. But the refundable portion of the credits was taxable income. Similarly, a property tax credit that reduced the taxpayers’ state tax liability was not taxable income, but the refundable portion of the credit could be included in income under the tax benefit rule.], 299, 302, 303

Miller v. Commissioner, 75 T.C. 182 (1980) [The family attribution rules in I.R.C. § 267


666 INDEX

United States v. Home Concrete & Supply, LLC, 132 S. Ct. 1836 (2012) [The I.R.C. § 6501(e)(1)(A) extension of time to assess a deficiency does not apply when a taxpayer overstates basis and understates gain. However, note that the 2015 Transportation Act § 2005 overrules this ruling and provides a 6-year extended statute of limitations to an overstatement of basis by more than 25% of the gross income shown on the return.], 506

Van Wyk v. Commissioner, 113 T.C. 440 (1999) [A 50% shareholder in an S corporation was not at risk with respect to a loan that he made to the corporation because the shareholder borrowed the funds from his brother-in-law, who was also a shareholder in the corporation.], 52

Wineberg v. Commissioner, T.C. Memo. 1961-336 [A timber company’s payments for the right to use a road for 10 years were rents because there was no sale of the property.], 345

Wuebker v. Commissioner, 205 F.3d 897 (6th Cir. 2000) [CRP payments received by a farmer actively engaged in the business of farming were included in self-employment income.], 340, 341

deduction is suspended until the payment is includable in the payee’s income.], 40

SoRelle v. Commissioner, 22 T.C. 459 (1954) [The taxpayer gifted land with mature crops to his children immediately prior to harvest. The court held that there was an actual and completed gift of income-producing property and the income from the sale of the crops was taxable to the children.], 357

State Bar v. Arizona Land Title & Trust Co., 366 P.2d 1 (Ariz. 1961) [The practice of law constitutes those activities that are commonly understood to be the practice of law, such as drafting deeds, notes, and contracts for the sale of real estate; and giving legal advice about real property transactions and clauses in wills.], 8

Tempel v. Commissioner, 123 T.C. 341 (2011) [The taxpayers had short-term capital gain on the sale of conservation easement credits because their holding period began when the state granted the credits and ended when they sold the credits. The taxpayers had no basis in the credits.], 303

U.S. v. Whisenhunt, 113 A.F.T.R.2d (RIA) 2014-1491 (W.D. Tex. 2014) [An executor of an estate was held liable (personally and in his capacity as executor) for the estate’s unpaid estate tax penalties and interest, and the executor waived his right to assert a reasonable cause defense by not asserting it earlier in the proceedings.], 113

United States v. Dean, 945 F. Supp. 2d 1110 (C.D. Cal. 2013) [A taxpayer who designed, assembled, and sold gift boxes and gift towers sufficiently changed the form and the function of the individual items into gifts, which constituted an MPGE activity for purposes of the domestic production activities deduction.], 217


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