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July 2021

BEAT QDP Reporting Requirement Deferred

The Treasury Department and the IRS have announced that they intend to amend the base erosion and anti-abuse tax (BEAT) regulations under Code Sec. 59A and Code Sec. 6038A to defer the information reporting requirements for qualified derivative payments (QDPs) until tax years beginning on or after January 1, 2023. The current regulations provide that the QDP reporting requirements apply to tax years beginning […]

June 2021

Safe Harbor for Certain PPP Loan Recipients Who Did Not Deduct Expenses

A safe harbor is available for certain Paycheck Protection Program (PPP) loan recipients who relied on prior IRS guidance and did not deduct eligible business expenses. These taxpayers may elect to deduct the expenses for their first tax year following their 2020 tax year, rather than filing an amended return or administrative adjustment request for 2020.

The IRS had initially determined […]

Guidance on COBRA Premium Assistance, Related Tax Credit

The IRS has provided guidance for employers, plan administrators, and health insurers regarding the new credit available to them for providing continuation health coverage to certain individuals under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) during the COVID-19 (Coronavirus) emergency.

COBRA provides eligible former employees, retirees, spouses, former spouses, and dependent children with the right to temporary continuation of […]

Employers Entitled to Claim Refundable Tax Credits for Providing Paid Sick Leaves to Employees

The IRS has reminded employers that under the American Rescue Plan Act of 2021 (ARP) ( P.L. 117-2), small and midsize employers and certain government employers are entitled to claim refundable tax credits that reimburse them for the cost of providing paid sick and family leave to their employees due to COVID-19. This includes leave taken by employees to receive […]

Taxpayers Urged to Create Emergency Preparedness Plans

The IRS reminds taxpayers that May includes National Hurricane Preparedness Week and National Wildfire Awareness Month. It urges taxpayers to create or review emergency preparedness plans for surviving natural disasters.

The IRS advises taxpayers to do the following:

Secure key documents such as tax returns, birth certificates, deeds, titles and insurance policies inside waterproof containers in a secure space. Keep duplicates […]

Dependent Care Carryover, Extended Claims Period Treatment Clarified

Dependent care assistance benefits carryovers and extended claims period amounts that would have been excluded from income if used during the preceding tax year will remain excludable in tax years ending in 2021 and 2022. In addition, these benefits will not be taken into account in determining the dependent care benefits exclusion limit for the tax years ending in 2021 […]

May 2021

Guidance for Claiming Employee Retention Credit for First and Second Quarters in 2021

The IRS has issued guidance for employers claiming the employee retention credit under Act Sec. 2301 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) ( P.L. 116-136), as modified by Act Secs. 206 and 207 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act) (Division EE of P.L. 116-260), for the first and second calendar […]

Amounts Paid for COVID-19 PPE Are Deductible Medical Expenses

The IRS has issued guidance clarifying that amounts paid for personal protective equipment—such as masks, hand sanitizer and sanitizing wipes—for the primary purpose of preventing the spread of the Coronavirus Disease 2019 (COVID-19 PPE) are treated as amounts paid for medical care under Code Sec. 213(d).

Therefore, amounts paid by an individual taxpayer for COVID-19 PPE for use by the taxpayer, the […]

Suspension of Excess Advance Premium Tax Credit Repayment

The IRS has announced that, under the American Rescue Plan Act of 2021 (ARP) ( P.L. 117-2), the requirement that taxpayers increase their tax liability by all or a portion of their excess advance payments of the Premium Tax Credit (excess APTC) is suspended for tax year (TY) 2020. A taxpayer’s excess APTC is the amount by which the taxpayer’s advance payments of […]

Deposit Penalty Relief Extended for COVID-19 Employer Credits

The IRS has extended the penalty relief provided in Notice 2020-22, I.R.B. 2020-17, 664, for failure to deposit employment taxes, to eligible employers that reduce their required deposits in anticipation of the following credits:

the paid sick and family leave credits under the Families First Coronavirus Response Act (Families First Act) ( P.L. 116-127), as amended by the COVID-related Tax Relief Act […]

April 2021

Cash Rewards for Money Order, Debit Card Purchases Included in Income

The Tax Court ruled that rewards dollars that a married couple acquired for using their American Express credit cards to purchase debit cards and money orders—but not to purchase gift cards—were included in the taxpayers’ income. The court stated that its holdings were based on the unique circumstances of the case.

Background

During the tax years at issue, each taxpayer had an […]

March 2021

Six-Time Rochester Top Workplaces Recipient Provides Straight Answers, Trusted Solutions

ROCHESTER, NY (MARCH 29, 2021) – Ask any CPA what they’ve been up to lately, and the unanimous answer is, “work, eat, sleep.” Even though the April 15 tax deadline has been extended to May 15, the team at Flaherty Salmin CPAs is still busily taking care of their corporate, affordable housing and personal clients’ needs, while also helping those […]

New Form for Self-Employed COVID-19 Leave Credits

The IRS has released new Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals. The form allows eligible self-employed individuals to calculate the amount to claim for qualified sick and family leave tax credits under the Families First Coronavirus Response Act (FFCRA) ( P.L. 116-127). They can claim the credits on their 2020 Form 1040 for […]

Lenders Notified to File Corrected Forms 1099-MISC to Exclude Subsidized Loan Payments

The IRS has announced that lenders who had filed or furnished Form 1099-MISC, Miscellaneous Information, to a borrower, reporting certain payments on loans subsidized by the Administrator of the U.S. Small Business Administration (Administrator) as income of the borrower, must file and furnish corrected Forms 1099-MISC that exclude these subsidized loan payments.

On January 19, 2021, the Department of the Treasury […]

February 2021

Employee Retention Credit Expanded & Extended

The recently enacted stimulus law extends a number of provisions for businesses struggling to cope with the pandemic. For instance, the law greatly expanded the effectiveness of the Employee Retention Credit (ERC). Originally, businesses had to choose between taking the Paycheck Protection Program (PPP) or the ERC. For most employers, the PPP provided more benefit and more businesses qualified […]

Reporting Penalty Relief for Partnerships

The IRS has issued guidance that provides partnerships with relief from certain penalties for the inclusion of incorrect information in reporting their partners’ beginning capital account balances on the 2020 Schedules K-1 (Forms 1065 and 8865). The IRS has also provided relief from accuracy-related penalties for any tax year for the portion of an imputed underpayment attributable to the inclusion […]

Additional Final Regulations on Section 163(j) Issued

The IRS has issued final regulations providing additional guidance on the limitation on the deduction for business interest under Code Sec. 163(j). The regulations finalize various portions of the proposed regulations issued in 2020 with few modifications. They address the application of the limit in the context of calculating adjusted taxable income (ATI) with respect to depreciation, amortization, and depletion. […]

Safe Harbor for Electing Real Property Trade or Business

The IRS has provided a safe harbor allowing a trade or business that manages or operates a qualified residential living facility to be treated as a “real property trade or business” solely for purposes of qualifying to make the Code Sec. 163(j)(7)(B) election. This guidance formalizes the proposed safe harbor issued in Notice 2020-59, I.R.B. 2020-34, 782. Taxpayers may apply […]

Final Regulations Released on Small Business Simplified Accounting Rules

The IRS has released final regulations addressing the post-2017 simplified accounting rules for small businesses. The final regulations adopt and modify proposed regulations released in August 2020.

Implementation of the Rules

The Tax Cuts and Jobs Act ( P.L. 115-97) put in place a single $25 million gross receipts test for determining whether certain taxpayers qualify as small taxpayers that can use […]

January 2021

Final Regs Define “Real Property” for Like-Kind Exchanges

Final regulations clarify the definition of “real property” that qualifies for a like-kind exchange, including incidental personal property. Under the Tax Cuts and Jobs Act (TCJA, P.L. 115-97), like-kind exchanges occurring after 2017 are limited to real property used in a trade or business or for investment.

The final regulations largely adopt regulations that were proposed in June ( NPRM REG-117589-18). However, they also:

add […]

PPP Deduction Safe Harbor if Loan Not Forgiven

The IRS has released rulings concerning deductions for eligible Paycheck Protection Program (PPP) loan expenses. The rulings:

deny a deduction if the taxpayer has not yet applied for PPP loan forgiveness, but expects the loan to be forgiven; and
provide a safe harbor for deducting expenses if PPP loan forgiveness is denied or the taxpayer does not apply for forgiveness.

Background
In […]

Final Regulations Address Transportation Fringe Benefits

The IRS has issued final regulations under Code Sec. 274 relating to the elimination of the employer deduction of for transportation and commuting fringe benefits by the Tax Cuts and Jobs Act ( P.L. 115-97), effective for amounts paid or incurred after December 31, 2017. The final regulations address the disallowance of a deduction for the expense of any qualified transportation fringe (QTF) […]

IRS Warns Taxpayers and Tax Professionals Against Scams and Identity Theft Schemes

This year marks the 5th Annual National Tax Security Awareness Week-a collaboration by the IRS, state tax agencies and the tax industry. The IRS and the Security Summit partners have issued warnings to all taxpayers and tax professionals to beware of scams and identity theft schemes by criminals taking advantage of the combination of holiday shopping, the approaching tax season […]

IRS Proposes Regs on Centralized Partnership Audit Regime

NPRM REG-123652-18

The IRS has issued proposed regulations for the centralized partnership audit regime that:

clarify that a partnership with a QSub partner is not eligible to elect out of the centralized audit regime;
add three new types of “special enforcement matters” and modify existing rules;
modify existing guidance and regulations on push out elections and imputed adjustments; and
clarify rules […]

Final Regs on Silo Rules for Calculating UBTI

The IRS has issued final regulations with guidance on how a tax-exempt organization can determine whether it has more than one unrelated trade or business, how it should identify its separate trades and businesses, and how to separately calculate unrelated business taxable income (UBTI) for each trade or business – often referred to as “silo” rules. Since 2018, under provisions of the […]

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