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The Bloomberg BNA Federal Tax Blog is a forum for practitioners and Bloomberg BNA editors to share ideas, raise issues, and network with colleagues about federal tax topics. The ideas presented here are those of individuals and Bloomberg BNA bears no responsibility for the appropriateness or accuracy of the communications between group members.

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June 27, 2014

IRS Encourages Practitioners to Get Rid of Circular 230 Disclaimers in E-mails, Other Written Communications

Recently finalized Circular 230 rules (see T.D. 9668, 79 F.R. 30885 (6/12/14)) have significantly simplified the rules for practitioners when providing written advice and have eliminated the...

June 27, 2014

Supreme Court Ends Presumption of Prudence in Stock Drop Cases

The U.S. Supreme Court eliminated a presumption of prudence that ESOPs often relied on to defend stock drop cases. In Fifth Third Bancorp v. Dudenhoeffer , participants in an ESOP...

June 16, 2014

Sixth Circuit Sticks to Its Guns, Allowing Lessee-Purchaser to Deduct a Portion of Property Purchase Price as a Lease Termination Expense

Perpetuating a disagreement among courts, the Sixth Circuit in ABC Beverage Corp. v. United States , No. 13–01701 (6th Cir. June 13, 2014), reaffirmed its 1948 holding in Cleveland Allerton that...

June 5, 2014

Application of Title IV of ERISA to Plans Covering Puerto Rico Participants – an Unofficial Update

Plans that are subject to Title IV of ERISA must comply with, among other things: the payment of Pension Benefit Guaranty Corporation (PBGC) insurance premiums; the guarantee of minimum plan...

May 23, 2014

Guidance from Around the Globe Adds Uncertainty to How Cryptocurrency Mining Will Be Taxed

Governmental guidance on how to treat cryptocurrencies such as Bitcoin, Litecoin, and Dogecoin have been sparse and often leave more questions than answers.  Examining a combination of Notice...

May 22, 2014

The Effect of Inversions and Entity Expatriations on Key Executive Compensation: A Warning

A somewhat little-discussed but increasingly important provision in the Code that could negatively affect the compensation of key executives is §7874’s treatment of certain corporate inversions.  ...

May 16, 2014

Many Hints, Few Rules: Severstal Weighs in on Investment Advice

Perhaps the most subtle way in which ERISA may impose fiduciary status on an individual is under section 3(21), which deems as a fiduciary any individual who provides “investment advice” to an...

May 13, 2014

REITs and Real Property

Whether a particular item is real property is of critical importance to REITs, because a REIT must derive a certain amount of income from real property and hold a certain amount for investment....

May 13, 2014

Cooperative and Charity Plans Have 2014 To Choose Among Pension Funding Options

Congress recently passed the Cooperative and Small Employer Charity Pension Flexibility Act, P.L. 113-97, to provide relief from funding rules for pension plans that are maintained by nonprofit...

May 13, 2014

U.S. Supreme Court to Weigh in on Retirement Plan Stock Drop Case

Practitioners await the Supreme Court decision in Dudenhoffer v. Fifth Third Bancorp ., argued April 2, 2014, in which the Court will address the presumption of prudence in stock drop cases for the...

May 12, 2014

Bitcoin, Litecoin, Dogecoin and Other Cryptocurrencies Now Taxable Income

Whether you say “Vires in Numeris” or “To the Moon” your future with virtual currencies will change because of the taxman.   In Notice 2014-21, 2014 I.R.B. 938 (4/14/2014), the IRS issued its...

May 8, 2014

Conspicuous and Repetitive Disclaimer Attached to Benefit Calculation Wins the Day In Court

Typically, loud, conspicuous and repetitive is a recipe for disaster.   But not so when it comes to the law.   Not so.   NOT SO AT ALL.    In Spiewacki v. Ford Motor Co.-UAW Ret. Bd....

April 25, 2014

Tussey v. ABB, Inc.: Can a plan asset cease being a plan asset?

Among the issues addressed by the Eighth Circuit Court of Appeals in Tussey v. ABB, Inc. , Nos. 12-2056, 2014 BL 75252 (8th Cir. Mar. 19, 2014), was whether Fidelity Management Trust Co....

April 24, 2014

Announcement Clarifies Inconsistency Between IRS and Tax Court Interpretations of 1-Per-Year Rollover Limitation

Many practioners wondered how the IRS would apply the 1-IRA-rollover-per-year limitation of I.R.C. §408(d)(3)(B) after the Tax Court weighed in on the issue in Bobrow v. Commissioner , T.C....

April 9, 2014

Affordable Care Act Sheds Annual Deductible Limits for Employer-Sponsored Health Plans

The Affordable Care Act requires annual cost-sharing limits on coverage as part of the essential health benefits package required for plan years beginning in or after 2014. As enacted, it provided for annual limits on total cost-sharing and for annual limits on deductibles for insured employer-sponsored plans offered in the small group market. Section 213 of the Protecting Access to Medicare Act of 2014 (Pub. L. No. 113-93) eliminated

April 4, 2014

Pension Relief May Result in Loss of Church Plan Exemption for Multiple Employer Plans

Multiple employer church plans may lose their exempt status unless they affirmatively opt out of recently enacted pension relief. The Cooperative and Small Employer Charity Pension Flexibility Act...

March 26, 2014

Guidance on Changes in Method of Accounting for Depreciable Property Appears to Only Affect Unfiled 2013 Returns

Rev. Proc. 2014-7 supersedes and expands the scope of Rev. Proc. 2012-20 to provide taxpayers the option of changing their methods of accounting to comply with either the temporary or proposed regulations generally for taxable years beginning in 2012 or 2013. However, practically speaking, only taxpayers who have not yet filed (including extensions) their 2013 returns appear to be able to benefit from the automatic consent procedures provided in Rev. Proc. 2014-17.

March 19, 2014

IRS Guidance on Changes in Method of Accounting for Depreciable Tangible Property

  On February 28, 2014, the IRS issued Rev. Proc. 2014-17 detailing long anticipated guidance regarding certain changes in method of accounting for depreciable tangible property under the final, temporary, and proposed tangible property regulations. Rev. Proc. 2014-17 updates Rev. Proc. 2011-14 and supersedes prior guidance provided in Rev. Proc. 2012-20.  

February 27, 2014

Partnership's Transfer of Tax Credits for Cash Is a Disguised Sale

In Route 231 v. Comr., T.C. Memo 2014-30, the U.S. Tax Court held that a contribution of $3.8 million from an LLLP (X) to an LLC (Y) taxed as a partnership in exchange for (1) Virginia tax...

February 12, 2014

IRS Oversteps Authority on Regulating Multibillion Dollar Industry

On February 11, 2014, the Court of Appeals for the D.C. Circuit ruled on the Loving  decision regarding registered tax return preparers (RTRPs). The court upheld the district court, holding that...

January 30, 2014

Tax Court’s Interpretation of 1-Per-Year Rule Curtails IRA Rollovers

A recent tax court decision changes the common understanding of the “one-rollover-per-year” rule, potentially resulting in a new restriction on IRA rollovers. Code §408(d)(3)(B) provides that...

January 29, 2014

An ERISA Claim Walks Into a Bar – A Followup: Heimeshoff v. Hartford Life

In an earlier blog, I discussed and analyzed oral arguments presented to the U.S. Supreme Court in Heimeshoff v. Hartford Life & Accident Ins. , No. 12-729 (10/15/13).   See ...

December 2, 2013

Who Gets the Partnership Allocations?

Are undistributed partnership allocations attributable to a transferred nonvested partnership capital interest allocated to the holder of the nonvested partnership interest or to the partners in...

November 26, 2013

Supreme Court Agrees to Review Birth Control Mandate Cases

On November 26, 2013, the U.S. Supreme Court agreed to consider whether the Affordable Care Act's preventive services mandate, which requires health insurance plans to cover contraceptives, violates...

November 6, 2013

No Individual Mandate Penalty Arises from Extended Exchange Open Enrollment for 2014

Can an individual really be penalized for signing up for health insurance through the Health Insurance Marketplace during open enrollment? Thanks to a good idea--the extension of the initial open enrollment period through March 31, 2014--it looked like the answer could be “yes.”

October 22, 2013

An ERISA Claim Walks Into a Bar...: Supreme Court Hears Oral Arguments in Heimeshoff v. Hartford Life

On October 15, 2013, the U.S. Supreme Court heard oral arguments in Heimeshoff v. Hartford Life & Accident Ins. Co. , No. 12-729 (10/15/13).    The case involved a dispute over a contractual...

October 17, 2013

Medical Conditions Are Not a Bar to Health Insurance Coverage Under the Affordable Care Act

For plan years beginning on or after January 1, 2014, the Affordable Care Act prohibits health insurance companies from denying health insurance coverage based on preexisting conditions and from refusing to provide or renew coverage. While these are not new protections, the Affordable Care Act increases their availability

October 11, 2013

Small Employers Shop the SHOP Exchange

Starting in 2014, small employers may chose to make health-care coverage available to their employees through the Small Business Health Options Program (SHOP). The SHOP Exchange, also known as a SHOP Marketplace, allows the employer to select qualified health plans in the small group market from which employees may get coverage. The employer chooses

October 11, 2013

Fraud by Partnerships’ Advisers Cannot be Imputed to Partners

The Court of Federal Claims recently found that, although a partnership’s tax returns included false or fraudulent items resulting from transactions fraudulently structured by the taxpayers’...

September 19, 2013

Bloomberg BNA Releases Projected Inflation Adjusted Tax Figures

For a second year, Bloomberg BNA has released projected inflation-adjusted amounts for thresholds, limits and deductions in the tax code using data from the consumer price index released...

September 19, 2013

DOL Releases Guidance Adopting State-of-Celebration Definition of Marriage for Same-Sex Spouses

In DOL Technical Release 2013-04, the DOL clarified that, for purposes of ERISA and certain Internal Revenue Code provisions that the DOL interprets, the term "spouse" will include any individuals...

September 17, 2013

DOL Proposal To Disclose Lifetime Income Projections Criticized

The DOL is considering a proposal to require pension benefit statements for defined contribution retirement plans to show the current balance of a participant's retirement account, as well as a...

September 13, 2013

Deadline for Furnishing Notice of Health Coverage Options Approaches for Employers

An employer must furnish current employees with written notice of their health coverage options by October 1, 2013, if the employer is covered by the Fair Labor Standards Act (FLSA). The Affordable Care Act added this requirement which tells employees about health insurance Exchanges, also called Health Insurance Marketplaces, and employer-sponsored health plan options. An employer must furnish current employees with written notice of their health coverage options by October 1, 2013, if the employer is covered by the Fair Labor Standards Act (FLSA). The Affordable Care Act added this requirement which tells employees about health insurance Exchanges, also called Health Insurance Marketplaces, and employer-sponsored health plan options

September 9, 2013

Buy-Sell Agreement?

Breaking up is hard to do, but a little planning can go a long way.  For example, in Kumar v. Commissioner , T.C. Memo 2013-184, the Tax Court ruled that a minority shareholder of an S corporation...

September 5, 2013

De-Risking on the Horizon for Many Pension Plans

About 40% of senior financial executives, responding to a survey by Prudential Financial Inc, indicated that they will “seriously consider” transferring their company’s defined benefit plan risk...

August 30, 2013

Bloomberg Law Event: Outlook on Tax--The Future of Corporate Taxation

On September 18, 2013, Bloomberg Law will host a discussion, featuring former U.S. Congressman Phil English and former U.S. Senator Byron Dorgan, just as Congress begins to prepare for the release...

August 29, 2013

A State of Celebration - Treasury and IRS Issue Ruling Implementing Effect of Windsor Decision

On August 29, 2013, in IR-2013-72, the Treasury and the IRS announced that same-sex couples that were legally married in a state or jurisdiction that recognizes same-sex marriages will be treated...

August 26, 2013

Bloomberg BNA Launches Premier State Tax Library

Bloomberg BNA launches its new Premier State Tax Library in response to the increased importance of state and local tax planning. This library includes the following new products and tools:   ...

August 19, 2013

Who Gets the Pay Out? Plan Sponsors Resort to Interpleader Actions After U.S. v. Windsor

An employee dies leaving behind an employer-sponsored qualified retirement account. The same-sex spouse and the parents of the employee both make claims for the benefits. The state in which the...

August 16, 2013

The Tax Court Weighs In on LILOs and SILOs

On August 5, in John Hancock Life Ins. Co. v. Commissioner , 141 T.C. No. 1 (8/5/13), the Tax Court ruled for the first time on the income tax consequences of lease-in-lease-out (LILO)...

August 16, 2013

IRS Proposed Rules Would Allow for 10-Year Timeframe for Innocent Spouses to Seek Equitable Relief under §6015(f)

Recently issued proposed rules addressing requests for equitable spousal relief under §6015 (see REG-132251-11 , 78 Fed. Reg. 49242 (8/13/13)), would make permanent a 2011 taxpayer-friendly IRS...

August 9, 2013

Murky at Best - District Court Case Shows Difficulty of Administering Windsor Decision

In Cozen O’Connor v. Tobits, No. 2:11-cv-00045-CDJ (E.D. Pa. 7/29/13), a Pennsylvania federal court ruled that United States v. Windsor,  No. 12-307 (U.S. 6/26/13), required the recognition of a...

August 2, 2013

A Cautionary Tale: Form W-8BEN Filers Should File Returns/Refund Claims When Taxes are Erroneously Withheld

A recent case, Boeri   v. United States , No. 2012-5102 (Fed. Cir. 7/31/13), provides a cautionary tale for nonresidents who have never lived nor worked in the U.S. but nevertheless may have...

July 26, 2013

Whose Judgment Is This Anyway?

What happens when the court makes a mistake in issuing its decision?   What recourse is available to the parties concerned?   Does the court vacate its decision and reissue a correct decision, or...

July 26, 2013

The Importance of Updating Records with the IRS

Changes of residence, changes of headquarters, changes in corporate structure, corporate/partnership   dissolution, bankruptcy, liquidation, and other occurrences that affect simple things like...

July 22, 2013

Timelines Help Employers Track Changes to Affordable Care Act Deadlines That Are Not Extended

Employers need to be aware of their health care-related obligations. Is your monitoring system for implementation of the Affordable Care Act’s rules up to date? Does it accurately and timely display deadlines under the Act and extensions and transition relief that the Department of Treasury and IRS, the Department of Labor, and the Centers for Medicare & Medicaid Services have granted? Does it reflect the 2014 transition relief provided for the employer mandate also known as “pay or play”?

July 19, 2013

Self-Insured Plan Compliance Calendar: First Deadline for Patient-Centered Outcomes Research Trust Fund Fee Approaches

The deadline is July 31, 2013, for sponsors of self-insured group health plans to pay Patient-Centered Outcomes Research (PCOR) Trust Fund fees to the IRS. The fee applies to accident and health coverage, retiree coverage, and COBRA coverage. It does not apply to excepted benefits or to programs that do not provide significant benefits in the nature of medical care or treatment.

July 10, 2013

Tax Exam: How Well Do You Know Which Benefits Are Subject to Employment Taxation?

In addition to cash salary or wages, employers can provide employees with a wide array of benefits.  These benefits can take many forms, including: (1) advances or reimbursements for employee...

July 5, 2013

Employer Penalties, Reporting Requirements under ACA Delayed Until 2015

After hearing complaints from employers about burdensome reporting requirements under the Affordable Care Act, the IRS and the White House announced that these requirements will be suspended for...

June 28, 2013

Pension Plan Sponsors Weigh Third Party Annuities

According to a survey conducted by benefits consulting firm Mercer and CFO Magazine, sponsors of defined benefit pension plans are increasingly interested in purchasing annuities to transfer   plan...

June 26, 2013

Key Provision in DOMA Struck Down - Learn How This Will Affect Employee Benefits Through Bloomberg BNA Webinar

On June 26, 2013, in a 5-4 decision, the Supreme Court ruled that the Defense of Marriage Act violates due process and equal protection principles applicable to the federal government.  The Court...

June 21, 2013

Enhancements to Bloomberg BNA Tax & Accounting Center

On June 17, 2013, Bloomberg BNA launched several enhancements on the Tax and Accounting Center, including new products and as well as improvements on existing products. We are very excited about...

June 18, 2013

Congress Considers Changes to Pension Beneficiary Rules

In an effort to offset the cost of maintaining low student loan interest rates, Congress recently considered limiting beneficiaries' ability to defer paying taxes on inherited retirement accounts. ...

June 13, 2013

Bitcoin 1001: Property or What?

Oh to be young.  On June 12, Bloomberg TV's Street Smart reported that a newly wed couple has proposed transacting in bitcoin exclusively, i.e., no U.S. dollars, for the first 90 days of their...

May 23, 2013

No Shifting COD: Even a Bankrupt Casino Makes Money

Casinos make money in the long run.  A casino may not be making money at any given moment, such as when a visitor wins a large jackpot, and a casino may not even want "money" in every situation....

May 20, 2013

Beware of Prohibited Transactions in Self-Directed IRA Investment Opportunities

A taxpayer who has a self-directed IRA and who guarantees a loan entered into by a company the shares of which are owned by the IRA runs afoul of the tax Code’s prohibited transaction rules, causing the account to fail to qualify as an IRA, according to the Tax Court in Peek v. Comr., 140 T.C. No. 12 (2013).  

April 29, 2013

EIN Inconsistency

In CCA 201315026, the IRS considered taxpayer’s request for assistance in determining whether there is a continuation of a partnership where the Original Partnership merges with an existing...

April 18, 2013

What Self-Funded Group Health Plans Should Know About Transitional Reinsurance

If you have a self-insured group health plan, you should care about the Affordable Care Act’s Transitional Reinsurance Program because you will help to fund it. Your plan will submit “contributions” for plan years beginning in the 3-year period starting January 1, 2014, to the Department of Health and Human Services.

April 18, 2013

Is the Obama Administration's Opposition to a Financial Transactions Tax Weakening?

Although the European Union could not gain the support needed to implement the Tobin tax on financial transactions, 11 EU countries are expected to implement the tax on their own this year.  See...

April 12, 2013

Workforce Reduction Supplemental Benefits Can Affect Pension Benefits

A supplemental benefit paid to a pension plan participant was an accrued benefit and subject to the terms of a qualified domestic relations order (QDRO), according to the U.S. Court of Appeals for the Third Circuit. Gruber v. PPL Retirement Plan, No. 12-2123 (3d Cir. 4/9/13).

April 4, 2013

How Much Do You Know About Changes to the Qualified Retirement Plan Rules in Puerto Rico?

Bloomberg BNA is presenting a webinar on May 23, from 1:00-2:30 p.m., ET, focusing on the new regulations on retirement income issued on January 9, 2013, by the Puerto Rico Department of the Treasury under the Puerto Rico Internal Revenue Code of 2011. Carlos Gonzalez, author of the Bloomberg BNA Tax & Accounting Portfolio No. 324, International Pension Planning — Puerto Rico, and Eugene Holmes, Senior Counsel, Proskauer Rose LLP, Washington, D.C.,  will take your questions on the Puerto Rico income taxation of benefits and payments from retirement plans covering Puerto Rico recipients and related administrative issues.

March 19, 2013

Controversies Over De-Risking Defined Benefit Plans: For the Courts or the Agencies?

Practitioners are suggesting that Verizon Communications’ decision to pay Prudential Insurance Company of America an $8 billion premium to take over monthly pension payments to 41,000 retirees was a “game changer” in the increasing de-risking strategies for defined benefit plans being pursued by employers, and may have altered the landscape of pension de-risking that relies on annuity forms of distribution.

March 11, 2013

If DOMA Is Overturned, Will It Be Enough to Protect the Same-sex Family Unit?

In late March, the Supreme Court will hear arguments in a pair of same-sex marriage cases that could have widespread federal tax impacts.   One case tests the constitutionality of the Defense of...

February 28, 2013

Webinar on Affordable Care Act Issues for Small Business and Self-Employed Clients

Bloomberg BNA is presenting a workshop on March 6 focusing on compliance by small employers with the Patient Protection and Affordable Care Act. Alden Bianchi of Mintz Levin Cohn Ferris Glovsky and...

February 20, 2013

ATRA Inadvertently Expands Scope of Hydropower Facility Credit Period Rule, But Possibly Without Consequence

In Section 407(a)(3)(E) of the American Taxpayer Relief Act of 2012 (2012 ATRA), Congress enacted a new rule applicable to hydropower facilities that produce incremental hydropower production (i.e.,...

February 14, 2013

Webinar on Affordable Care Act Issues for Large Employer Clients

Bloomberg BNA is presenting a workshop on February 21 focusing on compliance by large employers with the Patient Protection and Affordable Care Act. Alden Bianchi of Mintz Levin Cohn Ferrris...

February 5, 2013

Sunset of PPA Rules in 2014 Creates Confusion for Multiemployer Plans

The Pension Protection Act of 2006 (PPA) added special funding rules for significantly underfunded multiemployer pension plans. According to a study conducted by the DOL, IRS and PBGC, about 68% of...

January 30, 2013

Ways and Means Committee Proposal on Financial Products: Simplification?

The House Ways and Means Committee believes that a leading cause of the 2008 financial crisis was the complicated set of rules on taxation of financial instruments and products. On January 24,...

January 7, 2013

Sorry, That Doesn’t Work Anymore – IRS No Longer Accepts Working Copy Submissions of Plan Documents for Determination Letter Purposes

In a surprising turn of events, Rev. Proc. 2013-6, the IRS’s most-recently updated procedure for issuing determination letters on the qualified status of various retirement plans, was revised to...

December 20, 2012

Capital Loss Carryovers Apply in Determining Net Investment Income

Taxpayers facing liability under the new §1411 net investment income tax (NIIT) that takes effect for tax years after 2012 have been asking whether a prior year capital loss carryover may be...

November 30, 2012

“Annuitizing” a 401(k) – Options for Plan Sponsors and Participants

Employer pension plans are rapidly disappearing, making retirement savings critical.  The risk is that people will outlive their savings. Those nearing retirement, as well as the federal government...

November 30, 2012

How Can We Pay for Lower Corporate Tax Rates?

Bloomberg BNA's inaugural Tax Policy & Practice Summit, held in Washington, DC, the week after the November election, featured lively panel discussions, presentations, and Q&A on the fiscal...

November 30, 2012

Are DB Plan Sponsors Violating ERISA by Using Pension Assets to Purchase Group Annuities?

A trend appears to be developing in which defined benefit plan sponsors are using pension plan assets to purchase group annuity contracts from insurers who then assume the obligation to make future annuity payments to the company’s retirees. Employers view these transfers as “de-risking” their pension plans while improving the company's longer-term financial profile. Recently, retiree participants of the Verizon Communications, Inc. defined benefit plan filed a putative class action in a federal district court claiming that the company's plan to transfer $7.5 billion in pension assets to Prudential Insurance Co. to purchase annuities violates Verizon’s fiduciary duties under ERISA and interferes with the retirees' protected rights.

November 26, 2012

FUTA Credit Reductions in 2012

Employers in some states could pay more in unemployment taxes in 2012 due to the states' failure to repay federal loans. Employers in affected states would have to pay additional taxes by January...

November 26, 2012

Year-End 401(k) Plan Disclosures: Upcoming Deadlines

Having distributed the first set of fee disclosure documents this summer and initial quarterly statements of plan fees and expenses this fall, it's time for 401(k) plan administrators to turn their...