Promoter’s Too-Good-To-Be-True Leveraged Forward Contract Transaction Rejected on Multiple Grounds

In two recent legal advice memoranda, the IRS Office of Chief Counsel thoroughly analyzed, and twice rejected, a tax-motivated “Leveraged Forward Contract” transaction marketed to individual taxpayers for its nearly magical abilities to manufacture interest deductions that far exceeded the taxpayer’s out-of-pocket costs, and to convert time value of money income into capital gains.

The IRS Revokes Rev. Rul. 78-130 and Clarifies Tax Treatment of Triple Drop and Check Transactions

Recently, the IRS issued two revenue rulings, Rev. Proc. 2015-9 and Rev. Proc. 2015-10, which provide clarification regarding the IRS’s approach to certain multi-step transactions, including the “triple drop and check” transaction. Notably, Rev. Proc. 2015-9 revokes a 1978 ruling, Rev. Proc. 78-130, which has increasingly caused uncertainty for taxpayers as to how a “triple drop and check” transaction might be characterized. At the very least, taxpayers now have greater assurance that a “triple drop and check” transaction will not be viewed as an all-boot §368(a)(1)(D) reorganization (“D” reorganization).

Federal Circuit Determines BB&T STARS Transaction Bx Payments are Income

In Salem Fin., Inc. v. United States, No. 14-5027, 2015 BL 148218 (Fed. Cir. May 14, 2015), the U.S. Court of Appeals for the Federal Circuit determined that the profit potential of a structured trust advantaged repackaged securities (STARS) transaction arose entirely from anticipated tax benefits, and the struck down the transaction as lacking economic substance.

The Impact of Same-Sex Marriages on Benefit Plan Administration - An Evolving Issue

In Obergefell v. Hodges, 2015 BL 11035, U.S., No. 14-556, which was argued before the Supreme Court on April 28, 2015, the Supreme Court will finally address whether states must issue marriage licenses to same-sex couples and recognize same-sex marriages lawfully performed out-of-state.

Feedback Requested: How Useful Are the Proposed §41 Internal Use Software Regulations?

Except to the extent allowed by the regulations, research with respect to computer software that is developed by a taxpayer primarily for the taxpayer’s internal use is excluded from the definition of qualified research, and thus is excluded from eligibility for the research credit.

Tax Court Applies Sham and Step Transaction Doctrines to Series of Some Sham, Some Economically Substantive Transactions

In CNT Investors, LLC v. Commissioner, 144 T.C. No. 11 (March 23, 2015), the Tax Court undertook an analysis that blended the sham transaction doctrine with the step transaction doctrine in the context of a multi-step transaction, some of which were shams and some of which were not.

2014 Tax Identity Theft AllStars

Ever more present in the news is the rise of tax-related identity theft.  Although the IRS is committed to enforcement against refund fraud and identity theft, it remains overwhelmed by the growing trend.

Is the Illinois Secure Choice Savings Program Act Really That Secure From the Confines of ERISA?

Generally effective June 1, 2015, Illinois passed an act called the Illinois Secure Choice Savings Program Act (Public Act No. 098-1150 (2015), §500) (ISCSP or Act) that would require applicable employers automatically to enroll workers in Roth IRAs.

A Mark-to-Market Regime for Decedents?

Tax policy again became the subject of debate on January 20, 2015, when President Obama delivered his state of the union address.

No Disability Here; Court Scrutinizes Physician Over Note to IRS

On January 29th, in a 27 page opinion, the U.S. Court of Federal Claims denied a estate’s claim that a deceased taxpayer suffered from a disability, and should benefit from the §6511(h) extension of time to file a claim for refund for those unable to manage their financial affairs due to disability.

First One Out the Automatic Gate: Illinois Tells Employers to Enroll Employees in Roth IRAs

Illinois Secure Choice Savings Program Act is the first state law requiring employers not offering retirement plans to automatically enroll workers in Roth IRAs.

“Queen of Tax Fraud” to be Re-Sentenced, Tax Fraud is Easier than Drug Dealing

In early December, the Eleventh Circuit Court of Appeals vacated and remanded the 2013 sentencing of Rashia Wilson, the self-proclaimed “queen of tax fraud.” 

Exploring the Limits on Health FSA Contributions

Is your client lamenting the $2,500 contribution limit on the health flexible spending arrangement provided through his employer’s cafeteria plan?

No Pay-or-Play Responsibility, But Reporting Required by Employers Just the Same

Does an employer that is not subject to the employer shared responsibility requirements have information reporting obligations for coverage offered to its full-time employees?

Health Care Pay-or-Play’s Take on Seasonal Workers and Seasonal Employees

Aren't "seasonal worker" and "seasonal employee" interchangeable terms? Not when you are interpreting the employer shared responsibility provisions under the Affordable Care Act.

Treasury Releases Regulations Governing Retirement Savings Bonds

On January 29, 2014, President Obama issued a memorandum directing the Secretary of the Treasury to develop by year-end a new retirement savings security (originally called a “ myRA ”) focused...

Congratulations, You May Already Be Able to Direct Your Money Any Way You Want!

I couldn't help but think of the Publisher's Clearing House prize patrol as I read recent IRS guidance clarifying the taxation of rollovers from qualified plans to multiple destinations.  ...

Blazing a New Trail: The Brass Tacks About a Potential Grass Tax

State legislators have followed the general public opinion and have begun to legalize the sales and use of marijuana. Federal lawmakers now must contemplate whether they should follow suit. As with most commodities generating revenues, the issue of taxation must be addressed. A recent study by the Congressional Research Service explores the potential issues surrounding a federal marijuana excise tax.

Using IRA Funds for Personal Loans—How Bad Timing Affects a Good Cause

Your client took a short-term loan from her IRA, but the rollover of the amount was delayed. Can a letter ruling save the day?

When Your Return Preparer Betrays You

Identity theft has been pervasive.  In an earlier blog ( Identify Theft Pervasive, Overwhelms IRS (Dec. 1, 2014)) I discussed that while the IRS has increased its activity in the fight against...

Strict Documentation Required for Use of Vacation Rental Property

Tax practitioners often lecture clients about the importance of documentation.  Many clients don’t adhere to the advice, but even those that keep meticulous records can be surprised that the...

Identify Theft Pervasive, Overwhelms IRS

By now you may have heard one or more of the horror stories: the taxpayer files a return and eagerly awaits the expected refund, until he receives a letter from the IRS informing him that a...

Even Tax Lawyers Have a Stake in College Sports

With the arrival of the college football bowl season and college basketball regular season, there are few times of the year when sports fans across the nation pay closer attention to the...

Daily Employer-Provided Meals: As Taxable As They Are Delicious

Buried on page 8 of the IRS’s 2014-2015 Priority Guidance Plan, in the third item of subsection B, under the “Executive Compensation, Health Care and Other Benefits, and Employment Taxes” heading,...

I’m Afraid to Ask… Is this Slice of Cake Taxable?

Friends often ask me all sorts of questions when they first find out I am a tax attorney.  Some examples: Friend: Can I deduct the cost of these new shoes? Me: No. Friend: But I’m going to...

Successor of TARP Recipient Can't Use Extended NOL Carryback

Successor of troubled asset relief program recipient can't use extended NOL carryback

IRS Releases Form for Individuals Claiming the Premium Tax Credit

The IRS has released the 2014 Form 8962, which individuals will use to determine their premium tax credit and to reconcile it with advance payments.

Another Affordable Care Act Deadline Extended – The Transitional Reinsurance

Self-insured group health plans and health insurance issuers received a last minute extension to file their transitional reinsurance annual enrollment count for 2014.

Close of Minimum Value Loophole May Launch Additional Duty for Some Employers

An employer that sponsors a self-insured group health plan for its full-time employees asks, "Don't I escape 'pay or play' as long as the plan that I offer to my full-time employees is affordable and provides minimum value under the MV Calculator, even though it does not cover in-patient hospitalization services?" The IRS is taking action to ensure that the answer is "no,"

AICPA Challenge to the Voluntary Annual Filing Season Program Cannot Stand

The D.C. District court, which last year permanently enjoined the IRS from enforcing its registered tax return preparer program (see Loving v. IRS , 917 F. Supp. 2d 67 (D.D.C. 2013)), recently...

U.S. Supreme Court Plans to Address Limitations Period for Retirement Plan Fee Litigation

When does the clock start ticking on ERISA retirement plan participants' claims brought against plan fiduciaries because the plan offers investment options with higher fees when comparable lower-cost alternatives are available? The U.S. Supreme Court granted certiorari in Tibble v. Edison Int'l

SSA Releases 2015 Social Security Changes

On October 22, 2014, the Social Security Administration released a Fact Sheet of the 2015 Social Security changes.  The most important changes include the following: 1.   The social security...

Is Profligacy Enough to Defeat Tax Discharge in Bankruptcy?

The 9 th Circuit in Hawkins v. Franchise Tax Bd. of Cal., 3:10-cv-02026-JSW, 2014 BL 255142 (9th Cir. 2014), recently held that, in order to apply 11 U.S.C. §523(a)(1)(c)’s exception from...

Roth IRAs and the Magical Disappearing and Reappearing Compensation Trick for Individuals with Foreign Earned Income

When is foreign-earned income not income for Roth IRA contribution purposes?   The answer to that question depends on the Roth IRA contribution limit in effect.  Under an annual IRS “dollar...

More Informal Clarification Provided on the 1-Rollover Rule Applicable to IRAs

In its September 11, 2014 webinar on retirement news and hot topics, an IRS employee, not speaking in an official capacity for the IRS, provided more information with respect to the effect of ...

The IRS Wants You to Know About the Form 5500-EZ Penalty Relief Program Before It’s Too Late

In its online webinar on Retirement News and Hot Topics held on September 11, 2014, the IRS discussed its Form 5500-EZ Penalty Relief Program for certain plan sponsors that failed to file an...

Calendar and Timelines Help Employers Keep Track of Affordable Care Act Obligations

The Affordable Care Act presents an ongoing challenge both for regulators formulating guidance and for employers and their professional advisers trying to keep up with that guidance and related deadlines and transition relief. The compliance calendar and timelines in the Health Care Reform Adviser on Bloomberg BNA’s Tax and Accounting Center help you keep track of what needs to be done.

What is a Willful Attempt to Evade Tax?

Among the many “gray areas” of taxation is what constitutes a willful attempt to evade or defeat tax.  The answer may lie in what circuit court has jurisdiction over the question.   In Vaughn...

The Final Tangible Property Regulations

The "Final" Final Tangible Property Regulations The final regulations issued as T.D. 9689 on August 18, 2014 represent the last major component of the IRS's long-running effort to provide...

College Student-Athletes Tell NCAA to Share the Wealth: Potential Tax Implications of the O’Bannon v. NCAA Antitrust Case

In  O'Bannon v. National Collegiate Athletic Association , No. 4:09-cv-03329-CW, 2014 BL 221080 (N.D. Cal. Aug. 8, 2014), the National Collegiate Athletic Association (NCAA) was found to be in...

Hacienda Issues Administrative Determination Letter Detailing Procedures for 2014 Prepayments of Puerto Rico Retirement Plan Amounts

Between July 1, 2014 and October 31, 2014, individuals participating in retirement plans operating in PR, whether qualified or not, can elect to prepay all or a portion of their accumulated...

Protection Required – Agencies Issue Guidance on Notice Requirements When Dropping Preventive Services

In Burwell v. Hobby Lobby Stores, Inc. , No. 13-354, 2014 BL 180313 (U.S. June 30, 2014), the Supreme Court ruled that regulations requiring closely held for-profit companies to provide...

Implementation of 2014 Puerto Rico Tax Prepayments by Plan Sponsors Is Optional

On July 1, 2014, the Governor of the Commonwealth of Puerto Rico signed House Bill 1919 into law, which became Act. 77-2014.   Generally, this Act provides rules on certain prepayments of P.R....

Redemptions of Shares in Floating NAV MMFs Are Exempted from Wash-Sale Rules

On July 23, 2014, the IRS announced in Rev. Proc. 2014-45, 2014-33 I.R.B. __ relief for shareholders of certain money market funds (MMFs). Unlike other types of mutual funds, MMFs have...

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...

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...

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...

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...

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...

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.  ...

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...

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...

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...

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....

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...

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....

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....

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....

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

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...

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.

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.


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...

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...

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...

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 ...

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...

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...

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.”

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...

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

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

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’...

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...

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...

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...

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

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...

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...

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...

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...

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:   ...

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...

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)...

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...

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...

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...

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...

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...

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”?

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.

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...

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...

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...

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...

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...

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. ...

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...

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....

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).


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...

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.

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...

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).

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.

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.

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...

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...

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.,...

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...

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...

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,...

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...

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...

“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...

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...

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.

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...

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...

Is the Fate of the AMT the Key to the Beginning of Tax Season 2013?

While the nation’s attention has been focused on the so-called “fiscal cliff” and its impact on taxpayers – and with good reason – less visible has been the practical impact on tax practitioners who...

Circuits/IRS Split When It Comes to FICA Taxation of Severance Pay

An issue that comes up frequently with employers is whether severance payments to employees are subject to FICA taxation (OASDI and HI taxation).   Recent Circuit cases have muddied the waters by...

Pension Buy-Outs: Legal Implications of Cashing Out Retirees

GM and Ford, sponsors of two of the largest pension plans in the country, are offering lump sum settlements to retirees who are already collecting monthly pension benefits. The IRS approved each...

California Employers Face Pension Plan Mandate

Two bills passed by the California legislature and signed by the governor set the stage for the first state-sponsored retirement program for employees of private employers. If the program moves...

Oh, the Inhumanity - IRS Cancels Letter Forwarding For Missing Participants

As of August 31, 2012, the IRS no longer provides letter-forwarding services on behalf of plan sponsors or administrators of qualified retirement plans to locate missing participants who may be...

Bloomberg BNA Tax Policy & Practice Summit

Bloomberg BNA Tax Policy Summit: Post-Election Answers to "What Now" "Taxmaggeden," new reporting requirements under "Obamacare," and competing tax reform initiatives are just some of the...

Error in Earned Income Credit Amounts

While working on the Bloomberg BNA 2013 Projected Tax Rates , we were analyzing the Earned Income Credit and noticed something interesting. Section 32(b)(3)(B)(i), added by the American Recovery...

Treasury Proposes Circular 230 Changes for Covered Opinions and Written Advice

The Treasury Department has proposed changes to the Circular 230 rules that will significantly simplify and streamline the existing rules for written tax advice by removing current Circ. 230 §10.35...

Reminder: Year-End Deadline Nears to Amend Certain §409A Agreements


The last day of 2012 ends the two-year transition period for employers to revise employment agreements that require executives separated from service to sign a release of claims document before receiving post-termination pay and avoid further compliance problems under §409A.

Tax Court Rejects Contract Rights Purchase Argument in Split-Dollar Rollout Case


InNeff v. Comr. , T.C. Memo 2012-244, a case involving split-dollar life insurance arrangements entered into before the effective date of the 2003 final split-dollar regulations, the Tax Court held that two employees covered under life insurance policies realized income from a December 2003 rollout of the arrangements.   

Passive Activity Proposed Regulations: Policy and Practice

Tax policy issues related to partnerships and pass-through entities are both political and economic as the predominant form of investment and business entity is now the limited liability...

Excess Pension Assets May Now Be Used to Purchase Life Insurance Benefits

Although many employers have been struggling to keep their defined benefit pension plans adequately funded, other companies find that they now have a surplus of assets held in trust for retirement...

Pension Plans Prepare to Implement MAP-21 Funding Relief

The latest in pension funding relief, the Moving Ahead for Progress in the 21st Century Act (MAP-21), addresses the problems facing pension plans in several ways. The legislation tinkered with the...

RATE Coalition to Present Panel at Policy & Practice Summit

We are pleased to announce that the RATE Coalition will be presenting a panel discussion at the inaugural Bloomberg BNA Tax Policy & Practice Summit on November 13-14, 2012, in Washington, DC....

Inaugural Bloomberg BNA Tax Policy & Practice Summit

Bloomberg BNA will host its inaugural Tax Policy & Practice Summit on November 13-14, 2012, in Washington, DC.  One week after the November election, the Summit will focus on the impact of the...

Do the QDIA Safe Harbor Rules Give Plan Fiduciaries Too Much Control?

Do the quirky facts in Bidwell v. University Medical Center, Inc. justify the Sixth Circuit's decision that a plan administrator was not liable for $101,900 in losses to two §403(b) plan participants after it transferred the participants' investments from a stable value fund to a qualified default investment alternative (QDIA) without first receiving investment directions from the participants?

What Does the “Abuse of Discretion” Standard Really Mean for Tax Court Review of CDP Determinations?

With regard to the well-settled “abuse of discretion” standard the Tax Court utilizes in CDP cases, a secondary question arises, namely, the standard the court should use with respect to the...

IRS Seeks to Narrow Definition of Substantial Risk of Forfeiture

The IRS has issued proposed regulations that would make it more difficult to defer taxation on restricted property that is subject to conditions unrelated to the performance of future services.

IRS’s “Fresh Start” Initiative Adds Yet More Flexibility to Offer in Compromise Program

The IRS recently announced more changes to its offer-in-compromise (OIC) program as part of its “fresh start” initiative designed to help financially distressed taxpayers in IR-2012-53 (5/21/12).

Health Insurance Premium Tax Credit Rules Leave Employees and Their Employers Waiting

Many questions remain unanswered for low-income employees who wonder whether they may enroll in a qualified health plan and claim the health insurance premium tax credit beginning in 2014 or...

PLR 201220004 Illustrates Limited Application of Regs. §1.446-5

In PLR 201220004, an accrual method subchapter S corporation filed for Chapter 11 protection and planned to issue a combination of cash, new debt, and stock to its creditors pursuant to its (as...

Pursue Reasonable Cause Defense Outside Automated Decision Software, Gorman Says

The Internal Revenue Service can assesses numerous penalties against employers in connection with payroll taxes — including for late filing, making late payments, and failing to pay electronically — so it is important for practitioners to understand the ways available to them for winning reduction or abatement of penalties for their clients.

Tax Court Dismissal of Petition Seeking Review of CDP Action

In a case of first impression, the Tax Court held that dismissal of a taxpayer’s petition seeking review of IRS collection actions under §6330(d) does not violate the bankruptcy automatic stay under 11 U.S.C. §362(a)(8).

Supreme Court Resolves §6501 Limitations Issue but Deference Accorded to Treasury Regulations Remains Somewhat Murky

The U.S. Supreme Court's 5-4 decision in U.S. v. Home Concrete & Supply LLC, v. Comr. , No. 11-139 (S. Ct. 4/25/12) seems clear enough - an overstatement of an asset's basis resulting in an understatement of gain on its sale is not an "omission from gross income" of 25% or more for purposes of §6501(e)(1)(A) such that the normal three-year statute of limitations on assessment is extended to six years.

IRS Updates National Collection Financial Standards for Installment Agreements, Offers in Compromise

The IRS has posted to its website updates to the National Collection Financial Standards used to evaluate a taxpayer’s ability to pay and other financial circumstances primarily in connection with installment agreements and offers in compromise. The revised standards are effective April 2, 2012.

Revised IRS Form 2848 Power of Attorney Presents Traps for the Unwary Practitioner

The IRS’s recently updated version of Form 2848, Power of Attorney and Declaration of Representative (Rev. March 2012), presents several traps for taxpayers and practitioners alike.

Is the Recession Causing Small Retirement Plans to Skimp on Compliance Efforts?

Have difficult economic times caused small retirement plans to cut back on compliance with the tax laws? According to the March 20 issue of the IRS electronic newsletter, Employee Plans News , 1 in 4 smaller retirement plans reviewed starting in 2007 under the IRS's LESE ("Learn, Educate, Self-Correct, and Enforce") project had engaged in at least one prohibited transaction.

A Broken Record: Recent and Contemporary Arguments Concerning Tax Reform

Much of the debate in presidential primaries has centered on the perceived need for tax reform. Such reform would require substantial changes to the current version of the Internal Revenue Code, which, when enacted in 1986, was considered to represent “one of the most comprehensive revisions of the Federal income tax system since its inception.”

Deadline Looms for 2011 Small Business Health Care Tax Credit

March 15th is tax day for many corporations. As you prepare to file 2011 income tax returns, keep in mind that small businesses may be eligible for a tax credit to offset the cost of providing health insurance to their employees.

IRS Offers Limited Penalty Relief, Enhances Installment Agreements for Financially Struggling Taxpayers

The IRS announced in IR-2012-31 (3/7/12) an expansion of its “Fresh Start” initiative to help struggling taxpayers by providing penalty relief to the unemployed and to make installment agreements available to more taxpayers.

Bloomberg BNA Tax & Accounting Tax Essentials eBook version is now available on iBooks

Bloomberg BNA Tax & Accounting has just released on iBooks its new go-anywhere desk reference Tax Essentials: Individuals . This ebook provides an annual overview of federal tax questions affecting individuals and small business.

Congress Repeals All Special Estimated Payment Rules for Corporations with $1 Billion in Assets

Congress has periodically altered the amount of certain required estimated tax payment installments for corporations with assets of at least $1 billion (determined as of the end of the preceding tax year).

Disappearing Debt

A recent article in the Tax Management Real Estate Journal, “Is It the End or Just the Beginning: Planning with The Final Partnership Debt-for-Equity Regulations,” 28 Real Estate Journal 39 (2/1/2012), discusses the final regulations under §108(e)(8) and §721, and illustrates electing liquidation value to minimize income from discharge of indebtedness.

The Payroll Tax Cut: Is it Here to Stay?

Congress recently extended the payroll tax cut, so the rate for employees will continue to be 4.2%, down from the usual 6.2%. Unless Congress decides to extend the lower rate again, the 4.2% rate expires December 31, 2012.

IRS Now Allows K-1s to be Provided Electronically

2012 02 14 The IRS issued guidance in Rev. Proc. 2012 17 that now allows partnerships to provide Schedule K 1, Partner’s Share of Current Year Income, Deductions, Credits, and Other Items to recipients electronically.

IRS Offers Relief Pending DOL Action on IRA Indemnification Agreements

2011 12 21 Sometimes brokers seek indemnification from IRA owners to cover losses in IRA accounts. However, DOL and IRS have indicated that these agreements violate prohibited transaction rules under ERISA and the Code. The

Prohibited Transactions Are Common in Office Leasing Arrangements, DOL Warns

2011 10 20 Multiemployer plans that lease office space to or from contributing employers or unions whose members participate in the plan may be engaging in a prohibited transaction. For example, a union might lease

What’s Next on the Road to Health Care Reform for Group Health Plans?

The health care reforms introduced in 2010 take effect in stages. The IRS, DOL and HHS delayed the enforcement of some market reforms that took effect for group health plans in plan years beginning on or after September 23, 2010. Others require regular review to ensure continued adherence. In addition, it is not yet clear whether compliance with notification provisions intended to take effect in 2012 will be postponed.

New IRS VCSP Program Gives Employers a Golden Opportunity to Reclassify Workers at Low Cost and Without Penalties and Interest

2011-09-23 The IRS's Voluntary Classification Settlement Program (VCSP) presents a golden opportunity for employers to resolve past worker classification issues at an exceptionally low cost before an audit occurs. Under the VCSP, an employer would pay 10% of the amount of employment taxes calculated under the

What Will DOL's Re-Proposed Fiduciary Rule Look Like?

2011-09-23 In a News Release issued September 19, 2011, the Labor Department announced that it intends to re-propose its rule defining who is a fiduciary under ERISA in early 2012. The DOL issued a proposed rule last October that would have, among other things, expanded the definition to include those individ

No Cost Sharing for Preventive Care: Where Can Group Health Plans Draw the Line?

Although group health plans that are not grandfathered under the Patient Protection and Affordable Care Act typically must provide coverage with no cost sharing for recommended preventive care services, there are situations in which a plan may impose a deductible, copay or coinsurance.

IRS Policy Change Regarding Innocent Spouses May Present New Opportunities for Relief

A recent change in the IRS's policy regarding so-called "innocent spouse relief" under §6015(f) on equitable grounds may present a new opportunity for taxpayers to seek relief. Under Notice 2011-70, 2011-32 I.R.B. , effective July 25, 2011, the IRS no longer will require that a spouse submit

DOL Extends Deadline for Complying with Fee Disclosure Rules

Investment managers and other retirement plan service providers have been given a few more months to prepare new fee disclosures to plan fiduciaries. New DOL rules (DOL Regs. Sec. 2550.408b-2(c)) try to unmask “hidden fees” by requiring retirement plan service providers and investment vehicles to disclose indirect and direct compensation received from the plan. After receiving requests from the financial services industry for more time to compile fee information, the DOL proposed extending the original effective date of July 16, 2011, to January 1, 2012. Comments on this proposal asked for yet more time to comply, and the DOL was persuaded to extend the effective date to April 1, 2012.

Get a Waiver to Prolong Your Mini-Med Plan's Survival

A "mini-med" plan, a lower-cost plan that pays out a low dollar amount for health benefits, is available through a group health plan only until 2014 and only with a temporary annual limit waiver from the Department of Health and Human Services. Without a waiver, a mini-med plan and its sponsoring employer violate the Patient Protection and Affordable Care Act, the tax Code and ERISA.

IRS Reminds Taxpayers to Report Foreign Accounts by June 30 Deadline

In Information Release 2011-70 (6/24/11), the IRS reminded those who have bank or other financial accounts in a foreign country, or who have signature authority over such an account, that they may be required to report the account to the Treasury Department by June 30. Filing  is required for qualified pension plans and IRAs. Participants and beneficiaries in retirement plans under Code §§401(a), 403(a) or 403(b) and owners and beneficiaries of traditional IRAs, IRA annuities, SEP IRAs, SIMPLE IRAs, and deemed IRAs under §408 and Roth IRAs under §408A  are not required to file an FBAR for a foreign financial account held by or on behalf of the retirement plan or IRA.

Indemnity Is “Property” Under §351, IRS Rules

Generally, I.R.C. §351 provides nonrecognition treatment when the transferor exchanges “property” for stock of a corporation that is controlled by the transferor immediately after the exchange.