Daily Tax Report ®

Senate Republican Plans Bill to Alter Opportunity Zones

Justices Confront New Dispute Over Religious School Funding

Top Stories

Religious-School Aid Divides U.S. Supreme Court Justices

U.S. Supreme Court justices signaled a sharp divide in a Montana case that could make it easier to funnel public money to religious schools and other faith-based organizations.

Juul, Vaping Companies Would Pay FDA User Fees Under Bill

E-cigarette companies like Juul Labs Inc. could help fund the FDA’s vaping enforcement measures under a bipartisan bill in the Senate.

Le Maire Says France Agrees on Digital Tax Framework With U.S.

The U.S. and France struck a deal on a global framework for digital taxation Wednesday to avert a transatlantic trade war, French Finance Minister Bruno Le Maire said.

HILL TAX BRIEFING: High Court Hears Arguments in Tax Case Today

Read more: President Donald Trump said he’s happy with digital tax discussions with French President Emmanuel Macron. New Jersey Gov. Phil Murphy extends the state’s film tax credit program. The USMCA will soon be headed to Trump’s desk.

Trump Tells Fox Bus. Tax-Cut Plan Coming in 90 Days

President Trump plans to announce middle class tax cut proposal in next 90 days, he told Fox Business in an interview from Davos.

Javid Says U.K. Plans to Go Ahead With Digital Tax in April

Chancellor of the Exchequer Sajid Javid says U.K. government plans to go ahead with a tax on digital services in April, telling a panel at the World Economic Forum in Davos that the levy is designed to be temporary and to fall away once there’s international agreement on the issue.

U.S.-France Digital Tax Truce

The U.S. and France have agreed to a truce in their dispute over digital taxes, according to a French diplomat. It means punitive tariffs won’t be imposed by either side for the rest of this year. Bloomberg’s Caroline Connan reports on “Bloomberg Markets: European Open.”

Up Next:

France Favors International Solution to Tech Tax, Minister Cédric O Says

Sen. Warren on Wealth Tax, Trade War and Medicare For All

Why Billionaire Presidential Candidate Tom Steyer Supports the Wealth Tax

Why Warren’s Wealth Tax Could Push Billionaires Into Private Equity

N.J. Governor Murphy Says Trump 'Weaponized' Tax Law

Trump Weighs Weakening Obama's Corporate Inversion Rule

New York City Has a Property Tax Problem

Podcasts:

The Tax Decade: How the 2010s Led to Where We Are Now

The OECD and Taxes for the Digital Economy: a Primer

Tax Developments

Case: Jurisdiction Exists to Redetermine Income Tax Deficiencies in Partnership Proceeding, But Not Penalties (T.C. Memo) (IRC §6662)

Jurisdiction exists to redetermine income tax deficiencies, but not to consider penalties determined at partnership level, the U.S. Tax Court held in a memorandum opinion. Taxpayers participated in a Son-of-BOSS tax shelter transaction involving a partnership created by Taxpayers, together with two trusts. The IRS subsequently issued a final partnership administrative adjustment to the partnership, determining that it was a sham lacking in economic substance. After a court agreed with the IRS regarding the partnership, penalties were assessed. The IRS issued notices of deficiency and determined accuracy-related penalties. The court held that it had jurisdiction over Taxpayers’ income tax deficiencies because partner-level determinations were needed and granted Taxpayer’s motion to restrain collection and refund amounts previously collected. However, the court held that it lacked jurisdiction over the penalties Taxpayers challenged. The court stated that the penalties constituted computational adjustments. [Manroe v. Commissioner, T.C. Memo 2020-16 (Jan. 22, 2020)]

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IRS News Release: Warning to Taxpayers About Need to Carefully Review Tax Return Information, ‘Ghost’ Preparers (IRC §7427)

Taxpayers are warned to avoid unethical tax return preparers, known as ghost preparers, the IRS announced. The IRS stated that by law, anyone that is permitted to prepare a return is required to have a valid 2020 Preparer Tax Identification Number (PTIN). The IRS noted that a ghost preparer will not sign the return, a major tax return red flag. Additionally, ghost preparers may also require payment in cash only and not provide a receipt, invent income to qualify their clients for tax credits, claim fake deductions to boost the size of the refund, and direct refunds into their bank account, not the taxpayer’s account. The IRS urged that no matter who prepares the return, taxpayers need to review it carefully and ask questions about anything not clear before signing. [IR-2020-17 (Jan. 22, 2020)]

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Case: Schedule C Deductions, COGS Properly Adjusted by IRS (T.C. Summ.) (IRC §162)

Taxpayers provided no evidence to substantiate Schedule C deductions or costs of goods sold (COGS), and payment from C corporation of personal expenses were distributions, the U.S. Tax Court held in a nonprecedential summary opinion. Taxpayer Husband was the sole shareholder and an officer of C corporation (C). C stored electronic devices purchased from a lab, pursuant to the terms of a sales agreement. C was entitled to purchase the equipment for 13 cents per pound. Taxpayer Husband used his truck to transport the equipment. C resold some of the used equipment on eBay. The IRS determined deficiencies in Taxpayers’ Schedule C deductions, COGS, and dividend income. The court found that Taxpayers offered no explanation or evidence for COGS or the deduction for other expenses reported on their Schedule C. The court also rejected Taxpayers’ inclusion of the amount of its yearly purchases in the calculation of COGS even though not all of the items purchased during the year were sold during the year. The court explained that C failed to introduce evidence to contradict the IRS’s calculations of inventories. The court also held that C’s payments to Taxpayer Husband’s personal expenses were distributions to him. [Reliable Computer Services, Inc. v. Commissioner, T.C. Summ. Op. 2020-7 (Jan. 22, 2020)]

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Senate Republican Plans Bill to Alter Opportunity Zones

Justices Confront New Dispute Over Religious School Funding

Top Stories

Religious-School Aid Divides U.S. Supreme Court Justices

Juul, Vaping Companies Would Pay FDA User Fees Under Bill

Le Maire Says France Agrees on Digital Tax Framework With U.S.

HILL TAX BRIEFING: High Court Hears Arguments in Tax Case Today

Trump Tells Fox Bus. Tax-Cut Plan Coming in 90 Days

Javid Says U.K. Plans to Go Ahead With Digital Tax in April

U.S.-France Digital Tax Truce

Up Next:

France Favors International Solution to Tech Tax, Minister Cédric O Says

Sen. Warren on Wealth Tax, Trade War and Medicare For All

Why Billionaire Presidential Candidate Tom Steyer Supports the Wealth Tax

Why Warren’s Wealth Tax Could Push Billionaires Into Private Equity

N.J. Governor Murphy Says Trump 'Weaponized' Tax Law

Trump Weighs Weakening Obama's Corporate Inversion Rule

New York City Has a Property Tax Problem

Podcasts:

The Tax Decade: How the 2010s Led to Where We Are Now

The OECD and Taxes for the Digital Economy: a Primer

Case: Jurisdiction Exists to Redetermine Income Tax Deficiencies in Partnership Proceeding, But Not Penalties (T.C. Memo) (IRC §6662)

IRS News Release: Warning to Taxpayers About Need to Carefully Review Tax Return Information, ‘Ghost’ Preparers (IRC §7427)

Case: Schedule C Deductions, COGS Properly Adjusted by IRS (T.C. Summ.) (IRC §162)

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