May 7, 2004
In this Issue:
May Tax Talk Today Clarifies IRS Examination Program Changes
IRS Offers Settlement for Son of Boss Tax Shelter
Treasury and IRS Issue Guidance on Capital Gain Dividends
Treasury and IRS Issue Guidance on Mutual Funds
Treasury Issues Guidance on
Business Meal & Entertainment Expenses
Treasury and IRS Issue Guidance on Advance Payments
Treasury and IRS Issue Guidance on Interest Deductions and Tax-Exempt
Interest Income
Treasury Issues Guidance on Joint Ventures Between Tax Exempt Organizations
And For-Profit Entities
Treasury and IRS Issue Guidance on Credit Card Fee Income
Recent Technical Guidance
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May Tax Talk Today Clarifies IRS Examination Program Changes
The May Tax Talk Today program will focus on new audit procedures for determining the scope of the examination, practitioner involvement in setting the schedule for the exam and the increased role that IRS managers will play in the entire examination process. This webcast will be on Tuesday May 11, 2004, from 2 p.m. to 3 p.m. ET.
This program is designed for practitioners who are involved in representation work and with IRS Field Examination staff. See: http://www.taxtalktoday.tv/viewpage.cfm?pgname=8.71 for additional informational about exam reengineering on the resource page.
Reminder: E-Services Were Featured on March Tax Talk Today.
The March 9 program focused on the Electronic Account Resolution (EAR) prototype system for practitioners, the suite of e-services and who is eligible to participate.
To view the March 9 program, go to the Tax Talk Today archive at:
http://www.taxtalktoday.tv/index.cfm?page=8.532
IRS Offers Settlement for Son of Boss Tax Shelter
Taxpayers who invested in an abusive tax shelter commonly known as "Son of Boss" will have until June 21 to accept an IRS settlement offer to resolve their tax issues. The IRS is already aware of several thousand transactions involving an understatement of tax in excess of $6 billion, not including interest and penalties. Many of these transactions generated tax losses of between $10 million and $50 million. Under the terms of the agreement, eligible taxpayers must concede 100 percent of the claimed tax losses, must pay all applicable interest and must accept the imposition of a penalty unless they had previously disclosed their participation in the transaction.
IRS Announcement 2004-46 outlines the details of the settlement offer. See: http://www.irs.gov/pub/irs-drop/a-04-46.pdf
Treasury and IRS Issue Guidance on Capital Gain Dividends
The IRS and the Treasury Department today issued guidance to clarify that capital gain dividends received from a mutual fund in 2004 will be taxed at the new, lower capital gain rates enacted last year. See:
http://www.irs.gov/pub/irs-drop/n-04-39.pdf
Treasury and IRS Issue Guidance on Mutual Funds
The Treasury Department and the IRS have issued guidance making available to mutual funds a simplifying assumption that is already available under the securities law. See: http://www.irs.gov/pub/irs-drop/rp-04-28
Treasury Issues Guidance on
Business Meal & Entertainment Expenses
The Treasury Department and the Internal Revenue Service have announced the issuance of guidance on the use of statistical sampling in determining deductible business meal and entertainment (M&E) expenses. See: http://www.ustreas.gov/press/releases/js1498.htm
Treasury and IRS Issue Guidance on Advance Payments
The Treasury Department and IRS issued a revenue procedure that provides taxpayers that use an accrual method of accounting a limited deferral beyond the year of receipt for certain types of advance payments. The revenue procedure finalizes a proposed revenue procedure published in late 2002. An accompanying announcement discusses the most significant issues considered in connection with finalizing the revenue procedure. See: http://www.irs.gov/pub/irs-drop/rp-04-34
Treasury and IRS Issue Guidance on Interest Deductions and Tax-Exempt
Interest Income
The Treasury Department and the IRS have released guidance regarding the disallowance of deductions for interest paid on funds borrowed to purchase or carry tax-exempt obligations. See: http://www.ustreas.gov/press/releases/js1515.htm
Treasury Issues Guidance on Joint Ventures Between Tax Exempt Organizations And For-Profit Entities
The Treasury Department and the IRS have issued guidance on joint ventures between tax-exempt organizations and for-profit entities. See:
http://www.irs.gov/pub/irs-drop/rr-04-51
Treasury and IRS Issue Guidance on Credit Card Fee Income
The Treasury Department and the IRS have issued 3 guidance items regarding credit card annual fees and credit card late fees.
Revenue Ruling 2004-52, holds that credit card annual fees are not interest for federal income tax purposes. See: http://www.irs.gov/pub/irs-drop/rr-04-52
Revenue Procedure 2004-32 provides automatic consent procedures for taxpayers to change their method of accounting to the Ratable Inclusion
Method for Credit Card Annual Fees described in the revenue procedure. See: http://www.irs.gov/pub/irs-drop/rp-04-32
Revenue Procedure 2004-33 provides automatic consent procedures for taxpayers to change their method of accounting for credit card late fee income to treat these fees as interest that creates or increases the amount of OID on a pool of credit card loans to which the fees relate.
See: http://www.irs.gov/pub/irs-drop/rp-04-33
Recent Technical Guidance
The Treasury Department and IRS today issued a revenue procedure that sets forth the exclusive administrative procedures by which taxpayers may obtain consent to change their method of accounting for transactions that improperly use contested liability trusts to attempt to accelerate deductions. See: http://www.ustreas.gov/press/releases/js1513.htm
The Treasury Department and the IRS issued proposed regulations relating to tax-exempt private activity bonds issued to finance solid waste disposal facilities. See: http://www.ustreas.gov/press/releases/reports/js1510solidwasteregs.pdf
Announcement 2004-43 describes the notice that must be given to the plan participant, the participant's beneficiary and the Pension Benefit Guarantee Corporation (PBGC), when an employer elects to make an alternative deficit reduction contribution described in section 102 of the Pension Funding Equity Act of 2004. See: http://www.irs.gov/pub/irs-drop/a-04-43.pdf
Notice 2004-7, (1) announces the intention of the Internal Revenue Service and the Treasury Department to propose regulations providing that the value requirement may be treated as met under certain circumstances; (2) describes issues under consideration; (3) invites comments on those issues; and (4) announces those circumstances under which the IRS will provide relief from the failure to satisfy the value requirement until temporary or final regulations are promulgated. See: http://www.irs.gov/pub/irs-drop/n-04-7.pdf
Revenue Procedure 2004-30 provides automatic consent procedures for taxpayers to change their method of accounting for income from REMIC inducement fees to a safe harbor method set forth in TD 9128. See:
http://www.irs.gov/pub/irs-drop/rp-04-30.pdf
Revenue Procedure 2004-35 provides relief for certain taxpayers requesting relief for late shareholder consents in community property states. See: http://www.irs.gov/pub/irs-drop/rp-04-35.pdf
Revenue Ruling 2004-49 explains that if a section 197(f)(9) intangible is amortizable, the anti-churning rules do not apply to curative or remedial reverse allocations of amortization. See:
http://www.irs.gov/pub/irs-drop/rr-04-49.pdf
Revenue Ruling 2004-50 holds that a federally recognized Indian tribal government is not an eligible S corporation for purposes of the Internal Revenue Code. See: http://www.irs.gov/pub/irs-drop/rr-04-50.pdf
Revenue Ruling 2004-53 clarifies IRC 6103(a) pertaining to the disclosure of returns and return information to government employees. See: http://www.irs.gov/pub/irs-drop/rr-04-53.pdf
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