Tax Headlines

1827

Couple Could Not Exclude Foster Care Payments; They Did Not Live in Home Provided for Developmentally Disabled Adults; Accuracy Penalty Not Imposed Due to Reasonable Cause for Reporting Position (Stromme, TC)

A couple could not exclude foster care payments paid by a county government because they did not live in the house in which they provided for the care of developmentally disabled adults. The couple owned two homes; they resided in one home, and the second home was used to care for and as lodging for their clients. Code Sec. 131 allows the payments to be tax free if the payments are paid by the State’s foster care program or by a political subdivision thereof, or qualified agency to a foster care provider for the care of a qualified foster individual in the foster care provider’s home.

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IRS Proposes Procedures to Update Employer Identification Number (REG-135491-10)

The IRS has published proposed regulations on procedures for obtaining an employer identification number (EIN). Under current procedures, EIN applications often authorize an individual (a “nominee”) to act on the applicant’s behalf for purposes of obtaining the EIN. The nominee’s authority, however, is often temporary and does not last beyond the application process.

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Structural Components of Apartment Complex Depreciable as Residential Real Property (Amerisouth XXXII, LTD., TCM)

An apartment complex’s structural components were depreciable as residential real property over 27.5 years. The Tax Court rejected the taxpayer’s argument that the apartment complex was a collection of over 1,000 components depreciable as personal property over periods ranging from five to 15 years. The taxpayer conducted a cost-segregation study that separated the components at issue into twelve categories: water-distribution system, sanitary-sewer system, gas line, site electric (eligible for 15-year depreciation), site preparation and earthwork, special HVAC, special plumbing, special electric, finish carpentry, millwork, interior windows and mirrors, and special painting (eligible for five-year depreciation).

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Utah ~ Sales and Use Tax: Affiliate Nexus Bill Passes Legislature

The Utah Legislature has passed an affiliate nexus bill that would require certain out-of-state sellers to collect and remit Utah sales and use tax. The bill contains provisions defining the ownership or contractual relationships that constitute affiliation for nexus purposes. Under certain conditions, an affiliated seller would be (1) considered engaged in the sale of tangible personal property, a service, or an electronically transferred product in Utah and (2) required to pay or collect and remit taxes. If enacted, the affiliate nexus provisions would be effective July 1, 2012.

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Minnesota ~ Multiple Taxes: Assignment of Historic Structure Rehabilitation Credit Certificates Discussed

The Minnesota Department of Revenue has issued a Revenue Notice regarding the assignment of historic structure rehabilitation credits, which are available against corporate, personal, and insurance premium taxes. According to the department, only an original recipient of the tax credit certificate who is listed on the certificate can assign the certificate to another taxpayer and the credit certificate can only be assigned once. The credit may flow through an entity (such as a partnership or other flow-through entity), so the partner or owner of a partnership or LLC would not need to be listed on the application or credit certificate to receive the credit.

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Tax Relief Provided for Victims of Indiana Tornadoes (IN-2012-14)

The IRS has extended return-filing and payment deadlines for victims of severe storms, straight-line winds and tornadoes that began on February 29, 2012, in parts of Indiana and resulting in the counties of Clark, Jefferson, Ripley, Scott, Warrick and Washington being declared a federal disaster area. Persons who qualify for assistance were granted an extension to May 31,2012, to file most tax returns, pay taxes, including estimated taxes, and perform other time-sensitive acts otherwise due on or after February 29, 2012, and on or before May 31, 2012.

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CCH Weekly Report from Washington, D.C.

After a failed attempt to advance the Moving Ahead for Progress in the 21st Century (MAP-21) Bill (Sen 1813), the Senate began considering amendments to the highway reauthorization bill on March 8 and will continue on March 13. The House Ways and Means Committee held a hearing on tax reform for closely held business, while a Senate Finance Committee hearing examined the impact of tax incentives on capital investments and manufacturing. The IRS released guidance on tax penalty relief, the portfolio interest exception and accounting methods during the week of March 5.

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