Insights & News

Tax Insights, April 1, 2015
Tracking Tax News You Need to Know

April 01, 2015
Exchangeable Debt Is Part of Straddle
In partially redacted field attorney advice 20151201F, the IRS concluded that a taxpayer's exchangeable debentures and long position in the debenture's reference shares are a straddle for purposes of Section 1092 of the Internal Revenue Code because they are positions in the same property and the value of such positions ordinarily vary inversely. FAA 20151201F is available here.

House Ways and Means Committee Sends Seven Tax Administration Bills to House
The House Ways and Means Committee on March 25 approved seven bills related to tax administration and the determination of tax-exempt status. The committee approved on a 22-10 party-line vote a bill to repeal the estate and generation-skipping transfer taxes and reduce the gift tax. The text of a substitute amendment to H.R. 1105, the Death Tax Repeal Act of 2015, is available here. Click here for the Joint Committee on Taxation's Description of H.R. 1105, JCX-67-15. The text of a substitute amendment to H.R. 1314, the Ensuring Tax Exempt Organizations the Right to Appeal Act, which would allow for administrative appeals of adverse determinations of some organizations' tax-exempt status, is available here. Click here for the Joint Committee on Taxation's Description of H.R. 131, JCX-69-15.

Transferee Liability Applied to Some, But Not All, Amounts Sent to Minority Shareholders
The Tax Court held that taxpayers who were both minority shareholders and high-level employees of a corporation from which the majority shareholders siphoned substantially all the cash without paying the corporation's income taxes, were liable for those taxes as transferees, with respect to some monies the taxpayers fraudulently received from the corporation but not with respect to other monies, which the court viewed as not fraudulent under Florida law. William J. Kardash, Sr., et al. v. Commissioner, T.C. Memo 2015-51, is available here.

IRS Lists Countries Whose Adverse Conditions Create 2014 Foreign Income/Housing Waiver
In Rev. Proc. 2015-25, 2015-14 IRB (available here), the IRS has provided a list of countries for 2014 for which, due to adverse conditions during the year, it has waived the residency and presence tests that apply for purposes of the foreign earned income and foreign housing cost exclusions.

Tax Court Sustains Final Partnership Administrative Adjustments in Son-of-BOSS Case
The Tax Court in CNT Investors, LLC, Charles C, Carrol, Tax Matters Partner, 144 TC No. 11 (2015), held that the step transaction doctrine applied to a son-of-BOSS transaction involving the distribution of real property to an S corporation's shareholders and that the distribution resulted in gain that was omitted from the shareholder's returns.

IRS Adds Information on Reporting Requirements and Data Encryption to FATCA FAQs
The IRS has updated a list of FAQs on general issues associated with the Foreign Account Tax Compliance Act requirements, adding two questions on reporting requirements regarding Form 8966, "FATCA Report." The FATCA FAQs General are available here. The IRS has also updated a list of frequently asked questions on the international data exchange services system and on the international compliance management model system that are used for FATCA data, adding a question on the encryption process used to protect FATCA data. The FATCA IDES Technical FAQs are available here.

Information contained in this publication should not be construed as legal advice or opinion or as a substitute for the advice of counsel. The articles by these authors may have first appeared in other publications. The content provided is for educational and informational purposes for the use of clients and others who may be interested in the subject matter. We recommend that readers seek specific advice from counsel about particular matters of interest.

Copyright © 2015 Stradley Ronon Stevens & Young, LLP. All rights reserved.

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