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1. Gain exclusion lost upon reacquisition of former principal residence   CPEDirect

BY Charles J. Reichert, CPA
A repossession of a former principal residence pursuant to default on a contract for deed results in the partial recognition of gain previously excluded under Sec. 121.The Tax Court held that the portion of a taxpayer’s gain excluded under Sec. 121 was properly recognized when he repossessed his former principal residence, under the general rule of Sec.

2. Exemption from PFIC regime for indirect ownership expanded  

BY Dahlia B. Doumar, J.D., LL.M. and Carl A. Merino, J.D., LL.M.
The IRS clarifies that shares held through a variety of tax-exempt organizations, plans, and accounts are generally excluded.On April 14, Treasury and the IRS announced they will amend the regulations under Sec. 1291 to provide that a U.S. person who indirectly owns stock of a passive foreign investment company (PFIC) through a tax-exempt organization or account will not be treated as a U.S.

3. Taxpayer wins partial IRA rollover contribution issue on appeal  

BY Laura Jean Kreissl, Ph.D. and Darlene Pulliam, CPA, Ph.D.
Partially reversing the Tax Court, the Eighth Circuit holds that a taxpayer made a timely partial rollover contribution to his IRA.The Eighth Circuit held that the IRS and Tax Court improperly denied a taxpayer’s claim of a partial qualifying rollover contribution to his individual retirement account (IRA) by ignoring a partial repayment of a distribution made less than 60 days earlier.

4. Most qualified plan distributions to pay accident or health premiums are taxable  

BY Sally P. Schreiber, J.D.
Final regulations exclude amounts to pay for disability insurance replacing retirement contributions.The IRS finalized regulations providing that distributions from qualified retirement plans to pay accident or health insurance premiums are taxable unless a statutory exclusion applies. However, arrangements where amounts are used to pay premiums for disability insurance to replace retirement plan contributions in the event of a participant’s disability are not treated as taxable under the regulations if they meet certain requirements.

5. Inherited home triggers denial of first-time homebuyer credit  

BY Raymond C. Speciale, Esq., CPA
A home in which a taxpayer inherited an ownership interest was his principal residence, even though he lived there only a few months, the Tax Court holds.The Tax Court held that a home inherited by a taxpayer disqualified him from a first-time homebuyer credit for a new residence.

6. IRS issues guidance on health insurance premium tax credits   WebExclusive

BY Sally P. Schreiber, J.D.
The IRS issued regulations and revenue procedures Thursday addressing how to calculate the Sec. 36B premium tax credit, including how the credit is calculated in conjunction with the Sec. 162(l) deduction for health insurance premiums of self-employed individuals. The temporary regulations (T.D. 9683) also provide rules for taxpayers who are victims of domestic abuse to claim the tax credit on a separate return, and add a provision for abandoned spouses.

7. Federal courts disagree on health care credits for federal exchanges   WebExclusive

BY Sally P. Schreiber, J.D.
The appellate courts for the D. C. Circuit and the Fourth Circuit issued conflicting decisions on Tuesday regarding the availability of the Sec. 36B premium tax credit for taxpayers who purchase health insurance on exchanges set up by the federal government. The D.C Circuit held that the regulation permitting taxpayer’s to get premium tax credits under Sec.

8. Court halts IRS regulation of contingent fees for refund claims   WebExclusive

BY Alistair M. Nevius, J.D.
The U.S. District Court for the District of Columbia granted a motion of summary judgment and issued an injunction to prevent the IRS from regulating contingent fee arrangements for the preparation and filing of ordinary refund claims under Circular 230, Regulations Governing Practice Before the Internal Revenue Service (31 C.F.R.

9. One-IRA-rollover-a-year rule will be effective in 2015, IRS says   WebExclusive

BY Sally P. Schreiber, J.D.
Following up on its promise earlier in the year to follow the Tax Court’s holding that the limit of one rollover per year applies on an aggregate basis and not on an IRA-by-IRA basis, the IRS withdrew a proposed regulation from 1981, Prop. Regs. Sec. 1.408-4(b)(4)(ii), which had provided otherwise (REG-209459-78).

10. E-filing of amended returns, elimination of Form 1040X among TIGTA recommendations   WebExclusive

BY Sally P. Schreiber, J.D.
Taxpayers should be allowed to use Form 1040 to amend their returns and should be able to e-file amended returns, according to recommendations made by the Treasury Inspector General for Tax Administration (TIGTA) on Wednesday (TIGTA Rep’t No. 2014-40-028). Although individual tax returns in the Form 1040 series may all be filed electronically, the IRS can only accept Form 1040X, Amended U.S.
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