Tag Archive for Internal Revenue Service

IRS Rules Regarding Retirement Plans And Loans

IRS - IRS Rules Regarding Retirement Plans And Loans

Can A Loan Be Taken From An IRA?

Loans are not permitted from IRAs or from IRA-based plans such as SEPs, SARSEPs and SIMPLE IRA plans. Loans are only possible from qualified plans that satisfy the requirements of 401(a), from annuity plans that satisfy the requirements of 403(a) or 403(b), and from governmental plans. (IRC Section 72(p)(4); Reg. Section 1.72(p)-1, Q&A-2)

What Happens If A Loan Is Taken From An IRA?

If the owner of an IRA borrows from the IRA, the IRA is no longer an IRA, and the value of the entire IRA is included in the owner’s income. (IRC Sections 408(e)(2) and (3))

If the owner of an IRA pledges part of the IRA as collateral, the part of the IRA that is pledged is treated as distributed. (IRC Section 408(e)(4))

Under What Circumstances Can A Loan Be Taken From A Qualified Plan?

A qualified plan may, but is not required to provide for loans. If a plan provides for loans, the plan may limit the amount that can be taken as a loan. The maximum amount that the plan can permit as a loan is (1) the greater of $10,000 or 50% of your vested account balance, or (2) $50,000, whichever is less.

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Tax Professionals Now Able To Obtain Wage And Income Transcripts Needed For Tax Preparation

IRS - Request Wage Statements From IRS

The Internal Revenue Service, in partnership with the tax preparation community, has devised a new process that will allow tax practitioners to access employer information needed for return preparation and electronic filing while also protecting taxpayer data.

The new process is part of a series of steps planned by the IRS to enhance safeguards around the tax transcript format and distribution to better protect taxpayers from identity theft. A transcript is a summary of tax return entries on the Form 1040 series.

In September 2018, the IRS began partially masking the personally identifiable information for all individuals and entities listed on an individual tax return. The redesigned transcript will fully display all financial entries. See New Tax Transcript and Customer File Number for details.

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Guidance Related To The Foreign Tax Credit, Including Guidance Implementing Changes Made By The Tax Cuts And Jobs Act

IRS - Foreign Tax Credit Guidance


The Act made several significant changes to the Internal Revenue Code with respect to the foreign tax credit rules and related rules for allocating and apportioning expenses for purposes of determining the foreign tax credit limitation. In particular, the Act repealed the fair market value method of asset valuation for purposes of allocating and apportioning interest expense under section 864(e)(2), added section 904(b)(4), added two foreign tax credit limitation categories in section 904(d), amended section 960(a) through (c), added section 960(d) through (f), and repealed section 902 along with making other conforming changes. The Act also added section 951A, which requires a United States shareholder of a controlled foreign corporation (“CFC”) to include certain amounts in income (a “global intangible low-taxed income inclusion” or “GILTI inclusion”).

This document contains proposed regulations (the “proposed regulations”) addressing (1) the allocation and apportionment of deductions under sections 861 through 865 and adjustments to the foreign tax credit limitation under section 904(b)(4); (2) transition rules for overall foreign loss, separate limitation loss, and overall domestic loss accounts under section 904(f) and (g), and for the carryover and carryback of unused foreign taxes under section 904(c); (3) the addition of separate categories under section 904(d) and other necessary updates to the regulations under section 904 including revisions to the look-through rules and other updates to reflect pre-Act statutory amendments; (4) the calculation of the exception from subpart F income for high-taxed income under section 954(b)(4); (5) the determination of deemed paid credits under section 960 and the gross up under section 78; and (6) the application of the election under section 965(n).

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Virtual Currency And The IRS

Venar Ayar- Virtual Currency

Virtual currency refers to any digital currency which is only available in an electronic form and not as a physical form of money. Virtual currencies, like Bitcoin, are created by a process known as “mining,” where an individual, using powerful computers, authenticates transactions in what is known as a “blockchain,” or a ledger of digital transactions.

Virtual currencies may be traded on digital trading platforms, such as the third-party Coinbase, and can be used as a form of online payment, held as an investment, or used in loans to other individuals.

The IRS And Virtual Currencies

According to IRS Notice 2014-21, “the sale or exchange of convertible virtual currency, or the use of convertible virtual currency to pay for goods or services in a real-world economy transaction, has tax consequences that may result in a tax liability.”  This means, per IRS determination, virtual currencies, such as Bitcoin, are treated as property, and subject to tax regulations.

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IRS Large Business And International Report On The Examination Process

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The Internal Revenue Service introduced the Large Business & International Examination Process (LEP) in 2016. Designed to provide an organizational approach for conducting efficient examinations from the first contact with the taxpayer through the final stages of issue resolution, LEP is described in IRS Publication 5125 (2-2016). See also IRM 4.46 LB&I Examination Process. Many aspects of LEP are working well; in particular, LEP has resulted in closer collaboration on the formulation and issuance of Information Document Requests (IDRs). The LB&I subgroup understands that the IRM is in the process of being revised to reflect the new issue-based “campaign” initiative  and that additional changes will likely be made to LEP as LB&I gains experience with the campaign process.

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Treasury, IRS Issue Proposed Regulations On New Opportunity Zone Tax Incentive

Tax Opportunity Zones

The Treasury Department and the Internal Revenue Service today issued proposed regulations and other published guidance for the new Opportunity Zone tax incentive.

Opportunity Zones, created by the 2017 Tax Cuts and Jobs Act, were designed to spur investment in distressed communities throughout the country through tax benefits. Under a nomination process completed in June, 8,761 communities in all 50 states, the District of Columbia and five U.S. territories were designated as qualified Opportunity Zones. Opportunity Zones retain their designation for 10 years. Investors may defer tax on almost any capital gain up to Dec. 31, 2026 by making an appropriate investment in a zone, making an election after December 21, 2017, and meeting other requirements. Read more

Expenses For Business Meals Under §274 Of The Internal Revenue Code

Business Meal Expenses Under Tax Cuts And Jobs Act

This IRS notice provides transitional guidance on the deductibility of expenses for certain business meals under § 274 of the Internal Revenue Code. Section 274 was amended by the Tax Cuts and Jobs Act, Pub. L. No. 115-97, § 13304, 131 Stat. 2054, 2123 (2017) (the Act). As amended by the Act, § 274 generally disallows a deduction for expenses with respect to entertainment, amusement, or recreation. However, the Act does not specifically address the deductibility of expenses for business meals. Read more

IRS: Offshore Voluntary Compliance Program To End September 28, 2018

IRS - Offshore Voluntary Disclosure Program Ends September 28, 2018

The Internal Revenue Service today reminded taxpayers they have until Sept. 28 to apply for the Offshore Voluntary Disclosure Program (OVDP).

Since the OVDP’s initial launch in 2009, more than 56,000 taxpayers have used the various terms of the program to comply voluntarily with U.S. tax laws. These taxpayers with undisclosed offshore accounts have paid a total of $11.1 billion in back taxes, interest and penalties. The planned end of the current OVDP also reflects advances in third-party reporting and increased awareness of U.S. taxpayers of their offshore tax and reporting obligations.

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Report Of Cash Payments Over $10,000 Received In A Trade Or Business – Financial Crimes And Automobile Dealership Transactions

IRS - Reporting On Cash Payments Over $10,000

Generally, any person in a trade or business who receives more than $10,000 in cash in a single transaction or related transactions must complete a Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business (PDF). Form 8300 is a joint form issued by the IRS and the Financial Crimes Enforcement Network (FinCEN) and is used by the government to track individuals that evade taxes and those who profit from criminal activities. Although the cash reporting requirements apply to many types of businesses, auto dealerships frequently receive cash in excess of $10,000 and are required to comply with the filing requirements.

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IRS FATCA Foreign Financial Institutions (FFI) Lists 314,027 Financial Institutions Worldwide

IRS, IRS List of FATCA Foreign Financial Institutions

The Foreign Financial Institutions (FFI) List is issued by the IRS and includes all financial institutions, branches, direct reporting non-financial foreign entities, sponsored entities, and sponsored subsidiary branches that have submitted a registration and have been assigned a Global Intermediary Identification Number (GINN) at the time the list was compiled. The list is compiled on a monthly basis and published the first day of each month.

The Foreign Financial Institutions (FFI) list in its entirety along with the Global Intermediary Identification Number (GINN) can be accessed or downloaded in its entirety on the following page:

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Private Pass-Through Foundation Rules And The 50 Percent Contribution Deduction

IRS, TaxConnections

Contributions to a private nonoperating founda­tion may qualify for the benefit of the 50 percent contri­bution deduction limit, and donors may deduct the full value of appreciated property, if the pri­vate nonoperating foundation:

  1. Distributes an amount equal in value to 100 percent of all contributions received in the tax year by the 15th day of the 3rd month after the close of its tax year,
  2. Has no remaining undistributed income for the year, and
  3. Distributes only qualifying distributions that are treated as distributions out of corpus.

Qualifying distributions cannot be made to:

  1. An organization controlled directly or indi­rectly by the foundation or by one or more disqualified persons, or
  2. A private foundation that is not an operat­ing foundation.

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