Tax News

CCH (cch.taxgroup.com) reports:

  Two different types of bundled transactions that involve the sale of equipment along with the sale of wireless Internet service are subject to Louisiana sales and use tax. In both types of transactions, the provider bundles a taxable transaction (i.e., the sale of equipment) with a nontaxable transaction (i.e., the sale of wireless Internet service).

 

CCH (cch.taxgroup.com) reports:

  The Florida Department of Revenue has released advisory comments regarding the changes to the administrative and judicial review of property taxes enacted by H.B. 909, including changes to the Value Adjustment Board ("Board"). The enactment of H.B. 909 was reported previously. (TAXDAY, 2008/06/20, S.9)

 

CCH (cch.taxgroup.com) reports:

  A bill passed by the California Legislature would conform California personal income tax law to federal amendments made by the Mortgage Forgiveness Debt Relief Act of 2007 (Public Law 110-142) that allow a personal income taxpayer to exclude from his or her gross income the discharge of the individual's qualified principal residence indebtedness in the 2007 through 2009 calendar years. However, if enacted , the bill would limit the California exclusion to indebtedness discharged in the 2007 and 2008 calendar years only. Additional provisions would limit the amount of the exclusion to $250,000 ($125,000 in the case of a married individual filing separate) and would define "qualified principal residence indebtedness" for purposes of the exclusion to mean an individual's qualified acquisition indebtedness of up to $800,000 ($400,000 in the case of a married individual filing separately), rather than the $2 million ($1 million in the case of a married individual filing separately) limitation provided under federal law. The exclusion would be applicable for California personal income tax purposes beginning with the 2007 taxable year.

S.B. 1055, as enrolled, August 19, 2008
 

CCH (cch.taxgroup.com) reports:

  An individual could not bring an action against his employer to recover federal taxes withheld from his wages and paid over to the IRS. His allegations that the employer was required to establish a statutory employer-employee relationship and secure a determination of worker status before withholding taxes consisted primarily of legal conclusions without authority or factual support. Withholding federal income tax and making payments to the IRS are mandatory duties for employers. Moreover, the exclusive remedy for a tax refund is an action against the United States, not against an employer.

H. Nino v. Ford Motor Company, DC Mich., 2008-2 USTC ¶50,497

Other References:

 
Code Sec. 3403

  CCH Reference - 2008FED ¶33,593.1635

 
Code Sec. 7422

  CCH Reference - 2008FED ¶41,688.362

  Tax Research Consultant

  CCH Reference - TRC FILEIND: 15,306

CCH (cch.taxgroup.com) reports:

  The government's letter to an individual did not constitute an acceptance of the individual's settlement offer and did not create a valid and binding settlement of the parties' dispute. The letter did not mirror the terms of the offer because it made no reference to the interest that would accrue if he failed to pay the settlement amount within 120 days of the government's acceptance.

  Instead, it provided that the offer would be accepted on condition that payment is made within 120 days, with the understanding that the settlement did not constitute a compromise of the individual's income tax liability. Since the letter altered the terms of the individual's offer, it was construed as a counteroffer by the government.

  Related decision at 2006-2 USTC ¶50,555.

E.A. Brinskele, FedCl, 2008-2 USTC ¶50,493

Other References:

 
Code Sec. 7122

  CCH Reference - 2008FED ¶41,130.175

  Tax Research Consultant

  CCH Reference - TRC IRS: 42,116

CCH (cch.taxgroup.com) reports:

  The IRS has released a fact sheet to help taxpayers determine whether an activity is engaged in for profit or merely as a hobby. The fact sheet discusses the hobby loss rules and lists several non-inclusive factors to be considered when making this determination, including:

  --Does the time and effort put into the activity indicate an intention to make a profit?

  --Do you depend on income from the activity?

  --If there are losses, are they due to circumstances beyond your control or did they occur in the start-up phase of the business?

  --Have you changed methods of operation to improve profitability?

  --Do you have the knowledge needed to carry on the activity as a successful business?

  --Have you made a profit in similar activities in the past?

  --Does the activity make a profit in some years?

  --Do you expect to make a profit in the future from the appreciation of assets used in the activity?

  If an activity is not for profit, losses from that activity may not be used to offset other income and deductions cannot exceed the gross receipts from the not for profit activity. Further, hobby deductions are claimed as itemized deductions in the following order and only to the extent stated in each of three categories:

  --Deductions that a taxpayer may claim for certain personal expenses, such as home mortgage interest and taxes, may be taken in full.

  --Deductions that do not result in an adjustment to the basis of property, such as advertising, insurance premiums and wages, may be taken next, to the extent gross income for the activity is more than the deductions from the first category.

  --Deductions that reduce the basis of property, such as depreciation and amortization, are taken last, but only to the extent gross income for the activity is more than the deductions taken in the first two categories.

IRS Fact Sheet FS-2008-23, 2008FED ¶46,549

Other References:

 
Code Sec. 183

  CCH Reference - 2008FED ¶12,177.169

  Tax Research Consultant

  CCH Reference - TRC BUSEXP: 3,052

  CCH Reference - TRC BUSEXP: 15,250

Tax Analysts report: