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Michael Sardar presented a webinar entitled "Penalty Standards for the Taxpayer and the Preparer" for The CPA Academy on June 11, 2020

When the IRS audits a taxpayer and determines that additional tax is due, the taxpayer may be subject to penalties in addition to the tax due. Further, the tax practitioner involved in preparing that tax return may also be subject to penalties. This course covered the standards applicable to both the taxpayer and tax practitioner when the IRS determines whether to impose penalties. Mr. Sardar reviewed the relevant standards, including reasonable basis, substantial authority, and how to make adequate disclosure.  Knowing and applying theses standards will help the practitioner and taxpayer avoid IRS penalties.

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Paycheck Protection Program Flexibility Act passed June 5, 2020

The Paycheck Protection Program Flexibility Act of 2020 (“PPPFA”) was signed into law by President Trump on June 5, 2020. The PPPFA intends to provide flexibility for businesses making use of Paycheck Protection Program (“PPP”) funds by:

  1. extending the “covered period;”
  2. increasing the amount of loan forgiveness that may be attributable to non-payroll costs;
  3. extending the date by which employers must restore full-time employee (“FTE”) levels;
  4. creating a new safe harbor for inability to restore FTE levels;
  5. extending the loan repayment period to five years; and
  6. deferring payroll tax.  
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Nicholas S. Bahnsen moderated an American Bar Association panel entitled "Ethical Obligations and COVID19: What Tax Practitioners Need to Know" on June 4, 2020

What should we be on the lookout for to ensure we are not helping our clients participate in or become the victim of fraud considering the CARES Act? How should practitioners ensure we are meeting both IRS and court deadlines? How should we ensure we are meeting our ethical obligations to communicate with our clients? Nicholas S. Bahnsen moderated a panel discussing these timely issues. 

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Foreign Asset Reporting and U.S. Territories

By Usman Mohammad
The ABA Tax Times
Vol. 39 No. 3 - Spring 2020

Puerto Rico, American Samoa, Guam, The United States Virgin Islands, The Northern Mariana Islands—these are all United States territories or possessions. Individuals born in these territories are deemed by law to be either United States citizens or United States nationals. Yet these locations are separated from the contiguous United States by vast bodies of water. Many U.S. citizens from the contiguous United States have never been to any of the territories. Travel from the contiguous United States to any one of these territories involves a multiple-hour trip by either air or sea. In many ways, these locations seem foreign and exotic to most Americans.

The FBAR, Form 8938, Form 3520, Form 5471, Form 8621—these are all information reporting forms used to report various types of foreign assets to different bureaus within the U.S. Department of the Treasury, such as the Internal Revenue Service (the IRS) or the Financial Crimes Enforcement Network (FinCen). When most people think of “foreign” assets, they think of assets located in foreign countries, such as Switzerland, Israel, China, the United Kingdom, or Russia.

What about an asset—such as a bank account—located in a U.S. territory or possession? Is it a foreign or a domestic asset? The answer, unfortunately, is not so simple.

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Caroline Ciraolo contributed to ABA Tax Section Comments on proposed changes to Tax Court Rule 24

Caroline Ciraolo made substantive contributions to the American Bar Association Taxation Section Comments on the proposed changes to Tax Court Rule 24. The comments were formally submitted to Chief Judge Foley of the U.S. Tax Court on June 1, 2020.

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Caroline Ciraolo Featured on ACA TaxCast on May 31, 2020

Caroline Ciraolo was interviewed for the American Citizens Abroad (ACA) TaxCast podcast. Part 1 of her interview was posted May 15, 2020, and Part 2 was posted on May 31, 2020. During Part 2 of the program, Ms. Ciraolo takes a "deeper dive" into the types of tax professionals and government officials that may play a role in a client’s tax matters, the nature and risks of an “eggshell” audit, the scope of applicable privileges, best practices for vetting clients and managing an examination or investigation, and much more. 

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Robert M. Russell quoted in Bloomberg Tax article entitled "IRS Fixes to Foreign Tax Credit Rules Could Boost New Virus Perk"

In a recent Bloomberg Tax article by Siri Bulusu entitled "IRS Fixes to Foreign Tax Credit Rules Could Boost New Virus Perk," Robert M. Russell discussed how benefits, such as a net operating loss carry back provision, restored in response to the COVID-19 crisis could affect and interact with prior deductions and perks. 

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Accounting for Sales with Contingent Obligations: Methods and Considerations

By Stephen A. Josey
The CPA Journal
May 2020 Edition

Typically, the sale of a capital asset held by an individual is a straightforward affair from a tax accounting perspective. Under the most common scenario, the buyer will offer a one-time cash payment to the seller in exchange for the subject property, and the seller will report the gain or loss on the property and, if there is a gain, pay tax on the gain subject to the applicable rate [Internal Revenue Code (IRC) sections 1, 1001]. If there is a loss, the seller can claim that loss against other capital gains, potentially apply a portion of the loss to offset ordinary income, and if any loss remains, carry that loss forward to future-year returns [IRC sections 1211(b), 1212(b)(1)].

What happens, however, when a sale contract provides for the possibility of payments outside of the year of the sale? Buyers and sellers are increasingly incorporating such terms in sale contracts, as these provisions offer a level of risk mitigation for the buyer by deferring payments and tying them to conditional outcomes, while also providing potential upsides to sellers if the sale proves lucrative for the buyer.

For example, a contract may provide for a partial cash payment from the buyer to the seller in the year of the sale, but also provide that the buyer shall pay the seller a future percentage of earnings derived from the asset for a set number of years. Alternatively, a buyer and seller may agree to a payment structure whereby proceeds will become payable upon the realizations of certain milestones related to the purchased asset. How do taxpayers account for and report the sale of a capital asset when the amount ultimately payable is unknown in the year of the transaction?

This article will discuss the three methods—installment, closed transaction, and open transaction—available to taxpayers for reporting sales that involve contingent consideration potentially payable outside the year of the sale. Each of the methods described below has its own benefits and pitfalls that taxpayers and tax professionals should examine before electing a particular approach.

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Megan Brackney presented a webinar entitled "IRS Summons and Other Methods of Obtaining Taxpayer Information, Enforcement, and Defenses" for Celesq Attorneys Ed Center, on May 21, 2020

The IRS has several methods for obtaining information about taxpayers. This program discussed the IRS’s methods of obtaining information, focusing primarily on the IRS’s summons authority, including the scope of that authority, taxpayer’s rights and privileges, summons enforcement litigation, and the attorney’s ethical obligations when responding to IRS requests for information under Circular 230.

 

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Paul Butler quoted in Tax Notes article entitled "Work-From-Home Technology Comes With New Privilege Concerns"

In a recent Tax Notes article by Nathan J. Richman entitled “Work-From-Home Technology Comes With New Privilege Concerns," Paul Butler discussed concerns about how to safeguard attorney-client privilege and protect the work product doctrine when using videoconferencing and other new technological tools that tax professionals are relying on during the coronavirus pandemic.

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