Service asserts continued vitality of old Revenue Ruling but will not penalize consistent good-faith contrary positions

Article Abstract:

IRS Revenue Ruling 92-49 defends Revenue Ruling 57-7, which stated in 1957 that an agreement between the owner of coin-operated amusements and the occupant of the property where the devices are located is a lease. The lessor-occupant is therefore obligated to file a Form 1099 when rents equal at least $600 in reported floor amount. The IRS stood by this principle despite a federal judge's criticism in Manchester Music Co v United States. However, the IRS acknowledged the reasonableness of the opposing opinion and declared that it would not impose too much on taxpayers who act in good faith.

Joint ventures, Leases, Coin operated machines

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Extension of privilege to accountants clouded, inter alia, by exclusion of advice relating to corporate tax shelters

Article Abstract:

The extension of the lawyer-client confidentiality privilege to certain communications between tax advisers and taxpayers in IRC section 7525, enacted by the IRS Restructuring and Reform Act of 1998, was limited by the Conference Committee's excluding communications which concern corporate tax shelters. The tax shelter and other limitations can cause traps if the law is not carefully reviewed and applied. The law likely will result in confusion regarding when it is safe to employ nonlawyer tax advisers and what can safely be discussed.

United States, Tax Management, Financial Personnel, Tax consultants, Tax accounting, Accountants, Confidential communications, Tax shelters, Financial occupations, Privileges and immunities

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Corporation found to have taxable interest income from interest free loans made to shareholders under section 7872

Article Abstract:

The Tax Court found in KTA-TATOR, Inc. v. Commissioner that the corporate taxpayer's interest-free loans to finance construction projects engaged in by its sole shareholders triggered taxable interest income under IRC section 7872. The taxpayer argued based on the regulations that the transaction was not complete and taxable until the construction projects were complete. The Court rejected this argument and found that the advances were below-market demand loans.

Commercial Banks, Commercial Banking, Public Finance Activities, Business Financing, Corporate Income Taxes, Taxation, Cases, Recognition of gain or loss (Taxation), Recognized gain or loss (Taxation), Loans, Related party transactions

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