TAXPAYER PREVAILS IN FBAR CASE NON-WILLFUL FBAR PENALTY COMPUTED PER YEAR – NOT PER ACCOUNT

TAXPAYER PREVAILS IN FBAR CASE NON-WILLFUL FBAR PENALTY COMPUTED PER YEAR – NOT PER ACCOUNT

Tax Law
By: Lynn K. Ching A taxpayer-friendly opinion recently issued from the Ninth Circuit Court of Appeals regarding a non-willful failure to file an FBAR. FBAR Violations Recap: Under Section 5314(a), “the Secretary of the Treasury shall require [U.S. citizens and others] … to keep records, file reports, or keep records and file reports, when the [U.S. citizen or other person] makes a transaction or maintains a relation for any person with a foreign financial agency.” Id. Under corresponding regulations to section 5314(a), United States citizens must report on an annual basis any “financial interest in, or signature or other authority over, a bank, securities, or other financial account in a foreign country” exceeding $10,000. The required form is the FBAR (TDF 90-22.1). A person who fails to timely file an…
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Tax Free Mergers and Acquisitions under IRC 368 What Worked and What Didn’t

Tax Free Mergers and Acquisitions under IRC 368 What Worked and What Didn’t

Tax Law
By Lynn K. Ching The federal tax code provides for tax free mergers and acquisitions in certain situations. In tax-free mergers, the acquiring company uses its stock as a significant portion of the consideration paid to the acquired company. The purpose of the statutory non-recognition of gain or loss from reorganization transactions, as indicated by the legislative history, was in part to prevent losses being established by bondholders, as well as stockholders, who received new securities without substantially changing their original investment. (All) Four conditions must be met to qualify a transaction for tax-free treatment under Internal Revenue Code (IRC) Section 368. 1. Continuity of Ownership Interest doctrine - The continuity of ownership interest rule was introduced by the United States Supreme Court in Pinellas Ice & Gold Storagw v.…
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When Can the Administrative Record in an IRS WhistleBlower Case Be Supplemented?

When Can the Administrative Record in an IRS WhistleBlower Case Be Supplemented?

Tax Law
By Lynn K. Ching The Internal Revenue Service (IRS) Whistleblower Awards Program pays money to people who blow the whistle on persons who fail to pay taxes they owe, subject to meeting certain statutory requirements. If the Whistleblower claim is denied by the IRS Whistleblower Office (WBO), the claimant may petition the Tax Court to review (for abuse of discretion) the determination by the WBO not to pay an award. In reviewing a determination of the WBO, the Tax Court generally confines its review to the administrative record (i.e. the IRS’ records) in reaching its determination. In a recent case, Bemmelen v. Comm’r of the IRS, 154 T.C. No. 4 (2020), the petitioner asked the Court to allow him to supplement the administrative record in reviewing the denial of his…
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