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Welcome to the Federal Tax Update Podcast, hosted by Lynn Nichols. This is presented as a member benefit by the South Carolina Association of CPAs. It is produced to provide current information about developments in U.S. tax law, such as cases, ruling, IRS pronouncements and expert comments on hot topics.

Trending in this edition:

  • Clarifying Income Subject to NII (Net Investment Income) Tax (2:41 mark)
  • Expert Should Not Try to be an Advocate in Litigation (3:53 mark)
  • Tax Provisions in American Rescue Plan (5:22 mark)
  • LLC Members to be Audited for SE Tax (7:11 mark)
  • Which Tax Credits Are Safe from Creditors in Bankruptcy (10:31 mark)
  1. Shareholder’s Income From Closely Held C Corp Subject to NII Tax

In a legal memorandum, the IRS determined that a shareholder-employee’s dividend income received from a C corporation is subject to the section 1411 net investment income tax irrespective of whether the corporation is closely held or whether the shareholder is treated as materially participating in the company’s trade or business. [ILM 202118009; 1/4/2021, rel. 5/7/2021]

  1. One-Sided Expert Testimony a Turnoff in Tax Cases, Judge Says

Expert witnesses who take an evenhanded approach when making underlying assumptions are usually more persuasive than those who claim that every point falls in their party’s favor, according to Tax Court Judge Albert G. Lauber. [Tax Notes Today; 5/11/2021, article by Kristen Parillo]

  1. IRS Summarizes Tax Provisions of American Rescue Plan

The IRS has offered (IR-2021-106) an overview of the major tax provisions included in the American Rescue Plan Act. [IR-2021-106; 5/11/2021]

  1. LLCs to See More Audits for Self-Employment Tax Avoidance

Limited liability partners trying to claim exemptions from self-employment taxes will continue to get scrutiny from the IRS. [{Tax Notes Today; 5/13/2021, article by Kelley Taylor]

  1. Debtor’s Earned Income, Child Tax Credits Shielded in Bankruptcy

A taxpayer who filed for bankruptcy amid the coronavirus pandemic can exempt post-petition tax refunds stemming from the earned income and child tax credits, a bankruptcy court held in In re Moreno. [Tax Notes Today; 5/14/2021, article by Emily Foster]

Missed last week’s Tax topic? Catch up with Lynn at his Tax Updates video playlist.

All commentary is brief, and you should not take a position on the items discussed until you thoroughly examine it with authoritative sources. The topics can be found discussed in further length at Tax Notes Today.

“I have relied on Tax Analysts® to provide reliable and timely analysis of Federal tax developments for over 30 years. The ‘headnotes’ you see here are from ‘Tax Notes Today,’ the preeminent source of accurate information and analysis of important developments and trends in Federal taxation,” Nichols says.

You can contact Lynn Nichols at lynnnicholscpa@outlook.com or 714.321.3387 and connect on LinkedIn.

A federal tax specialist for 50 years, Lynn Nichols provides tax consulting services to CPA firms on complex federal income tax issues, professional standards in tax practice and effective tax practice management.

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