After 43 Years, IRS Collects Gift Taxes From Redstone. The gift tax statute of limitations is typically three years — if you file a gift tax return. But when then-rising media mogul Sumner Redstone placed shares in the family business in trust for his children in 1972, he did not report the gift, based on his accountant’s advice that it was not necessary. The Internal Revenue Service pursued the matter decades later after Redstone testified about the transfer in an unrelated lawsuit. The Tax Court upheld an assessment of more than $737,000 against Redstone but rejected the agency’s attempt to impose more than $368,000 in fraud penalties, finding that Redstone properly relied on professional advice at the time. Sumner Redstone v. Commissioner, T.C. Memo 2015-237.
IRS Boosts Small Business Capital Expense Relief. The Internal Revenue Service will allow small businesses that lack audited financial statements to immediately deduct up to $2,500 per invoice for tangible property that would otherwise have to be depreciated over multiple years. Businesses with audited financials have a similar safe harbor of up to $5,000. In proposed regulations, the exception for unaudited businesses was initially set at $500, but was increased after business owners and tax advisors objected that the lower threshold would not accomplish the IRS goal of simplifying recordkeeping requirements. Many capital purchases, such as tablet computers, cost more than $500, commenters noted. The relief is effective for tax years beginning in 2016 or later, but the IRS will also allow it to be used in examinations of earlier tax years. Notice 2015-82.
Charities Need Not Collect Donor Identification Data. The Internal Revenue Service quickly abandoned a set of proposed regulations that would have encouraged charities to collect the names and Taxpayer Identification Numbers of donors who contribute $250 or more. The procedure, which would have been voluntary on the part of charities, was intended to relieve donors of the requirement to obtain contemporaneous written acknowledgment of their gifts. But the alternative was criticized for increasing the risk that donors would become victims of identity theft if charities collected their personal data and transmitted it to the IRS instead. The objections were so sharp that the agency withdrew the proposed rule in January, just four months after it was issued. FR Doc. 2016-89.
