Internal Revenue Bulletin:  2005-4 

January 24, 2005 

INCOME TAX


Rev. Rul. 2005-4 Rev. Rul. 2005-4

Interest suspension; time sensitive penalties. Section 6404(g) of the Code suspends interest and time sensitive penalties, additions to tax and additional amounts with respect to an increased tax liability reported on an individual's amended income tax return filed more than 18 months after the date that is the later of (1) the original due date of the return (without regard to extensions) or (2) the date on which the taxpayer timely filed the return.

T.D. 9168 T.D. 9168

Final regulations under section 59 of the Code provide rules governing the time and manner for making and revoking an election to treat certain qualified expenditures which are otherwise deductible under the Code as amortized over the applicable period provided for in the statute. The regulations provide that the election may be made for any specific dollar amount of the qualified expenditures, but cannot be made by reference to a formula. To revoke the election, a taxpayer must receive the permission of the Commissioner. Permission will only be granted in rare and unusual circumstances. If permission is granted, the revocation will be effective in the taxpayer's earliest open taxable year affected by the election.

T.D. 9170 T.D. 9170

Final, temporary, and proposed regulations under section 1374 of the Code provide that (a) section 1374(d)(8) applies to any transaction described in that section that occurs on or after December 27, 1994, regardless of the date of the S corporation's election under section 1362; and (b) for purposes of the Tax Reform Act of 1986, as amended, a corporation's most recent S election, not an earlier election that has been revoked or terminated, determines whether or not it is subject to current section 1374.

REG-139683-04 REG-139683-04

Final, temporary, and proposed regulations under section 1374 of the Code provide that (a) section 1374(d)(8) applies to any transaction described in that section that occurs on or after December 27, 1994, regardless of the date of the S corporation's election under section 1362; and (b) for purposes of the Tax Reform Act of 1986, as amended, a corporation's most recent S election, not an earlier election that has been revoked or terminated, determines whether or not it is subject to current section 1374.

Notice 2005-8 Notice 2005-8

This notice states that a partnership's contributions to a partner's Health Savings Account (HSA) may be treated as distributions under section 731 of the Code or as guaranteed payments under section 707(c). HSA contributions treated as section 731 distributions are not deductible by the partnership, and may be deductible by the partner under sections 223(a) and 62(a)(19) and are excluded from net earnings from self-employment. HSA contributions treated as guaranteed payments under section 707(c) derived from the partnership's trade or business and for services rendered to the partnership may be deductible by the partnership, are included in the partner's gross income, may be deductible by the partner under sections 223(a) and 62(a)(19), and are included in net earnings from self-employment. An S corporation's contributions to 2-percent shareholder-employee's HSA for services rendered to the S corporation are treated as section 707(c) guaranteed payments. For employment tax purposes, the 2-percent shareholder-employee is treated as an employee subject to FICA, unless the requirements of section 3121(a)(2)(B) are met.

Announcement 2005-6 Announcement 2005-6

In July 2004, the Service issued a revision to Form 656, Offer in Compromise. The purpose of this announcement is to highlight the addition of a “check-the-box” disclosure authorization (new Item 14), which allows the taxpayer to designate someone to assist him or her while the Service is processing the offer.


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