BUREN’s Post

On October 29, 2024, the United States Tax Court issued a memorandum decision in Surk, LLC v. Commissioner. The decision allowed the Internal Revenue Service to adjust the taxpayer’s basis in a partnership interest for losses erroneously claimed in a closed taxable year. The decision focuses on the rule that events in years that are time-barred for assessment can still result in current tax consequences. I summarize the decision and related rules in the attached Legal Update.

The Constitutional Court has provided clarity on taxing trusts and their beneficiaries, ruling in favour of SARS. The case focused on the flow-through principle and taxation of capital gains and involved a complex debate between Section 25B and Paragraph 80(2) of the Income Tax Act. Joon Chong highlighted that the conduit principle applied only to Zenprop, not Thistle, leading to a higher tax bill. However, concerns remain over the lack of clarity on 'bona fide inadvertent errors' in taxation penalties. Read more: https://bit.ly/3TRt1Q4 #TaxLaw

Rebate under Section 87A Extended to Special Rate Income I am pleased to bring attention to a significant legal development that addresses a contentious issue surrounding Section 87A of the Income Tax Act. In the case of Beena Manishbhai Fofaria vs. Assistant Officer, dated November 22, 2024, the Commissioner of Income Tax (Appeals) has decisively ruled that the rebate under Section 87A is applicable even against income taxed at special rates. This judgment is pivotal as it resolves a long-standing dispute regarding the scope and applicability of the rebate under Section 87A, particularly in the context of special rate incomes, such as short-term capital gains (Section 111A) or long-term capital gains (Section 112/112A). Key Highlights of the Judgment: 🔹 It affirms that the intent of Section 87A is to provide tax relief to eligible taxpayers, irrespective of the rate at which income is taxed. 🔹 The judgment provides a precedential reference for taxpayers who may have been denied this rebate on technical grounds. 🔹 It reinforces a taxpayer-friendly interpretation of the law, aligned with the principles of equity and fairness. This decision marks a significant milestone for taxpayers, as it sets a crucial benchmark for both assessment proceedings and appellate reviews. The ruling will undoubtedly guide the resolution of similar disputes and strengthen taxpayers' claims for rightful benefits under the Act. I encourage tax professionals, advisors, and taxpayers to review this judgment in detail and leverage its insights for accurate tax compliance and planning. Your thoughts and perspectives on this matter are welcome—let's discuss its broader implications! #IncomeTax #Taxation #Section87A #LandmarkJudgment #TaxRebate #LegalUpdates

From the plain reading of Item No 50 of Federal Legislative List, as it stands after the 18th Amendment, it transpires that the National Parliament can levy taxes on capital value of movable assets but has no authority to levy taxes, including capital gains tax, on immovable property. It is obvious that taxes include tax on capital gains. How the FBR and Law and Justice Division has read plain language of Item No 50 of Federal Legislative List speaks volumes about their level of competence - no wonder why we have so much chaos in revenue and legal matters! https://lnkd.in/dMgZpa_q

Recent California Legislation Will Have Taxpayers Considering New Tax Planning Strategies New budget legislation, SB 167, passed by the California Legislature on June 13th and signed into law by the governor on June 27, 2024 will have significant impacts on taxpayers by suspending net operating loss (NOL) deductions and limiting the utilization of credits from 2024 through 2026. Let me know if you have any questions! #taxcredit #taxcredit #taxincentive #taxincentive #californialegislation #taxplanning #nol #carryforward #refundabletax #SB167

This October’s issue of The Tax Adviser features the article "Current developments in the taxation of individuals," co-authored by RubinBrown Partner Amie Kuntz. The semiannual update summarizes notable cases, rulings, and guidance on a variety of topics issued during the six months ending April 2024. Learn more here: https://lnkd.in/gFeFKrkd

With Republicans set to control both chambers of Congress and the White House, the party is poised to deliver the TCJA’s second act, locking in or extending what they couldn’t set in stone in 2017 due to the Senate’s budget reconciliation rules. Here’s a look at the big-ticket items from the more than two dozen tax laws that are expiring at the end of next year. #TCJA #taxcuts #taxes #finance

The Pennsylvania Supreme Court has ruled that for tax years before 2023, the state did not conform to IRC Section 1031 for personal income tax. As a result, taxpayers who engaged in like-kind exchanges were required to pay state income tax in the year of the exchange, even if they deferred gains for federal tax purposes. Find out how this ruling could affect your tax situation. https://okt.to/cbBMDh #TaxUpdate #IRC1031 #Pennsylvania #TaxLaw

Beware: IRS to Crack Down on Partnership Basis Shifting; Plus, Supreme Court Upholds Foreign Income Tax The Internal Revenue Service (IRS) has announced plans to eliminate the tax break associated with partnership basis shifting through a combination of regulatory changes and increased enforcement. And, in a 7-2 decision, the U.S. Supreme Court has upheld a lower court decision confirming the validity of a tax on U.S. citizens’ earnings received outside the country. Click below to learn more about these two topics.

In a case involving the statutory limitations for net loss carryover (NLC) deductions contained under Pennsylvania law for the 2014 tax year at issue following the Pennsylvania Supreme Court’s 2017 decision deeming the NLC deduction invalid, the Court recently held that its 2017 decision should be given prospective effect only, and that due process does not require Pennsylvania to refund the Pennsylvania corporate net income taxes that the taxpayer paid in 2014. #pa #pennsylvania #pasupremecourt #nlc #corporatenetincometax #tax