June 2013 Issue

June 2013


In this month’s issue, taxpayers receive insight on a recent LB&I memorandum that addresses the examination of milestone payments. We also discuss another LB&I directive that provides taxpayers more time to use the safe harbor method for capitalization of electric transmission and distribution property expenses as well as a revenue procedure that provides safe harbor repairs guidance for electric generation taxpayers. This issue also discusses a range of other newly issued IRS guidance, including rulings on whether: a termination payment must be capitalized as an intangible asset; a taxable acquisition is a covered transaction for Section 263(a) purposes; and an extension of time can be given to file for using the LIFO method. Additionally, this issue contains guidance on whether: late-payment penalty relief can be provided to taxpayers due to delayed 2012 tax forms; gain on the sale of merchant contracts is ordinary income; a taxable cooperative can aggregate patronage and nonpatronage income for purposes of computing its domestic production activities deduction; and a simplified proportional method can be used to account for OID on pooled credit card receivables.

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