Page 146 - TaxAdviser_Jan_Apr23_Neat

INDIVIDUALS

did not claim the EITC on the previ-
ously filed return were directed to file a Some commentators had described the
late or amended return based on 2019
earned income. previous regulations as containing a ‘family
Dependency is necessary for glitch,’ in that only the employee’s cost of
the EITC: In one Tax Court case, the
taxpayer had three children with his coverage had been taken into consideration
for the cost of covering the employee’s family
former spouse.7 The marital separation
agreement awarded full custody of the members and not the cost for the entire family.
children to the former spouse, although
the children spent specified weekends
and four weeks during the summer regarding the affordability of employer- comments had been received on the pro-
with the taxpayer. The taxpayer, who sponsored minimum essential coverage posed regulations, most of them positive.
did not include with his return a Form for purposes of the Sec. 36B premium Cafeteria plan guidance: The
8332, was not allowed a dependency tax credit. Some commentators had IRS issued Notice 2022-41, which
exemption for one of the three children, described the previous regulations as expands “change in status” elections for
whom he claimed as a dependent and containing a “family glitch,” in that only Sec. 125 cafeteria plans to allow employ-
as a qualifying child for the EITC. His the employee’s cost of coverage had been ees to revoke a family coverage election
EITC claim was likewise disallowed taken into consideration for the cost of to allow family members to enroll in a
for one tax year and partially disallowed covering the employee’s family members health care exchange plan. This notice
for another. and not the cost for the entire family. was issued in conjunction with the final
Proposed regulations issued in April regulations under Sec. 36B described in
Sec. 36B: Refundable credit 2022 were adopted with minor changes, the preceding paragraph. It is for elec-
for coverage under a qualified effective Dec. 12, 2022. Treasury and the tions effective on or after Jan. 1, 2023,
health plan IRS stated in a preamble they believe and amplifies Notice 2014-55.
Final regulations: The IRS re- these regulations represent a better read- Calculating the premium tax
leased final regulations8 under Sec. 36B ing of the relevant statutes. Over 3,000 credit: Rev. Proc. 2022-34 was issued

EXECUTIVE SUMMARY and more family-friendly reading • Prominent among the many court
of the relevant statutes. cases concerning deductions
• Among other notable develop- of charitable contributions were
ments in individual taxation in • The IRS Office of Chief Counsel those involving contributions of
the 12 months ending October said in a Chief Counsel Advice conservation easements under
2022, the Tax Court decided memo that recipients of Pay- Sec. 170(h) — notably, regula-
several cases having to do with check Protection Program loans tions governing how contribu-
taxpayers’ eligibility for the child that are improperly forgiven under tions must provide for proceeds
tax credit, earned income tax the program must include the from any judicial extinguishment
credit, and other child-related tax loan amount in gross income. of the easement. One circuit
benefits. found that the IRS violated the
• Court cases decided during the Administrative Procedure Act by
• Final regulations amended the review period dealt with exclusion failing to respond to significant
calculation of affordability of of income from canceled debt, comments on proposed regula-
employer-sponsored minimum exclusion of gain from the sale tions, while another upheld the
essential health insurance cover- of a principal residence, and rec- regulations.
age for purposes of the Sec. 36B ognition of losses, among other
premium tax credit, in what Trea- issues.
sury and the IRS called a better

7. Ola-Buraimo, T.C. Summ. 2022-2. 8. T.D. 9968.

32 March 2023 The Tax Adviser