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IRS TO RULE ON TAX STATUS OF HOME SALE PROGRAMS
January 28, 2005 -- The IRS is expected to issue a ruling on the tax status of two common relocation-related home sale programs. "Amended Value" and "Buyer Value" transactions are the topics to be addressed. The ruling may affect the tax status of clients utilizing these programs. The IRS already has issued a Coordinated Issue Paper (CIP) as an initial draft regarding their position. The Employee Relocation Council (ERC) has identified some of the "questionable" assumptions included in the CIP. The ERC released their comments earlier this month in an effort to clarify some of these assumptions. The following was taken from the ERC: IRS Amdahl Project IRS lawyers in Washington are actively working on the Amdahl project, which is on the IRS Priority Guidance Plan for the fiscal year ending June 30, 2005, and still are expressing optimism that a ruling will be forthcoming by that date. It remains unclear what direction the IRS is taking, but we continue to discuss the issue with them and as yet the IRS has not expressed any intention to adopt the Amdahl case. In the meantime, however, on October 27, 2004, the IRS field organization began circulating for comment an "initial draft" of a "Coordinated Issue Paper" (CIP), which seeks to articulate and standardize the IRS's audit position. We will be analyzing the paper and submitting comments by the requested date of December 6, 2004. We emphasize that the CIP is separate from the IRS National Office ruling project, does not represent an "official" position of the IRS, and is objectionable in numerous respects. Although it finds Appraised Value transactions to be acceptable, even with use of a blank deed, it holds all Amended Value transactions (which would include Buyer Value Option transactions) to be taxable. Although the IRS has not yet issued their final ruling, we strongly advise you to speak with your tax counsel on the ways that this may affect your tax status. AIReS is available to assist you with any additional questions or concerns that you may have regarding your participation in either the Amended Value or Buyer Value home sale programs. AIReS has provided this information as part of our ongoing efforts to proactively inform our clients and their employees about industry news and events. For more information, please contact AIReS. # # # |