Welcome to the bimonthly publication, IRS Insights, produced by Deloitte's Tax Controversy Services Group to keep our clients abreast of current issues related to the Internal Revenue Service.

In this month's issue:

• Overstatement of Basis is Omission of Gross Income – The Court of Federal Claims recently held that a partnership's overstatement of basis from the sale of property was an omission of income because the property in question was not sold in connection with the operations of a trade or business.
• IRS Summons Partially Denied Under Tax Practitioner Privilege – In a recent District Court decision, the court held that a summons issued by the IRS to a taxpayer's advisors was not overbroad and the information sought was not privileged under the work products doctrine. The court, however, did find that certain documents were protected from disclosure under the tax practitioner's privilege under section 7525.
• Tax Controversy Updates: IRS Provides Guidance on Tax Return Preparer Penalties – On December 31, 2007, the Treasury Department and the IRS issued Notice 2008-13 to provide guidance on tax return preparer penalty standards under section 6694. Notice 2008-13 provides guidance on (1) the relevant categories of tax returns or refund claims subject to section 6694 (2) the definition of a tax return preparer (3) the standards of conduct applicable to tax return preparers and (4) interim penalty compliance obligations applicable to tax return preparers.
• Tax Controversy Updates: IRC § 41 Research Credit Update – The Audit Technique Guide (ATG) for Research Credit sets forth the Research Credit Technical Advisors’ suggested guidelines for auditing research credit issues. Examiners typically rely on the ATG, which provides a roadmap of the key issues and outlines the information the IRS will likely request from taxpayers.
• Recent Guidance: IRS Clarifies Transitional Relief Guidance for Paid Preparer Penalties – Recently, the IRS issued Notice 2008-11 that provides further guidance on the transitional relief granted to tax return preparers under Notice 2007-54.
• Recent Guidance: IRS Clarifies Tax Return Preparer Signature Requirement – Recently, the IRS issued Notice 2008-12 that clarifies the tax return preparer signature requirement under section 6695(b), which was amended in May 2007, to impose a penalty on a tax preparer for failure to sign a return or refund claim.
• Tax Controversy Dbriefs Webcast Series

See attached file for details.

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