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Travel deductions denied

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Taxpayers traveling “away from home” can deduct ordinary and necessary expenses incurred in a trade or business. But when nonresident alien students at foreign universities, who participated in a summer work-travel program, deducted travel costs to and from the U.S. and certain living expenses while here, the IRS denied the deductions. The U.S. Tax Court agreed, stating that the students weren’t “away from home in pursuit of a trade or business,” so their travel and living expenses weren’t deductible. (Liljeberg, 148 TC No. 6)

President Trump’s budget cuts IRS funding by $239 million

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The President has released his “skinny budget” for 2018. A precursor to the full budget due in May, it’s a wish list of cuts and some basic economic projections in which he lays out plans for boosting military spending, cutting foreign aid and some domestic programs, and slashing IRS funding. The budget targets the IRS’s “antiquated operations” but states that the agency can “continue to combat identity theft, prevent fraud, and reduce the deficit” through enforcement and administration of tax laws.

IRS ruled favorably on a community cultural center’s tax-exempt issues

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The IRS has privately ruled on a number of issues with regard to a tax-exempt organization’s activities in building and operating a cultural center, including whether its operation of a coffee shop would be an unrelated trade or business, whether certain transfers would be self-dealing transactions and whether the cost of obtaining the ruling would be a qualifying distribution. The organization is classified as a private operating foundation. (PLR 201710005)

Dig out first, then file for an extension

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The IRS has granted businesses affected by Winter Storm Stella, the storm that hit parts of the Northeast and Mid-Atlantic this week, additional time to request a 6-month extension to file their 2016 federal tax returns. The extension for the extension affects calendar year partnerships and S corporations that must file their 2016 returns by March 15, or else file for an automatic 6-month extension on Form 7004. The deadline to file an extension is March 20. Eligible taxpayers must write “Winter Storm Stella” on their Form 7004 extension request.