This week's presentation is based on a presentation I made for the Virginia Society of CPAs' 8th Annual Industry Conference in Williamsburg on May 28, 2009 on gadgets and gizmos.  The presentation includes a look at:Novatel's MifiApple's Airport ExpressApple iPhone 3GBlackberry Bold, Pearl and StormApple iPod TouchNetbooks The slides can be important to follow along, so you may wish to download them at http://www.edzollars.com/2009-05-29_Gadgets.pdf .The podcast is sponsored by Leimberg Services, located at http://www.leimbergservices.com .

Listen Now:

Education incentives have been a favorite of Congress in recent years, but this week we look at the old favorite of education as a business deduction, a provision covered by regulations last updated back in 1967.  The Tax Court had cause to look into this in the case of Ray v. Commissioner, TC Summary Opinion 2009-71.Materials for this week's podcast can be downloaded at http://www.edzollars.com/2009-05-20_Education.pdf . The podcast is sponsored by Leimberg Information Services, located at http://www.leimbergservices.com .

Listen Now:

Last year there was lots of discussion regarding the changes to Â6694 and how tax professionals were to apply the standards there against return positions.  However, while the standard to be applied may have changed, there were standards in place before and this week we look at the case of a CPA that ran afoul of the lower standards.  In the case if USA v. Kapp, (2009 TNT 84-30), the Ninth Circuit Court of Appeals sustained the issuance of an injunction against a CPA prohibiting him from taking a position on returns that failed the older Â6694(a) standard for nondisclosed positions.The case is of interest because the panel gives a practical walkthrough of analyzing the level of support that existed for a position, as well as noting those items of support that Mr. Kapp wished to rely upon but which did not serve to help his cause.The materials for the podcast are at http://www.edzollars.com/2009-05-11_Preparer.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

The IRS has issued a revised ruling on the use of a net operating loss under the new rules Congress added in February.  The new ruling, Revenue Ruling 2009-26, updates and liberalizes the guidance previously given in Revenue Ruling 2009-19 issued on March 16.  The new guidance allows taxpayers to simply file a carryback for the appropriate number of years to make the election, but there are special due date rules you have to worry about.The materials are at http://www.edzollars.com/2009-05-04_NetOperatingLoss.pdf.The podcast is sponsored by Leimberg Information Services on the web at http://www.leimbergservices.com.

Listen Now:

The definition of an employee is this week's key issue--and we look at the matter in the case of Maimon v. Commissioner, TC Summary Opinion 2009-53.  Dr. Maimon attempted to argue that he was not an employee of the professional corporation he worked in (and owned some shares in), but rather was an independent contractor.  He was interested in holding this position because he had ended up personally paying over legal fees and, ultimately, a $1 million settlement, in a case involving his medical services.The case is interesting because the Court held Dr. Maimon was not an officer and thus actually stepped through the common law tests for employment status.  In the end the court found Dr. Maimon was an employee, but the case gives a good outline of the analysis to go through even in cases that aren't quite as "bad facts" as this one.Materials for the podcast are available at http://www.edzollars.com/2009-04-25_Employee.pdf .The podcast is sponsored by Leimberg Services, located on the web at http://www.leimbergservices.com .

Listen Now:

The Tax Court recently decided a pair of cases related to the innocent spouse provisions of Â6015 and time limits on filing for relief.  In the case of Mannella v. Commissioner, 132 T.C. No. 10 the Tax Court held that even if the notice of intent to levy and rights under the innocent spouse provisions were never seen by the taxpayer, the two year period for relief under Â6015(b) and (c) that is specifically imposed by statute begin to run.However, the Court held in this case and the earlier case of Lantz v. Commissioner, 132 T.C. No. 8 that the IRS regulation that imposed a similar two year time limit on equitable relief under Â6015(f) was invalid, thus allowing the taxpayers to move forward with a claim for equitable relief.The materials for this podcast are at http://www.edzollars.com/2009-04-19_6015.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

The IRS has shown recent interest in disputing whether real estate agents meet the requirements to be treated as real estate professionals that can use the rules of Â409(c)(7) to treat rental real estate under the standard passive activity rules rather than having such items automatically treated as passive.  The IRS position is that since the law refers to a "brokerage" trade or business and such individuals generally are not licensed as real estate brokers they cannot qualify.In the case of Agarwal v. Commissioner, TC Summary 2009-29, the Tax Court did not agree with the IRS on that matter, instead allowing the taxpayer, who was a real estate agent who worked as an independent contractor under contract with a licensed brokerage firm, to qualify for Â409(c)(7) treatment.  The podcast also discusses a 2007 case where it was the IRS who was (successfully) arguing that you can't use state law licensing definitions when the issue was whether an bookkeeping and tax preparation firm that was not licensed as a CPA firm was a personal service corporation.  In both of these cases, the Tax Court found that under the IRC we would look to the commonly understood definition of the terms, and that state licensing definitions did not control.Materials for this podcast can be found at http://www.edzollars.com/2009-03-09_RealEstate.pdf .The podcast is sponsored by Leimberg Information Services, located at http://www.leimbergservices.com .

Listen Now:

Can nonexistent cattle be overvalued?  The Ninth Circuit, disagreeing with the Tax Court and other circuits, says it cannot be in the case of Keller v. Commissioner, 2009 TNT 37-17 reversing on this issue the Tax Court's decision in TC Memo 2006-131.The materials for this podcast can be downloaded at http://www.edzollars.com/2009-03-02_Cattle.pdf .The podcast is sponsored by Leimberg Services at http://www.leimbergservices.com .

Listen Now:

This week we look at a case dealing with the trust fund recovery penalty under Â6672.  In the case of Richard A. Smith v. United States, 2009 TNT 30-6, CA10, (http://ca10.washburnlaw.edu/cases/2009/02/07-4210.pdf) the Tenth Circuit refused to overturn the holding in the US District Court of Utah that Mr. Smith was a responsible person, even though he had no ownership interest in the entity in question.  The case highlights the dangers for employees in accounting functions when the organization they work for begins to have cash flow problems, and payroll tax payments begin to be skipped.The materials are available at http://www.edzollars.com/2009-02-23_Responsible.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

The new American Recovery Reinvestment Act of 2009 has a number of tax provisions, and this week's podcast looks at the small business net operating loss provisions of the Act.  This provision will require action for some taxpayers within 60 days after the bill is signed into law, as well as giving us a "sliding" window for when we start using a net operating loss for the year we elect to have it apply to.The podcast materials are located at http://www.edzollars.com/2009-02-16_NOL.pdf .The podcast is sponsored by Leimberg Information Services at http://www.leimbergservices.com .

Listen Now:

Housing problems are all over the news (and with some of our clients), but today's story is a housing problem of a different sort.  We look at a case where lots of things went wrong in building a taxpayers' dream home where the taxpayers attempted to claim a casualty loss on their tax return.  In the cases of Grief v. Commissioner and Bui v. Commissioner, TC Summary Opinion 2009-18, the Tax Court finds that this couple is not going to get any relief from the IRC.The materials for this week's podcast can be downloaded at http://www.edzollars.com/2009-02-09_Casualty.pdf .I also note in the podcast that I'm posting updates on Twitter (http://www.twitter.com) .  My Twitter name is "edzollars" and if you want to follow me there that's fine.The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

What if a customer tells you they are going to reduce what they pay you for the work you just delivered to them because you owe them to fix for a bad job you did on an earlier contract?  If you are on the accrual basis, can you reduce your accrued receivable or record an expense if you are disputing that claim?  That is the issue being dealt with this week in the case of Trinity Industries v. Commissioner, 132 TC No. 2.The written materials can be downloaded at http://www.edzollars.com/2009-02-02_Timing.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

This week I look at a case involving a Northwest Airlines mechanic who was laid off and ended up using his "bumping" rights in other cities while hoping to return to his original home base.  The question of whether the taxpayer could deduct the expenses of working in the various locations is considered by the Seventh Circuit Court of Appeals after the Tax Court decided no deduction was allowed in the case of Wilbert v. Commissioner, 2009 TNT 12-12, CA7, affirming TC Memo 2007-152.The materials can be downloaded at http://www.edzollars.com/2009-01-25_TaxHome.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

Last year when Congress added the first-time homebuyer credit found in Section 36, they included the ability for unmarried individuals who jointly acquire a residence to allocate the credit among themselves, and gave the IRS the ability to write the rules to allow this to happen.  In Notice 2009-12 the IRS has outlined those rules, and they proved to be very taxpayer friendly.The materials for the podcast can be downloaded at http://www.edzollars.com/2009-01-20_UnmarriedCredit.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

The new year opens up with a podcast based on a topic that was part of a panel I was a part of at the Arizona Forum for Improvement of Taxation's winter conference.  I spoke with attorney Tracy Essig of Phoenix regarding these matters.  The materials can be downloaded at http://www.edzollars.com/ForeclosureDebtandTaxes.pdf .The podcast is sponsored by Leimberg Information Service, found on the web at http://www.leimbergservices.com .

Listen Now:

Medical expenses were the issue this week in the case of Magdalin v. Commissioner, TC Memo 2008-293.  In this case the taxpayer had paid expenses for obtaining eggs and the services of a surrogate mother, and argued that these expenses should be treated as deductible medical expenses, pointing to the IRS's 2003 private letter ruling (PLR 200318017) that allowed a woman the expenses related to in vitro fertilizaiton, including expenses paid for an egg donor.  The IRS (and the Tax Court) didn't find the situations to be comparable and denied the deduction--but it gives us a chance to look at the rules around Â213.The materials are at http://www.edzollars.com/2008-12-28_Medical.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

After a bit of a break while I was out speaking in the past couple of weeks in Nevada, California, Ohio and Virginia we return to a Thanksgiving Day podcast dealing with self-employment taxes and employee status.  We look at the Tax Court's ruling in McWhorter v. Commissioner, TC Memo 2008-263 where a taxpayer argued he was not subject to self-employment tax because he should have been treated as an employee.The materials can be downloaded at http://www.edzollars.com/2008-11-27_Self_Employed.pdf .The podcast is sponsored by Leimberg Information Services, located at http://www.leimbergservices.com .

Listen Now:

The podcast this week is based on a presentation I made Thursday at the Arizona Tax Institute on the current state of Section 6694.  The session was scheduled back a few months ago, but proved timely given recent tax law changes.  A copy of the slides can be downloaded at:http://www.edzollars.com/2008-11-09_6694Slides.pdf .The podcast is sponsored by Leimberg Information Services at http://www.leimbergservices.com .

Listen Now:

We continue with issues related to S Corporation debt and the many ways to end up not being able to use debts to deduct losses flowing through.  This week we look at the Tax Court's opinion in the case of Russell v. Commissioner, TC Memo 2008-246.The materials for the podcast can be downloaded from http://www.edzollars.com/2008-11-03_SDebt.pdf .The podcast is sponsored by Leimberg Information Services at http://www.leimbergservices.com .

Listen Now:

The IRS has issued final regulations on S Corporation open account debt that will change the way that many clients have to deal with their loans to the corporation.  These changes are effective immediately, so we have to understand how these rules work.  The podcast is being recorded this week while I'm at the Hilton Garden Inn in Owings Mills, Maryland.The materials are available at http://www.edzollars.com/2008-10-31_S_OpenAccount.pdf .The podcast is sponsored by Leimberg Services, located on the web on http://www.leimbergservices.com .

Listen Now:

Another taxpayer found out well after filing his return with less than stellar results from his trading activities that there had been an option to file an election under Â475(f) to use mark to market accounting which also converts the transactions from short term capital gain/loss to ordinary gain/loss.  Since the taxpayer had over $90,000 in net losses.The materials can be downloaded at http://www.edzollars.com/2008-09-29_LateElection.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

This is a "travel" podcast of sorts this week--the materials were prepared on a Southwest Airlines 737 flying from Phoenix to Baltimore, and recorded in the Hotel Roanoke in Roanoke, Virginia.  This week's topic doesn't deal with any of that--rather it deals with the issue of a CPA that got "creative" in planning with himself and his clients, and in his case he finds the Tax Court isn't amused.  The case is Baisden v. Commissioner, TC Memo 2008-215 where a CPA attempted to get around the self-employment tax by paying "royalties" from his sole proprietorship to himself.  The case doesn't deal with that issue (he had conceded that matter by then) but rather deals with whether he was subject to the fraud penalty.The materials are available for download at http://www.edzollars.com/2008-09-22_Fraud.pdf .The podcast is sponsored by Leimberg Information Services at http://www.leimbergservices.com .

Listen Now:

We look this week at a difference in application of IRC Â162(k) between the Ninth Circuit Court of Appeals and the United States Tax Court given the Tax Court's decision in Ralston Purina v. Commissioner, 131 TC No. 4 that dealt with the taxpayer's attempt to claim a deduction for dividends paid to participants in its ESOP when it had to redeem certain stock from the ESOP to pay out terminated participants in that plan.The materials can be downloaded from http://www.edzollars.com/2008-09-15_ESOP.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

The Ninth Circuit Court of Appeals this week affirmed the Tax Court's decision in the case of Johanson and Melzig v. Commissioner, TC Memo 2006-105 involving alimony.  In its original decision, the Tax Court expressed exasperation at having to yet again decide an issue the parties could have resolved in the decree itself-whether the payments would cease on the death of the recipient spouse as required by Â71(b) for the payments to be treated as alimony.  Yet again, the recipient claimed the payments would not and the payor claimed they would, and the Tax Court had to then divine how a California state court would have ruled under California law.The materials can be found at http://www.edzollars.com/2008-09-08_Alimony.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

Accounting issues we often run into involve the differences between tax and GAAP treatment of items, and this week we look at one such case involving the time for recognizing an expense.  In this case, the matter involved rebates and we look at a Chief Counsel Memorandum (ILM 200834019) outlining the IRS's view on why the taxpayer in this case could not recognize the expense related to rebates at the time a sale was made.  Materials for this week's podcast can be downloaded at http://www.edzollars.com/2008-09-01_Rebates.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

We review the requirements found in the regulations for obtaining the required support for a tax position, concentrating on the methods outlined in Reg. Â1.6662-4(d) in the definition of "substantial authority" which are cross referenced multiple times when considering other levels of authority.The materials can be downloaded from http://www.edzollars.com/2008-08-25_Penalty.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

This week we look at the Recent United States Court of Federal Claims decision in Fisher, Trustee v. United States, 2008 TNT 154-7 where the court sided with the taxpayer and held that the proper treatment of amounts received in lieu of shares in the demutualization of Sun Life were to be treated under the open transaction doctrine rather than treated as a sale of shares with a zero basis.The materials can be found at http://www.edzollars.com/2008-08-18_OpenTrans.pdf .The podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com .

Listen Now:

The IRS issued new proposed regulations to explain the reduction of the NOL substitute in an S corporation setting when cancellation of debt is excluded from the S corporation's income under Section 108.  While the regulations are in proposed form only, the "deemed NOL" rules have existed in the IRC since 2002, and Section 108 is likely to be an issue for S corporations who face economic challenges.The materials for this podcast can be found at http://www.edzollars.com/2008-08-04_108andS.pdf .The podcast is sponsored by Leimberg Information Services, located at http://www.leimbergservices.com .

Listen Now:

This podcast is the sequel to a November 2006 podcast on the same case--that of Kadillak v. Commissioner where an individual who was caught by the "dot bomb" crash of the technology stock of his former employer attempted to mitigate the damage caused by his ISO exercise and 83(b) election made at the height of the craze.  A year later, Mr. Kadillak was no longer employed by the organization, the stock price had tanked, and when he sold the stock that he didn't have to surrender got stuck with a $3,000 per year AMT capital loss deduction (probably for lifetime) to "offset" a large prior year AMT liability.This week the Ninth Circuit ruled on the case and, unfortunately for Mr. Kadillak, agreed with the Tax Court's decision.  We look at the Section 83(b) election, it's downside risk that Mr. Kadillak obtained "up close and personal" experience with and some general observations on counseling clients about the "what if" problem when they are sure they know what the future will hold.The materials are available at http://www.edzollars.com/2008-08-04_83b.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

In a special podcast, we look at the just passed American Home Rescue and Foreclosure Prevention Act of 2008, taking a detailed look at a few tax provisions in that bill of interest.  We look at the new, refundable first time homeowners credit, the property tax deduction for nonitemizers and the soon to start restrictions on the ability to get a full Section 121 exclusion if a property has not always been used as a principal residence that will apply to usage after January 1, 2009.Note that this presentation is based on a brief review of the provisions that I've just completed based on what I believe to be the version of the bill that passed--but be sure to confirm these details, as well as watch for the required IRS guidance on a number of these matters.The materials are available for download at http://www.edzollars.com/2008-07-28_Housing.pdf .The podcast is sponsored by Leimberg Information Servicees, located on the web at http://www.leimbergservices.com .

Listen Now:

In the past year we've talked a lot about the preparer standards and tax return positions.  This week, in the case of Wadsworth v. Commissioner, TC Memo 2008-171, we see a real world situation where a tax professional decided a position was not one that he could accept and what happened when the client decided to find another person who would take the requested position.  As you might expect, the taxpayers don't fare well in the eyes of the court when they attempt to claim reliance on the advice of the professional that did sign off on the position.The materials for this week are available at http://www.edzollars.com/2008-07-28_Preparer_Shop.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

I gave a presentation at the offices of the Arizona Society of CPAs on the use of virtual machines to deal with the transition from Windows XP to Vista in a tax practice.  This podcast is based on that presentation, and it will be fairly useful to actually have the materials in front of you as you listen to this one.  The materials are at http://www.edzollars.com/Virtual_Machine.pdf.The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com.

Listen Now:

The IRS issued new temporary regulations that deal with start-up and corporate and partnership organization costs.  Interestingly enough, the new regulations now create an automatic election to expense/amortize all such costs, and treat problems related to the identification of costs or the proper year to begin amortization as accounting method issues.The materials are located online at http://www.edzollars.com/2008-07-14_Section_195.pdf .The podcast is sponsored by Leimberg Information Services, located at http://www.leimbergservices.com .

Listen Now:

The IRS this week issued some relatively unsurprising guidance on the treatment of life insurance and an S corporation's accumulated adjustments account, so this week we'll look at the more general issues of the relevance (and lack of relevance) of AAA for an S corporation and its shareholders, and how the item is computed.The materials are available at http://www.edzollars.com/2008-07-07_AAA.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

The IRS has issued new guidance in the form of a series of questions and answers related to Health Savings Account in Notice 2008-59.  This podcast goes over the various items covered in this notice, and some of the planning and design opportunities available under this notice.Written materials for this podcast can be downloaded from http://www.edzollars.com/2008-06-30_HSA_Guidance.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

This is part two of a series of two podcasts on the proposed regulations for preparer penalties released recently.  .The materials are at http://edzollars.com/2008-06-23_Penalty.pdf .The podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com .

Listen Now:

This is the first of what will be a series of two podcasts on the proposed regulations for preparer penalties released here recently.  Considering the length of the regulations and podcast, the first hour is in this file to listen to and digest, with part two to be posted later in the week.The materials are at http://edzollars.com/2008-06-23_Penalty.pdf .The podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com .

Listen Now:

Securing our client's data is the responsibility of all of those in tax practice. This past week I gave a presentation at the Arizona Society of CPA's Financial Planning Conference on this matter, and that presentation serves as the basis for this week's podcast.The slides used for this presentation are available at http://www.edzollars.com/2008-06-16_Knocking.pdf .The podcast is sponsored by Leimberg Information Services, located at http://www.leimbergservices.com .

Listen Now:

This week we look at the step transaction doctrine and where the line is drawn when we deal with the application of the step transaction doctrine in the formation of a family limited partnership.  The IRS attempted to use their victory in the Senda case to get the same result in the case we'll look at this week, Holman v. Commissioner, 130 TC No. 12.  But in an opinion that reminds of the importance of the facts of the specific case in question, the Tax Court refused to take that step. Materials for this week's podcast can be downloaded from http://edzollars.com/2008_06_09_Holman.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

This week we look at a Court of Claims case that deals with an IRS examination and the imposition of the fraud penalty--a penalty the Court of Claims found was not justified.  The case is the one of Gagliardi v. United States, 2008 TNT 98-20, and is instructive both in the outline of the law, as well as allowing us to consider the ways an examination like this could spin out of control and result in a taxpayer being assessed the fraud penalty in a case like this.The materials can be downloaded from http://www.edzollars.com/2008-06-02_FraudandtheDentist.pdf.The podcast is being uploaded a bit early this week since I'll be traveling Saturday to New Orleans for the AICPA's Spring Tax Division meeting held there Monday and Tuesday.  The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com.

Listen Now:

Simplified employee pensions (SEPs) are a popular retirement plan for extremely small businesses, with one of the key attractions being that don't require many of the formalities of regular qualified plans.  But that has led to taxpayers treating them too informally, and in the case we look at this week (Brown v. Commissioner, TC Summary 2008-56) a taxpayer discovered the hard way what can be the consequences of failing to faithfully follow the simplified rules for this type of plan.The materials for this podcast can be found at http://www.edzollars.com/2008-05-26_SEP_Issue.pdf .I'll be in New Orleans next Monday at the AICPA Spring Tax Division meeting, so the next podcast may come out on a slightly different schedule. The podcast is sponsored by Leimberg Information Services, located at http://www.leimbergservices.com.

Listen Now:

The Fifth Circuit came down with a ruling in Kornman & Associates, Inc. v. United States on whether a taxpayer who set up a Son of BOSS style shelter would get the benefit that was expected--and the taxpayer was disappointed.  The case offers a chance to review the unusual impact that liabilities have in a partnership context, as well as the question of just what is a liability for this purpose.The materials for this podcast can be downloaded at http://www.edzollars.com/2008-05-19_Partnership_Liabilities.pdf .The podcast is sponsored by Leimberg Information Services, located at http://www.leimbergservices.com .

Listen Now:

Since we've discussed mailing returns in previous podcasts, this time we look at the problems a taxpayer who tries to hand file a return can run into getting that done correctly.  In the case of Allnut, Sr. v. Commissioner, 2008-1 USTC Â50,310 the taxpayer failed to make delivery as required by the regulations, and the court found that what the taxpayer had to live with the date a document could finally be documented as being in the District Director's office--which was less than year years before the date the IRS issued an assessment.Materials for this week are available at http://www.edzollars.com/2008-05-09_Hand_Carried.pdf.The podcast is sponsored by Leimberg Information Services, located at http://www.leimbergservices.com .

Listen Now:

Partnership taxation is one of those areas where things may not work exactly as many practitioners expect, and those unexpected workings are things that tax shelter promoters have attempted to make use of.  But if you are going to try and use the technical details of the tax law to force the IRS to grant you a tax benefit that otherwise doesn't seem like something that should happen, it's helpful to follow the detailed requirements yourself.  Unfortunately for the taxpayer in 7050 Ltd. v. Commissioner, TC Memo 2008-12, that didn't quite happen--and while one bullet was dodged, another problem proved fatal to the benefit the taxpayer was after, and the court never had to deal with whether the shelter actually would have worked if executed as it was supposed to have been.The materials are available at http://www.ezollars.com/2008-05-05_Sloppy.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

This week we follow the continuing saga of the self-employment tax and qualified joint venture that we've been following since the early part of this year.  This week we analyze CCA 200816030 issued by the IRS that outlines the "new improved" IRS position on self-employment tax and the Qualified Joint Venture election under Â761(f).The materials for the podcast are available at http://www.edzollars.com/2008-04-28_SEandQJV.pdf .The podcast is sponsored by Leimberg Information Services, located at http://www.leimbergservices.com .

Listen Now:

The issue of whether Â7502(c) provides the exclusive means to prove timely filing of a document by a taxpayer is addressed yet again by the courts--and what the Third Circuit had to say, the IRS didn't like hearing.  In the case of Philadelphia Marine Trade Ass'n.-Int'l Longshoremen's Association Pension Fund et al. v. Commissioner, 2008 TNT 74-16 the Third Circuit held that the reports of the death of the common law mailbox rule were, in the words of Mark Twain, greatly exaggerated.  That places the Third Circuit in the same camp with the Eighth, Ninth and Tenth Circuits, and opposed to the positions of the Second and Sixth Circuits.The materials for this podcast are located at http://www.edzollars.com/2008-04-21_Mailbox.pdf.The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com.

Listen Now:

After a hiatus at the end of tax season, we return with a new show dealing with an issue of whether a payment to a person was compensation income or a gift.  The case in question is the case of Larsen v. Commissioner, TC Memo 2008-73.The materials for the podcast are at http://www.edzollars.com/2008-04-16_GiftorComp.pdf.We also briefly discuss an interesting episode of a podcast I found on small service business operating issues at a place you might not look--check out http://macbreaktech.com/63/making-mac-your-business/ for an interesting listen that really isn't very MacIntosh (or even computer) centric--just a general discussion of issues facing small service businesses.The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimberservices.com .

Listen Now:

The self-employment tax is our topic for this week, specifically dealing with two topics.  We revisit an issue last visited in the early days of the podcast (back in June 2005) of the treatment of LLC members for self-employment tax purposes.  We look specifically at the case authorities we have (which are scant, and not terribly promising for LLC members), the IRS's proposed regulations that were controversial when issued, and what options exist for dealing with the issue today.As well, we revisit an issue raised in a February podcast, as the IRS unofficially "clarifies" their position on the self-employment tax treatment of Qualified Joint Ventures that is presented in the Form 1065 instructions and were discussed in the Tax Talk Today webcast and podcast from back in January.The materials can be downloaded at http://www.edzollars.com/2008-03-24_Self_Employment.pdf.The podcast is sponsored by Leimberg Information Systems, located at http://www.leimbergservices.com .

Listen Now:

The question of whether a problem on a return was an error or a method of accounting is important, as we'll discuss this week looking at the Sixth Circuit's ruling in the case of Huffman v. Commissioner, where the appeals court sustained the 20006 ruling of the Tax Court (126 TC 322) that the CPA's consistent flawed attempt to calculate inventory as prescribed by the regulations for the dollar-value, link-chain LIFO method.  The resolution of this matter in favor of the IRS allowed the IRS to get at what would otherwise have been out of reach errors in years closed for assessment by moving that income into years that were open under the provisions of Â481.The materials for this podcast can be found at http://www.edzollars.com/2008-03-17_CPA_Says_Error.pdf .The podcast is sponsored by Leimberg Information Service, available on the web at http://www.leimbergservices.com .

Listen Now:

This week we look at the Tax Court's second pass at the case of Hubert v. Commissioner, TC Memo 2008-46, a case that sent back to the Tax Court by the Sixth Circuit Court of Appeals to decide if the LLC debt restoration provision made the taxpayer the payer of last resort under the Sixth Circuit's test.  The Tax Court comes back saying no.The materials can be found at http://www.edzollars.com/2008-03-10_Risky_Business.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

The IRS has issued a safe harbor treatment for Â1031 exchanges involving property that previously had or subsequently has personal use.  Revenue Procedure 2008-16 outlines the tests taxpayers can meet to be given safe harbor status on the question of the properties being held for investment or business use to qualify for Â1031 status.The materials for the podcast can be found at http://www.edzollars.com/2008-03-02_1031_Exchange.pdf .The podcast is sponsored by http://www.leimbergservices.com .

Listen Now:

We revisit the issue of what exactly is timely filing, revisiting an issue last covered in a podcast back in October of 2005.  This time we look at the Tenth Circuit's opinion in the case of Gibson v. Commissioner, a case that illustrates how a taxpayer who thought he was complying with the requirements to prove a timely filing of his Tax Court petition managed to find a way to not get the benefit he thought he had.The materials are available at http://www.edzollars.com/2008-02-25_Timely_Filing_PodcastII.pdf . The podcast is sponsored by Leimberg Information Services, located at http://www.leimbergservices.com .

Listen Now:

This podcast was originally recorded to go up last week, but the new tax bill displaced it so a week late we'll look at something that might have escaped your notice in the tax bill passed last May.  This podcast discusses an issue highlighted in, of all places, the instructions to Form 1065.  The issue is the side effect that occurs when married taxpayers holding rental property in an LLC or other form eligible to elect Qualified Joint Venture Treatment under Â761(f) elect to be treated as a Qualified Joint Venture.  The effect is that the rental income (or loss) is no longer exempted from being treated as self-employment income, but now is treated as such.  We'll discuss why this is the case, as well as the interesting location the IRS chose to give us the details of this impact as well as how to actually make the election under Â761(f) for any entity.The materials for the podcast are located at http://www.edzollars.com/2008-02-11_Joint_Venture.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

Congress passed the Economic Stimulus Package of 2008 this week that makes a few, but significant, tax law changes for 2008.  This podcast talks about what Congress did and what we need to do about it.Materials are available at http://www.edzollars.com/2008-02-09_Economic_Stimulus.pdf .The podcast is sponsored by Leimberg Information Services at http://www.leimbergservices.com .

Listen Now:

A listener who was following along in some discussions on the Arizona Society of CPAs sent me an email suggesting that perhaps it might be useful to look at the issues involved with LLCs and S corporations.  This week we will look at this issue, one that often doesn't get covered well since the topic cuts across what is often covered in partnership discussions (the use of LLCs) and S corporations (where often LLCs are presented as an alternative to, rather than a potential form of, an S corporation).The podcast covers issues that arise when a single member LLC is used to hold S corporation stock, as well as when an LLC elects corporate status and wishes to be taxed under the S corporation rules.The materials are at http://edzollars.com/2008-02-04_S_Corporation.pdf .The podcast is sponsored by Leimberg Information Services, located online at http://www.leimbergservices.com .

Listen Now:

The issue of what is a capital asset is looked at in the Ninth Circuit's decision in Trantina v. United States, 2008 TNT 7-8.  In this case, an insurance agent was arguing that payments received from State Farm should have been taxed to him at capital gain rather than ordinary income rates.  Unfortunately, the United States District Court disagreed with the taxpayer, and the Ninth Circuit did so as well.The materials are at available for download at http://www.edzollars.com/2008-01-28_Trantina.pdf .The podcast is sponsored by Leimberg Informaton Services at http://www.leimbergservices.com .

Listen Now:

This week we look at Revenue Procedure 2008-12 and final regulations under Â7216, both of which deal with taxpayer authorizations for the use or disclosure of tax return information by tax preparers.  The new regulations contain a number of new requirements that will be imposed on tax preparers, and the Revenue Procedure contains specific language that must be used for taxpayers who are filing the Form 1040 series of forms.  These new requirements will take effect on January 1, 2009.The written materials for the podcast can be downloaded from http://www.edzollars.com/2008-01-21_Consents.pdf .The podcast is sponsored by Leimberg Information Services at http://www.leimbergservices.com .

Listen Now:

The Supreme Court today decided the issue of whether investment fees paid by a trust was subject to the 2% of adjusted gross income limitation.  The Supreme Court in Knight v. Commissioner held that expenses are to be tested to determine if they are expenses that would not commonly or customarily be incurred by an individual--and only if they pass that test do they avoid the 2% limitation.The materials are available for download at http://www.edzollars.com/2008-01-17_Knight_Time.pdf .The podcast is sponsored by Leimberg Information Services at http://www.leimbergservices.com .

Listen Now:

We look at a case where the IRS failed in an attempt to argue that a transaction had no economic substance or otherwise failed under the anti-abuse partnership regulations.  The case is Countryside Limited Partnership v. Commissioner, TC Memo 2008-3 where the taxpayers used the partnership distribution rules to allow two partners to have their interests in the partnership liquidated with no tax cost just prior to the partnership selling a significant asset at a gain.The materials are located at http://www.edzollars.com/2008-01-14_Partnership.pdf .The podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com .

Listen Now:

We look at a case that illustrates the application of Section 108 in a situation with recourse debt.  While this case would likely have been covered by the relief in the Mortgage Foregiveness Debt Relief Act of 2007 if the property had been taken in 2007, it's still useful to review since many foreclosures won't qualify for the newly passed relief, but may still meet the insolvency test that worked for the taxpayers in this case.The case is Keith v. Commissioner, TC Summary 2007-214 where the IRS's position did not garner much respect from the Tax Court.  We'll also look at what tax research gotchas may have caused the IRS to raise the positions that Tax Court so rapidly dismissed as just wrong and how to avoid those problems in your own practice.The materials are located at http://www.edzollars.com/2008-01-08_Debt_Forgiveness.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

The IRS celebrated the end of 2007 by releasing three Notices late on December 31 that provide guidance on the application of the revised preparer penalties contained in the Small Business and Work Opportunity Tax Act of 2007 that was passed last May.  The IRS had previously released interim relief in Notice 2007-54, but that relief was set to expire as 2007 did.The centerpiece of this guidance is Notice 2008-13, which provides interim guidance on applying the Â6694 preparer penalty standards.  The interim rules are not nearly as onerous as many had feared they would be, and need to be incorporated rapidly into our practices as tax season approaches.  Note, as well, that this guidance applies only until the IRS releases revised regulations, something the notice indicates they plan to do during 2008.The materials for this podcast can be downloaded at http://www.edzollars.com/2008-01-01_6694.pdf .  Those materials include the full text of all three notices.The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

In this podcast, we look at a case where a shareholder attempted to argue that, in fact, the S corporation's election had been terminated a decade before due to an agreement with the founding shareholder that, in the taxpayer's view, created a second class of stock.  The case is Minton v. Commissioner, T.C. Memo 2007-372.  The shareholder is not successful, though she does eventually succeed in unilaterally ending the S status of the corporation.  We'll look at both why the Tax Court didn't go along with her claim that a 1986 agreeement created a second class of stock, and the issues raised by her ability to unilaterally kill off the S election and what that suggests for those of us working with S corporations and/or succession plans.The materials are available at http://www.edzollars.com/2007-12-31_S_Corporation_Class.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

In this podcast we look at highlights of three of the five bills affecting taxation that Congress passed prior to leaving town, specifically the Tax Increase Prevention Act of 2007, Mortgage Forgiveness Debt Relief Act of 2007 and Tax Technical Corrections Act of 2007, all three of which have provisions that should be of interest to many of your clients.  The written materials for the podcast can be downloaded from http://www.edzollars.com/2007-12-29_New_Laws.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

In a recent Tax Court decision on the home sale exclusion under Section 121, the IRS and the taxpayers split the decision--the IRS lost in its attempt to claim the taxpayer did not use the property in question as his principal residence, but the taxpayer lost a portion of the deduction because a portion of the property was titled in the name of a partnership--and the court did not buy the taxpayer's theories that either the partnership was never formed or that the property had been distributed.  The case is Farah v. Commissioner, T.C. Memo 2007-369.The materials for the podcast can be downloaded from http://www.edzollars.com/2007-12-26_Section_121.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

The IRS has issued Notice 2008-1 that details how an S corporation shareholder can qualify for the self-employed health insurance deduction under Â162(l) even if the policy is in the name of the shareholder. The notice is at odds with the implication contained in IRS Headliner 163 issued in May of 2006 that seemed to many to strongly suggest that personal ownership of the policy was fatal to the deduction. We had previously discussed why, perhaps, that wasn't the case in a podcast back in June of 2006 that suggested listeners look at Revenue Ruling 61-146 and consider whether a similar program would not solve the problem the Headliner pointed out with individual policies. What the IRS has now done is, effectively, adopted that solution with official blessing. The materials can be downloaded from http://www.edzollars.com/2007-12-26_S_Corporation.pdf. The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com.

Listen Now:

After a not so short hiatus, the Tax Update podcast is again posted, this time looking at IRS Revenue Ruling 2008-5 that deals with issue of a taxpayer selling securities at a loss in a taxable account and then purchasing identical securities in a regular or Roth IRA.  The issue is one that practitioners have discussed for years, but which the IRS just now is getting around to issuing a formal ruling on.The written materials for the podcast can be downloaded at http://www.edzollars.com/2007-12-21_IRA_Issue.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

Two days, two revisions:  the IRS on September 25 issued proposed regulations to revise Circular 230 Â10.34, and the next day finalized regulations that also made changes to the same provision (among others).  We take a look at both sets of changes, and their impact on tax practice.The materials can be downloaded from http://www.edzollars.com/2007-09-26_Circular_230.pdf .The podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com .

Listen Now:

The IRS released a Chief Counsel Advice (CCA 200734021) that dealt with how to interpret the language found in Section 121(d)(5) that, in certain cases, will allow a taxpayer to treat a residence that is destroyed as if it were sold for purposes of ignoring up to $250,000/$500,000 of gain under Section 121(a).The materials for this week's podcast are found at http://www.edzollars.com/2007-09-01_Residence.pdf .The podcast is sponsored by Leimberg Information Services, found at http://www.leimbergservices.com .

Listen Now:

The Second Circuit Court of Appeals decided that the Tax Court had been too quick to dismiss a penalty under Â6662 in the Estate of Thompson, decided last week, but that the Court was not forced to accept the taxpayer's valuation when it rejected the IRS's own expert's valuation even if the Court had decided the burden had been shifted under Â7491.The materials for the podcast are available at http://www.edzollars.com/2007-08-26_Estate_Tax_Value.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

We once again revisit the Cohan rule, but this time in the context of a much larger taxpayer than we normally look at, in the case of Tyson Foods, Inc and Subsidiaries vs. Commissioner, TC Memo 2007-188.  The taxpayer's was attempting to argue, based on Cohan rationalization, that they should be able to depreciate a $2,000,000+ debit remaining on their books after making an agreed upon adjustment under IRS exam.  The IRS (and eventually the Tax Court) did not agree that such a treatment should be allowed.The materials for the case are at http://www.edzollars.com/2007-07-21.pdf . The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

Equitable ownership of a home can grant a taxpayer a deduction for mortgage interest and taxes even when the taxpayer is not the legal owner.  While the taxpayer in the case of Nair v. Commissioner, TC Summary Opinion 2007-116, did not have such ownership, the opinion does outline the requirements a taxpayer would need to demonstrate to have such equitable ownership. As well, Mr. Nair's failed attempt to obtain a casualty loss deduction also offers some insights into the issue of establishing basis for items that are involved in a casualty loss deduction. The materials for the podcast can be downloaded from http://www.edzollars.com/2007-07-15.pdf. The podcast is sponsored by Leimberg Information Services, located at http://www.leimbergservices.com.

Listen Now:

We finish up the look at Â6662, this time looking at the substantial understatement penalty, as well as the exceptions to this penalty. The material for this week's podcast can be downloaded from http://www.edzollars.com/2007-07-09_Substantial_Understatements.pdf. The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com.

Listen Now:

For Independence Day we take a look at a new set of standards released by the American Institute of CPAs' Consulting Services Executive Committee that will take effect for engagements entered into after January 1, 2008.  The Statement on Standards for Valuation Services No. 1, Valuation of a Business, Business Ownership Interest, Security, or Intangible Asset can have an impact on tax practice where the value of an asset covered by this standard has an impact on a tax issue.  CPAs will need to be aware of when this standard may become applicable and the options when that might take place.  Those that work with CPAs in tax practice, include tax attorneys who are working with the client's CPA, need to be aware of this change and the impact of this standard on both what the CPA can do and the cost of having the CPA perform certain functions.The materials for this podcast can be downloaded from http://www.edzollars.com/2007-07-04_SSVS.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

Given that in both the changes to Circular 230 paragraph 10.35 back in 2005 and the recent revisions to Section 6694, it seems appropriate to review the penalties that can be imposed on a taxpayer under this section, a section whose outlines of level of comfort in a position have borrowed in revising both of those provisions.  This week we look at Â6662(b)(1)'s negligence and disregard of rules and regulations penalty, planning to look next at the substantial understatement provisions of Â6662(b)(2).  The materials for this podcast can be found at http://www.edzollars.com/2007-06-29_Client_Side_Penalties.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at www.leimbergservices.com .

Listen Now:

This week we look at recent cases where the IRS lost a statute of limations case.  In the case of Bakersfield Energy Partners, LP, 128 TC No. 17, the question was whether an overstatement of basis used in computing a Section 1231 gain could result in omission from gross income that triggers the six year statute of limitations under Â6629 and Â6501.   The Tax Court decided the answer was no.The materials can be downloaded at http://www.edzollars.com/2007-06-22_Limits.pdf .The podcast is sponsored by Leimberg Information Services, located on the web on http://www.leimbergservices.com .

Listen Now:

The IRS this past week issued Notice 2007-54 which grants partial relief from some of the changes made to the preparer penalties under Section 6694(a), delaying full implementation of the provisions until next year.  We discuss the extent of the relief granted, as well as some of the reactions to this change that I've noticed in online discussion groups.The materials for this podcast, including the above notice, can be found at www.edzollars.com/2007-06-15_Delay_of_Game.pdf .The podcast is sponsored by Leimberg Information Services, located at http://www.leimbergservices.com .

Listen Now:

We further analyze the new law, this time looking in detail at the preparer penalty provisions and the change in the trigger for where the preparer penalty under Section 6694(a).The materials are available at www.edzollars.com/2007-06-02_Preparer_Penalty.pdf .The podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com .

Listen Now:

Kaye Thomas emailed me with an observation regarding one issue in the new law.  It turns out that though prior drafts of the bill and the Joint Committee's report on the bill indicated expanding the general rule on the Kiddie Tax one more year, that provision is not included in the final bill.  Rather, only the "student" provision is added to the bill. The materials have now been updated, and can be downloaded from the original link at http://edzollars.com/2007-05-25_New_Law.pdf .

Listen Now:

The new Congress has passed its first major tax bill with changes that are meant to grant relief to small businesses, but which also have revenue raisers that will impact a number of clients.  The President has indicated he will sign the bill, so over the Memorial Day weekend we can all read up on the new law to start our summer.The materials are available for download at http://edzollars.com/2007-05-25_New_Law.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

We look at the recent case of Pediatric Affililates, P.A., (2007-1 USTC Â50,477) where the Third Circuit Court of Appeals upheld the U.S. District Court of New Jersey's determination that the taxpayers were liable for unpaid payroll taxes that their payroll service had walked off with.  The case is instructive for the types of responsibilities under the tax law a taxpayer is unable to delegate to a third party.The materials can be downloaded at www.edzollars.com/2007-05-18_Payroll_taxes.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at www.leimbergservices.com .

Listen Now:

This week we look at Proposed Regulations under Section 152 to clarify the treatment of divorced parents, regulations that would both serve to document what has developed under the current temporary regulations and case law and add some new quirks-including the ability to revoke a waiver that was to apply to a future year by the custodial parent.The materials for the podcast can be found at http://www.edzollars.com/2007-05-08_Dependent.pdf .  And that noise you hear jingling in the beginning of the podcast is my cat deciding to walk in the room at the beginning of the podcast and the tags on his collar.The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

A taxpayer without a regular place of business can still obtain a deduction for travel away from home if the taxpayer can establish that he/she has a home.  In two cases (Jason Ayala v. Commissioner and Manuel Ayala, Jr. v. Commissioner) the taxpayers failed to show they had a home and lost the deduction.  But the IRS also failed in its attempt to assess a negligence penalty on these taxpayers.The materials for the podcast can be downloaded from http://www.edzollars.com/2007-04-27_Home.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

The IRS on April 23 released guidance on the application of monetary penalties to practitioners, their employers, firms and related entities for violations of Circular 230 as authorized by the American Jobs Creation Act of 2004.  This guidance gives some insight into the IRSâs views on how they will make use of this new enforcement tool, as well as some indication of what the IRS might view as an appropriate quality control system for a tax practice.  If, as expected, SSTS No. 9 goes from an exposure draft to a final standard for CPAs, this document may be one to consider when a CPA firm sets out its tax quality control standards.  And given the existence of the âaspirationalâ? standard for best practices in Circular 230 Section 10.33, the importance of SSTS No. 9 may not be limited to CPAs.The materials for this podcast can be found at http://www.edzollars.com/2007-04-24_Monetary_Penalties.pdfThis podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

When Section 6501(c) refers to a false and fraudulent return, does the IRS need to show that the taxpayer was involved in the fraud to get the benefit of the unlimited statute of limitations to assess tax?  Or is it enough to show only that the preparer was involved in preparing a false return with the intent to evade tax on behalf of the taxpayer?  That's the issue the Tax Court considered in the case of Allen v. Commissioner, 128 TC No. 4.The supporting materials for this podcast can be downloaded from http://edzollars.com/2007-03-10_Preparer_Fraud.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

The IRS has again issued guidance indicating their displeasure with a marketed shelter that promises benefits via the literal application of partnership provisions in the IRC.  In CCA 200704028 the IRS outlines both the shelter that was marketed that claimed the magic of returning most of the investment via a credit against state taxes and then a capital loss deduction for the investment for federal tax purposes as well.  The IRS outlines three separate rationales for disallowing the claimed treatment.The materials for the podcast can be downloaded from http://edzollars.com/2007-02-24_Credit_Denied.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

Congress doesn't necessarily make the law work as consistently as practitioners want it to work.  This week we look at four different provisions in the Internal Revenue Code and their somewhat different view on whether "enough" is being done to get a tax benefit--for Sections 469, 179, 1362/1375 and 1402.The materials for the podcast can be found at http://edzollars.com/2007-02-17_Passive.pdf .The podcast is sponsored by Leimberg Information Services at http://www.leimbergservices.com .

Listen Now:

Back in February of 2006, I did a podcast on medical reimbursement plans and went over the Speltz case where the taxpayer prevailed in a medical reimbursement plan provided for her husband who worked for the taxpayerâs daycare business as an employee.  That was a case where the taxpayer kept excellent records and truly kept track of all the necessary details.  This week the Tax Court gave opinions in two cases where taxpayers were not as meticulous with such plansâand the results were not nearly as good. We look at the cases of Snorek v. Commissioner, TC Memo 2007-34 and Francis v. Commissioner, TC Memo 2007-33 for taxpayers who adopted medical reimbursement plans but found that there was more to sustaining the deduction than just doing that. The materials for this weekâs presentation can be downloaded from http://edzollars.com/2007-02-17_Medical.pdf I also discuss my early experiences with Microsoft Vista, Word 2007 and Excel 2007.  I also reference a tipcard for Excel 2007 you can get from the following site: http://www.mrexcel.com/excel2007tipcard.html Youâll the author of the above site also has a daily video podcast filled with Excel tips.  Information about the podcast can be found at: http://www.mrexcel.com/podcast.shtml And, as you might expect, information about his offerings in general can be found at http://www.mrexcel.com . The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com.

Listen Now:

Congress passed a number of incentives in the Tax Relief and Health Care Act of 2006 meant to make Health Savings Accounts (or HSAs) more attractive to taxpayers.  We'll take a look at the provisions this week and consider their impact on our clients.The materials for the podcast can be downloaded from http://edzollars.com/2007-02-03_HSAs.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

We look at the case of a traveler who got bitten when she attempted to make use of the hotel to get a package picked up by a private delivery service-a package that happened to contain her petition to the Tax Court which she was filing on the last day available.  When the delivery service reported picking up the package the following day, the IRS argued that she had blown her chance to file in Tax Court--and the Tax Court agreed.The case is Austin v. Commissioner, TC Memo 2007-11 and the materials can be downloaded at http://edzollars.com/2007-01-27_Late_Filing.pdf.We also discuss the IRS announcement this week that 2006 returns won't be due until April 17 due to April 16 being a city holiday in the District of Columbia and its impact at the state level, and this week's release by Microsoft of the consumer version of Windows Vista and Office 2007.The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com.

Listen Now:

This week we look at an IRS memorandum that argues against the position taken by a taxpayer arguing that his transaction literally complies with Section 731 and 732.  The IRS argued that the transaction, which involved the partnership acquiring a residence for the partner to redeem his interest, actually represented the equivalent of a distribution of cash followed by the purchase of the house--a transaction that would have triggered a significant taxable gain.The materials for this podcast can be downloaded from http://edzollars.com/2007-01-20_Literally_Too_Good.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com.

Listen Now:

The IRS has issued Notice 2007-7 that explains the distribution provisions in the Pension Protection Act of 2006.  In the podcast, we look at some of he provisions contained in this notice that would be of special interest to advisers of closely held businesses and their owners.The materials for the podcast can be downloaded from http://edzollars.com/2007-01-12_IRS_PPA_Notice.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

Sometimes life just doesn't seem fair.  Like when you exercise stock options from your former employer, and the stock price drops 20% from the date you told your employer to exercise the options until just a few days later.  And, even worse, at the last minute you revoked instructions to your former employer to immediately sell the shares upon exercise and instead decided to hold the shares.  In this case, the taxpayer attempted to salvage something from this by arguing that the later date was the measuring date for the compensation value since that was the date that the employer actually received the funds for the shares.This is the story we look at in the case of Walter v. Commissioner, TC Memo 2007-2, a story that doesn't have a happy ending for the taxpayer.The printed materials are found at http://edzollars.com/2007-01-06_Options.pdf .The podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com .

Listen Now:

The mark to market election under Section 475(f) can have a major impact for individuals that were unsuccessful in their attempt to become a day trader-which turns out to be the majority of those who try.  However, the election has rather strict requirements on when the election must be filed, and as the taxpayer in Knish v. Commissioner, TC Memo 2006-268, learned as he tried to unsuccessfully argue for the validity of his election filed 18 months after the date that Revenue Procedure 99-17 required it have been filed.The materials for this podcast can be downloaded at http://edzollars.com/2006-12-31_Mark_to_Market.pdf .The podcast is sponsored by Leimberg Information Services, found on the web at http://www.leimbergservices.com .

Listen Now:

This week the IRS decided to send a warning to accrual basis taxpayers that the IRS has some very specific ideas on the proper application of the recurring item exception.  We look at Revenue Ruling 2007-3 and the issues it raises for deductions on contracts entered into near year end.The materials for this podcast can be downloaded from http://edzollars.com/2006-12-23_Accrued_Expenses.pdf .The podcast is sponsored by Leimberg Information Services .

Listen Now:

Congress got around to passing the extenders in the Tax Relief and Health Care Act of 2006 early on Saturday morning, which picked up a number of the items that expired at the end of 2005 and had not yet been extended.  One provision added in the bill gives relief to individuals who have old, unused minimum tax credit which is discussed in this podcast.The materials can be downloaded at http://edzollars.com/2006-12-09_Giving_Credit.pdf .The podcast is sponsored by Leimberg Information Services at http://www.leimbergservices.com .

Listen Now:

The issue of whether an individual is or isn't considered an active participant in a retirement plan can be complex, as the taxpayer found out in the case of Colombell v. Commissioner, TC Summary 2006-184.  As the taxpayer discovered, the mere fact she was not earning any benefit under the plan (nor was she likely ever to do so) did not mean she was not an active participant, as the regulations define that term.The materials can be downloaded from http://edzollars.com/2006-12-02_Participant.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

Given that the IRS and courts had a short week, we look back this week at a ruling from a few weeks back, as well as a related ruling from a year ago, that deal with the accountable plan rules, and how the IRS interprets the options for implementing those rules.  We look at Revenue Rulings 2006-56 and 2005-52.The materials can be downloaded at http://edzollars.com/2006-11-25_Accountable_Plan_Per_Diem.pdf .The podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com .

Listen Now:

The IRS has released a simplified method that businesses can elect to use to compute the amount of their refund for the federal long distance excise tax that the IRS finally agreed the law did not allow them to collect.  The simplified method is elective, and uses April and September 2006 phone invoices to compute a percentage that is applied to all telephone expense throughout the relevant period.Materials, including the IRS notice and questions and answers, can be downloaded at http://edzollars.com/2006-11-18_Telephone_Tax_Refund.pdf .The podcast was recorded this week at the Founders Inn in Virginia Beach, Virginia where I spoke at the Virginia Accounting and Auditing Conference.The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

83(b) elections were all the rage, especially for those with stock options during the dot com bubble--and now many of those individuals regret the election.  This week the Tax Court considered the case of Anthony Kadillak (Kadillak v. Commissioner, 127 TC No. 13) who sought to escape the consequences of his 83(b) election and subsequent forfeiture of a portion of the shares through various means. The materials can be downloaded at http://edzollars.com/2006-11-11_83b_and_AMT.pdf .I'm going to Ohio this week, speaking in Dublin, Ohio just outside of Columbus on Monday, and Canton on Tuesday.  After that, I will do a technology update at the Virginia Beach version of the Virginia Accounting & Auditing Conference on Thursday.The podcast is sponsored by Leimberg Information Services, located at http://www.leimbergservices.com .

Listen Now:

The podcast this week deals with the case of Estate of Landers, TC Memo 2006-230, where an estate's co-administrator attempted to seek a finding that there was reasonable cause for late filing based upon his reliance upon his (now deceased) co-administrator, who was a tax professional, and who suffered a broken hip two months before the extended due date of the estate tax return.The case offers a look at what does and doesn't constitute reasonable cause for late filing, as well as the issue of whether a nonprofessional can be excused for not being aware of the due date of a return if he claims he relied upon a professional to inform him of the due date.The materials are located at http://edzollars.com/2006-11-01_Late_Filing_Tax_Professional.pdf .The podcast is sponsored by Leimberg Information Services, located at http://www.leimbergservices.com.

Listen Now:

The Tax Court this week reasserted its previously stated position on the treatment of the GST grandfathering provision for trusts in existence on September 25, 1985 when a party holds a general power of appointment under that trust.  The Tax Court held that the IRS final regulations that treat such a power as removing the trust transfers from the protection of the grandfathering provisions are valid, despite cases decided by the Eighth and Ninth Circuit where it was held the plain language of the grandfathering provisions meant that such powers were to be ignored for this purpose.The Tax Court and the Second Circuit had previously held such a position to be a valid interpretation of the law.  Now it appears the Sixth Circuit, which has not yet been heard on this matter, will gets its say in the Gerson Estate case (127 TC No. 11).The materials can be downloaded from http://edzollars.com/2006-10-28_Plain_Language.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com.

Listen Now:

The IRS has proposed regulations that will radically change the taxation of private annuities, making Revenue Ruling 69-74 obsolete as of October 18.  We discuss the new treatment the IRS is proposing, and how it would impact such transactions.This week we also summarize some other recent developments, including the new updated numbers for qualified plan limitations.The materials can be downloaded at http://edzollars.com/2006-10-21_Annuity.pdf .The podcast is sponsored by Leimberg Information Services at http://www.leimbergservices.com .

Listen Now:

In a relatively slow tax news week, the Tax Court issued yet another published opinion dealing with the coordination of the capital loss rules of Â1211 and the alternative minimum tax.  In the case of Palahnuk v. Commissioner, 127 T.C. No. 9 the Tax Court once again dashed the hopes of a taxpayer who exercised highly appreciated incentive stock options only to see their value plummet before the year had expired that would allow the taxpayer to sell the shares and get long term capital gain treatment for regular tax purposes.The materials can be downloaded from http://edzollars.com/2006-10-14_Lets_Try_This_Again.pdf .The podcast is sponsored by Leimberg Information Services, located at http://www.leimbergservices.com.

Listen Now:

This podcast covers a number of recent tax developments, including dealing with the burning issue of whether a preparer must sign the client's copy of the return, a recent case involving again the question of what is alimony and the IRS's recent reprieve from the requirement that nonqualified deferred compensaton plans be in compliance with the (as of yet) not issued final regualtions by January 1, 2007.Documents for this podcast are available at http://edzollars.com/2006-10-06_ThisandThat.pdf .The podcast is sponsored by Leimberg Information Services, online at http://www.leimbergservices.com .

Listen Now:

The issue of whether a service provider is properly treated as a contractor or employee is an important issue for many small businesses.  In the case of Orion Contracting Trust v. Commissioner, TC Memo 2006-211, the Tax Court looked at this issue.  As well, the Court also took a look at the issue of what actions would indicate the proper "bad faith" to allow the imposition of a fraud penalty.The materials for the podcast can be downloaded from http://edzollars.com/2006-09-30_Who_Is_An_Employee.pdf .The podcast is sponsored by Leimberg Information Services.  Visit them on the web at http://www.leimbergservices.com . .

Listen Now:

The documentation rules for charitable contributions can create situations where taxpayers lose the right to claim a deduction even though they made it and, by the time they get to Tax Court, can even show the value of what was contributed.  This was a lesson learned by the taxpayers in Ney v. Commisssioner, TC Summary 2006-154.This podcast reviews the requirements for qualified appraisals and why just because an appraisal exists that won't necessarily save the taxpayers' deduction unless have specifically contracted for a tax appraisal and are sure to have the proper parties sign off on their return.The materials for this week's podcast are located at http://edzollars.com/2006-09-23_Charity_Appraisals.pdf .The podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com.

Listen Now:

We look at a case involving the statute of limitations and the issue of reliance on IRS advice.  In the case of A. L. Katz & J. L. Miller v. United States the United States Court of Claims explains that a taxpayer cannot use the fact that an IRS employee told them a claim could be filed by a date that turned out to be after the statute had expired to reopen the statute.  As well, the case provides an opportunity to look at the general rules that are involved with Section 6511 and the statute of limitations on claims for refund.The materials for the podcast can be downloaded from http://edzollars.com/2006-09-16_Statute.pdf .The next couple of weeks may prove challenging in getting the podcast up, as I will be traveling to Novi, Michigan to speak on Monday, come back to my office for Tuesday through Thursday, and then head off on my "Southern" speaking trip, speaking at the Virginia Accounting and Auditing Conference in Roanoke, Virginia on Monday, September 25 and then in Memphis, Tennessee for the Tennessee Society of CPAs on Employee Benefit Plans on Wednesday, September 27.  Hopefully I'll be able to get some podcasts put together in that time frame.The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

Securing data has become a key issue for professionals, given recent high profile thefts of computers and drives containing sensitive client information.  This week we look at some of the basics of encrypting data that professionals need to understand to protect their clientâs information should a data containing device fall into a third partyâs hands.  The materials for this weekâs podcast can be downloaded at http://edzollars.com/2006-09-08_Securing_Data.pdfThe podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

This week we deal with the issues involved with having cars that are used by employees, and the various rules that employers need to deal with in that situation.  While arguably not as âexcitingâ? to tax practitioners as issues dealing with estate planning, entity selection and the like (we get excited by strange things), clients are often extremely interested in getting company autos to certain employees, far more interested than the dollars involved would suggest they should be. We look at the employment tax issues related to the company car, as well the requirements to meet the various âsimplifiedâ? rules available for this purpose.The materials can be downloaded at http://edzollars.com/2006-09-01_Employee_Cars.pdf .The podcast is sponsored by Leimberg Information Services at http://www.leimbergservices.com .

Listen Now:

Paying your children to work in your business can make sense both for the business and from a family tax planning standpoint, but you have to take care to justify that the children are truly being paid for actual business work.  This was the little item that caused the taxpayer problems in the case of Alexander v. Commissioner, TC Summary 2006-127.  While the case may mainly demonstrate the truth of the old "pigs/hogs" tax saying, the opinion also helps illustrate issues that need to be considered when a close relative is placed on the payroll.  You can download the materials for this podcast at http://edzollars.com/2006-08-26_But_My_Kids_Are_Worth_It.pdfI'll be heading to Bismarck, North Dakota next week for a vacation that will stretch over two weekends.  There may or may not be podcasts for those weeks (depends on if I get them recorded and uploaded), but I expect to have up the following week if nothing else.The podcast is sponsored by Leimberg Information Services, located at http://www.leimbergservices.com .

Listen Now:

We look at a case this week that deals with the continuing problems of employee related options that were exercised when the stock was at a high price, but whose price collapsed before the tax was due.  The case involved was the case of Racine v. Commissioner, TC Memo 2006-162.The materials can be downloaded at http://edzollars.com/2006-08-19_Margins_and_Options.pdf .The podcast is sponsored by Leimberg Information Services at http://www.leimbergservices.com .

Listen Now:

This week we look at a provision buried in the Pension Protection Act of 2006 that involves "employer" owned life insurnace.  The provision in question renders the death benefit taxable to the extent it is greater than the premiums paid unless the policy both falls into certain excepted categories and the policy owner takes specific steps before the policy is issued to assure that the insured both gets proper notice and gives a proper consent.The materials are found at http://edzollars.com/2006-08-12_Life_Insurance.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

Taxpayers get their advice from a lot of sources, and we often end up having to defend our own advice against other sources.  This week we have two cases that show that all advice is not created equal.  In the case of Lehrer v. Commissioner (TC Memo 2006-156) a taxpayer learned the hard way that selecting a preparer predominantly on which one computes the lowest tax is not necessarily the best way to end up well advised.And the case of Diem v. Commissioner (TC Summary 2006-121) is useful for those clients that will try and check your advice by calling the IRS for an answer and then reporting the IRS's answer to you (so, you know, you don't have to do any work on that one).  Mr. Diem was clobbered when it turned out an IRS employee's assurance that the program offered by his employer would be treated just like the workers compensation style claim he was giving up for tax purposes turned out not to be so.The materials for this week's presentation are found at http://edzollars.com/2006-08-03_Trust.pdf . The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

Is a distribution made to a surviving spouse that was rolled to her IRA but can be traced to her deceased spouse's IRA account eligible for the death benefit exception to Section 72(t)?  Considering a nearly $100,000 penalty was on the table, the taxpayer in the case of Gee v. Commissioner (127 TC No. 1) certainly hoped the Tax Court would answer yes.  Unfortunately for her, the Tax Court answered in the negative.  We look at the facts of her case, as well as the whole question of whether a surviving spouse should elect to treat an IRA as his/her own or take it as a beneficiary.The materials can be downloaded at http://www.edzollars.com/2006-07-29_IRA_Spouse.pdf .The podcast is sponsored by Leimberg Information Services (who had an email newsletter on this topic earlier this week), located on the web at http://www.leimbergservices.com .

Listen Now:

And now for something completely different-coverage of FASB.  Well, actually there is a tax angle to this one, as FASB has issued FASB Interpretation 48 in final form in June that will deal with uncertain tax positions.  The new interpretation will create some real problems for CPAs, especially those who both handle tax matters and have any sort of attest relationship with the client (including compilations, reviews and audits) that deals with GAAP statements.The materials can be downloaded from http://www.edzollars.com/2006-07-22_FASB_Podcast.pdf , though the actual FASB interpretation needs to be downloaded from their site ( http://www.fasb.org/st/#int48 ) due to copyright issues-and you will want to download it.The podcast is sponsored by Leimberg Information Services, on the web at www.leimbergservices.com .

Listen Now:

The logic of the application of the IRC to specific situations at times seems to defy common logic, and this week we look at a specific case of such.  In this case, the Tax Court decided that a reasonable cause for late filing that allowed a taxpayer to avoid the late filing penalty was that the court believed the taxpayer in reality had mailed the return on time, even if as a matter of law the return was late filed.  This is an extension of the issue discussed in the October 2005 podcast on proving timely filing.The case in question is Gregorian v. Commissioner, TC Summary 2006-99.The materials can be downloaded from http://edzollars.com/2006-07-15_Late_Filing.pdf .Apologies for some of the audio glitches you'll notice this week.  For various reasons this week I used my Windows laptop to record the podcast--and, as should be clear, the machine proved "suboptimal" even though it used the same tools (hardware and software) as the old Mac iBook I normally use.  We'll be back on the iBook in next week's podcast.The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

The issue of the taxation of prepaid purchase discounts that may need to be refunded if purchase goals are not met has resurfaced as the Ninth Circuit Court of Appeals reversed the Tax Court in the case of Westpac Pacific Foods v. Commissioner.  The Ninth Circuit's views on this topic differ both from those of the Tax Court and the IRS, each of which has it own views o this topic.In the podcast, the question to be addressed is what do we tell our clients who are faced with this issue?  The materials for this podcast can be downloaded from http://edzollars.com/2006-07-08_Westpac_Advances.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

Listen Now:

For our one year anniversary show, we take a look at the newly released regulations under Section 199 as they define construction found at Regulation Â1.199-3(m).  These definitions are key for anyone who works with clients in construction related entities.  The materials for this podcast can be downloaded at http://edzollars.com/2006-07-01_Construction.pdf .As I noted last week, I returned this week from visiting Syracuse, New York where  I presented a couple of continuing education courses for the New York Society of CPAs, and this was one of the topics we talked about in the course I gave Tuesday.This podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com .

Listen Now:

A few weeks ago (back in April) we looked at the case of Ruckreigel where a taxpayer lost an IRS challenge on whether a debt was truly from the shareholders to the corporation due to a failure to follow the necessary formalities.  This week, the taxpayers strike back with a taxpayer victory in the case of Miller v. Commissioner (TC Memo 2006-125) where the IRS fails in its attempt to reclassify debt that followed the proper form but which the IRS attempted to claim was really debt from the bank to the corporation.The taxpayer achieved victory on this point and the issue of whether the taxpayer was truly at risk as defined in Section 465, even though when all was said and done the taxpayer got out of all liability as the debt was actually paid by other investors who had guaranteed the entire loan structure.  This is an interesting case in showing the extreme importance of following proper form because, from an economic standpoint, the taxpayers in Ruckreigel seem to have much real exposure to potential loss than Mr. Miller actually ended up having, but he got his deduction.The materials can be downloaded from http://edzollars.com/2006-06-23_S_Debt.pdf.This podcast is sponsored by Leimberg Information Services, Inc., on the web at http://www.leimbergservices.com.

Listen Now:

Another Circuit chimes in on the issue of the FICA taxation of payments made in exchange for tenure rights as part of an early retirement package offered to teachers.  In a combined appeal of two contradictory opinions of lower courts under their jurisdiction, the Sixth Circuit upheld the lower court's finding in favor of FICA taxation in Appolini and reversed the opposite lower court holding in Klender, both cases that involved early retirement payments to teachers subject to Michigan's tenure law.The Sixth Circuit, in a 2-1 split decision, specifically called into question the Eigth Circuit's holding in North Dakota State University where payments for professor's tenure rights were held not to be subject to FICA.  We look at why the majority believes the North Dakota holding was in error, as well the reasoning behind the dissenting opinion.  As well, we consider the IRS changes to Revenue Rulings in this area, as well as how the courts dealt with the prior rulings that were applicable to these cases.The materials can be downloaded at http://edzollars.com/2006-06-17_FICA.pdf.The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com.

Listen Now:

The IRS on May 15 issued a "Headliner" on their website directed at tax professionals that attempted to explain the treatment of policies purchased by a single employee shareholder of an S corporation in the shareholder's own name.In this podcast we look at the headliner, and consider whether Revenue Ruling 61-146 offers an option that solves the problem this ruling points out.The materials can be downloaded at http://edzollars.com/2006-06-10_Medical_S_Corporation.pdf.The podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com.

Listen Now:

A special podcast this week of interest to practitioners (and their clients) who bulk filed paper extensions with the Fresno Service Center.  The IRS recently admitted to a mistake in processing extensions received in Fresno.Materials for the podcast, including two IRS releases on this issue, can be downloaded from http://edzollars.com/2006-06-04_Fresno_4868.pdf.The podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com.

Listen Now:

Divorce settlements at times are frustrating for tax preparers to work with, since they often leave dangling the issue of whether payments were or were not intended to be alimony and, not surprisingly, the former spouses may have very different views on that issue.  In this week's case, the Tax Court was forced to settle the issue after lecturing the warring spouses in his opinion about how the issue should have been taken care of well before this point.The case in question is the case of Johanson and Melzig v. Commissioner, TC Memo 2006-105.  You can download the materials from http://edzollars.com/2006-06-02_Alimony.pdf.This podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com.

Listen Now:

For Memorial Day, the podcast will take a break from tax related topics and consider rather some issues that arise when you, like many this weekend, are traveling and take your laptop with you to "stay connected" with your office and clients.  There are a number of risks that have been discussed in recent weeks on Steve Gibson and Leo Laporte's Security Now podcast that I wanted to discuss in the context of a tax professional.We look at how your system may be compromised and your data exposed rather easily by any other machine on a network you are connected to (incluidng a hotel high speed network or a wifi hotspot at your local coffee shop).  And by this I mean a machine of any other guest or patron of the shop, or just someone in distance of the hotspot.   As well, we discuss why wifi encryption does not address this problem, and why additional steps are necessary.  We also discuss the steps you can take to make your transmissions truly secure.The materials for this podcast can be downloaded from http://edzollars.com/2006-05-20_Secure_Data.pdf.This podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com.

Listen Now:

We finally have a 2005 extender bill, albiet missing a few extenders and with a few surprises (some good, some not so great).  The President signed the bill into law this week, so it's time to look at the details that were in the bill.The materials for this podcast can be found at http://edzollars.com/2006-05-20_TIPRA.pdf.The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com.

Listen Now:

Taxpayers who take distributions from retirement plans prior to attaining age 59 1/2 have to deal with a confusing set of rules of which distributions are and are not eligible to escape the 10% addition to tax under Â72(t).  Two recent cases illustrate both the traps that exist for the unwary and how a taxpayer managed to convince the Tax Court he qualified for an exception from the penalty despite IRS arguments to the contrary.The materials for the podcast can be downloaded from http://edzollars.com/2006-05-13_Premature.pdf.The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com.

Listen Now:

The Tax Court looked at the interaction of the $3,000 capital loss limitation and the alternative minimum tax basis adjustment on the sale of shares originally obtained via the exercise of incentive stock options in a prior year.  The case in question is Merlo v. Commissioner, 126 TC No. 10.In the case at hand, a taxpayer had exercised stock options at the end of $2,000 and obtained his stock at a price that was more than $1,000,000 less than the market price at the time.  Under the rules for ISOs, that fair market value spread was not taxable for regular income tax purposes, but was taxable for AMT purposes, generating a substantial AMT liability.However, things did not go well for the stock in 2001 and, by year end, Mr. Merlo's stock was worthless.  The Tax Court considered whether, when Mr. Merlo disposed of his stock, he could take the full basis differential against alternative minimum taxable income in 2001 and generate an AMT net operating loss to carry back to 2000 to recoup much or all of his AMT liability in that year.  Their answer was not the one Mr. Merlo wanted.The materials can be downloaded at http://edzollars.com/2006-05-06_AMT_Capital_Loss.pdf.This week we're adding some theme music, music licensed from www.podcastthemes.com.The podcast is sponsored by Leimberg Information Services, found on the web at http://www.leimbergservice.com.

Listen Now:

Shareholder debt to S corporations has proven to be a minefield for shareholders and their advisers, and the taxpayer and their adviser in the case of Ruckriegel v. Commissioner managed to step on a shareholder debt/basis mine twice in two consecutive IRS exams.  In this case, the shareholders attempted to argue that loans from a partnership they controlled were actually loans to them from the partnership, followed by loans to the corporation.Or, to put it more correctly, their CPA attempted to argue that.  One of the problems in this case, beyond the simple fact that the form of the transaction (which the taxpayers had control over) did not agree with what they were arguing was the true substance, was the fact that neither the taxpayers nor their inside accountant were treating these loans as if they had traveled that indirect route.  The case points up the dangers of attempting to "after the fact" correct client missteps--and especially continuing to do it for multiple years.The materials for this podcast are found at http://edzollars.com/2006-04-29_Debt.pdf.This podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com.Please feel free to comment on this podcast via the podcast website's "comment" button.

Listen Now:

Much of the information that taxpayers need to deal with their tax obligation arrives via the U.S. mail.  But what happens when that mail is delivered to the wrong address and either never makes it to the taxpayer or arrives late?  While we've previously considered what happens when the taxpayer attempts to send documents to the IRS that the IRS claims never arrived, this week we look at a case and a letter ruling involving mail that was sent to an address the taxpayer did not currently live at when the mail arrived.Since those of us who do compliance work now have a real need to relax, the podcast also has a brief off-topic discussion of an additional internet audio option--internet radio with discussions about four different stations.The materials for this podcast can be found athttp://edzollars.com/2006-04-22_Lost_in_Transit.pdfThis podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com.

Listen Now:

Can adopting a child, an apparently voluntary endeavor, qualify as an unforseen circumstance for purposes of obtaining an early exclusion of gain from the sale of a home under Section 121?  A taxpayer asked that question of the IRS and got a favorable response which we consider this week.  The letter ruling, which applies only to this taxpayer, is useful in helping us determine where the IRS may see the boundaries of an "unforseen" circumstance that qualifies a taxpayer for early use of Section 121's gain exclusion at a reduced level.We look at Letter Ruling 200613009's specific facts, noting that many factors were considered than just the fact the taxpayers decided to adopt a child--so the ruling does not support the conclusion that all adoptions will trigger the ability to make early use of a reduced 121 exclusion.The materials for the podcast can be found at http://edzollars.com/2006-04-15_Adoption.pdf.This podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com.

Listen Now:

The case of Benson v. Commissioner, TC Memorandum 2006-55, provides a look at the issue of what constitutes adequate disclosure under Section 6501(e)(1)(A)(ii) for purposes of avoiding the otherwise mechanical application of an extended six year statute on substantial underpayments.  In this case, which the taxpayer ends up losing, the Court considers to what extent disclosures on other returns can "make up" for items not disclosed directly on the individual return.The text file for this podcast can be downloaded from http://www.edzollars.com/2006-04-08_Adequate_Disclosure.pdf.This podcast is sponsored by Leimberg Information Services, found on the web at http://www.leimbergservices.com.

Listen Now:

We look at the exclusion for personal injuries under Section 104 this week, as well as the nature of a reasonable cause for purposes of escaping the imposition of a penalty.  We use the case of Goode v. Commissioner, TC Memo 2006-48, to illustrate these issues.  As well, we look at another attempt at getting reasonable cause to take a position--ask the President (as in George W. Bush), or at least have someone else do it and then claim to rely on the answer received when the question is delegated to an individual at the IRS.  This was the attempt of teh taxpayer in Smith v. Commissioner, TC Memo 2006-51.The materials can be downloaded from http://edzollars.com/2006-04-01_Injury.pdf.This podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com.

Listen Now:

This week we look at the issues and limitations involving the Cohan rule and its use in tax compliance and representation work. The materials can be downloaded from http://edzollars.com/2006-03-25_Cohan.pdf. The podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com.

Listen Now:

This week we look at some issues revolving around payroll tax deposits, including the IRS and Social Security Administration recent caution about the use of payroll services to deposit taxes. This week we look at a case that invovled the embezzlement of payroll tax deposits by a payroll service, where the IRS successfully argued that the employer still was liable for the unpaid taxes even though they had believed the payroll service had deposited the taxes As well, we look at a case involving a shareholder who stumbled into a full trust fund penalty when he attempted to take back funds he had advanced the failing corporation when he discovered there were unpaid payroll taxes. The materials for the podcast can be downloaded at http://edzollars.com/2006-03-18_Payroll.pdf. This podcast is sponsored by Leimberg Information Services located on the web at http://www.leimbergservices.com.

Listen Now:

In honor of the upcoming March 15 filing deadline for calendar year corporations, this week we look at the issue of just what is a "qualified personal service corporation" and, perhaps more importantly, what is not. The podcast looks at the recent case of Ron Lykins, Inc. v. Commissioner, TC Memorandum 2006-35, where a corporation was held not to be a QPSC, and so could benefit from the lower tax brackets available to non-PSCs. Materials for the podcast can be downloaded from http://www.edzollars.com/2006-03-10_Getting_Personal.pdf . The podcast is sponsored by Leimberg Information Services, available on the web at http://www.leimbergservices.com.

Listen Now:

This week's podcast arose from a discussion that began on the California Society of CPAs TaxTalk group on Yahoo about the widespread use of Circular 230 disclaimers. There seems to be an unfortunately false belief among many in the professions involved that a standard disclaimer eliminates any and all issues related to the revisions last summer to Circular 230. The podcast discusses both the issues outside of Circular 230 that can arise from the indiscriminate use of this disclaimer, as well as those cases under the covered opinion rules when the disclaimer does not absolve the professional from having to issue a covered opinion. The materials can be found at this link: http://edzollars.com/2006-03-03_Disclaimers.pdf We also discuss briefly some technology matters, including a quick discussion of why it may be useful to listen to Steve Gibson's Security Now podcast. To check out what's available go to: http://grc.com/securitynow.htm If you ever use a wireless hotspot or plug into a hotel network when on the road, this week's broadcast, while a bit dense, also contains some very important information about risks you may not be aware of (the "man in the middle" attack to steal your passwords, or the simple sniffing allowed if you aren't wired directly to a switch--that is, the network uses either wireless or a simple hub). The podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com.

Listen Now:

This week we look at issues surrounding what are medical expenses for various tax purposes, as well as a case where the taxpayer successfully defended hiring her spouse as employee, and then covering him under a medical reimbursement plan. The materials for this week's podcast are at this link. This podcast is sponsored by Leimberg Information Services.

Listen Now:

We take a bit of a break from developments to talk about the issues and methods of tax research this week. We look at how to learn to efficiently deal with research issues that arise in a tax practice--especially during this busy season. The materials are found at this link. This podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com.

Listen Now:

This week's program discusses charitable remainder trusts in light of the IRS granting relief from an issue they first seemed to have discovered last year regarding the potential state law granted right of a surviving spouse to claim a share of a CRT upon the death of the creator of the trust. The program discusses CRTs in general, including a discussion of which clients a CRT might or might not be appropriate for. We then look at the problem that a spouse's right to elect a share of the trust created, the IRS's initial response and then their recent reconsideration of that response. The materials can be downloaded here. This podcast is sponsored by Leimberg Information Services, found on the web at http://www.leimbergservices.com.

Listen Now:

This week we take a look at the Tax Court's application of the charitable documentation regulations to two real world cases. In the case of Kendrix v. Commissioner a former IRS CID employee and Revenue Officer is found to be lacking in the documentation for her many charitable contributions. While there appears to be reason for the court to believe the contributions to be overstated or not made at all, the court actually keeps returning to technical inadequacies in her documentation to actually deny the deductions. The judge even muses that the court may have erred in the past in allowing the use of the Cohan rule to be used when documentation didn't meet the requirements, but ultimately concludes that the issue doesn't have to be dealt with in this case case. That makes this case potentially troubling since that same logic would apply even if there was no question the donation was made. The second case is a Tax Court Summary opinion of Haas v. Commissioner where the court, among other things, gets to deal with the "I put cash in the plate they passed around at church." The materials can be downloaded from this link. This week's podcast is sponsored by Leimberg Information Services.

Listen Now:

Congress hates employees--that's a fact of life that a worker learns the hard way in the case of Alley v. Commissioner, (TC Summary Opinion 2006-4) that we discuss this week. Mr. Alley had a "creative" way of getting around the fact that Section 62 does not allow employee business deductions to be taken in computing adjusted gross income. Unfortunately for Mr. Alley, the Tax Court did not appreciate his creativity. The case offers an option to look at the overall structure of where deductions are taken and the controlling provisions, so it useful beyond just the employee business expense context. The supporting materials can be downloaded here. This podcast is sponsored by Leimberg Information Services.

Listen Now:

This week we finally get a break from the Schedule D developments and move on to a new topic. We discuss simplified employee pensions, including the basic rules that apply to them, and the gotchas that clients tend to run into. The materials are available from this link. This podcast is sponsored by Leimberg Information Systems.

Listen Now:

In what has become an unintended series of podcasts, we deal once again (and hopefully for the final time) with the IRS's revisions to the Schedule D instructions, and the subsequent "clarifications" (some might say abandonment) of those changes that have come out due to the storm of protests. When last we left our story last Sunday, a solution acceptable to most on paper filings had been endorsed by the IRS. However, many questions remained on how efiling was impacted by this. This week we get a revised clarification that apparently will grant relief for efiling. The materials with all the details can be found at this link. This podcast is sponsored by Leimberg Information Services.

Listen Now:

While highly unofficial at this point, the IRS has begun circulating a "clarification" of the Schedule D issue. This special podcast discusses this email document and what it means for the upcoming tax season. Of special interest is its apparent lack of a solution to the problem for those filing returns via electronic means. This podcast is sponsored by Leimberg Informaiton Services.

Listen Now:

This week we look at the updated uniform definition of a child and other changes to the dependency exemption under Section 152 that Congress passed last year, as well as a technical correction Congress just passed that removes what had been a potentially significant change in the treatment of the exemption for divorced parents. You can download the materials from here. This podcast is being sponsored by Leimberg Information Services.

Listen Now:

We mark six months of podcasts this week (the first Tax Update was posted right after Apple opened up the iTunes music store to podcasts). To close out the year and get ready for the upcoming tax season, we look at the documentation rules for charitable contributions. The materials can be downloaded from http://www.edzollars.com/2005-12-31_Charitable_Documentation.pdf. This podcast is being sponsored by http://www.leimbergservices.com, who provide an excellent set of email newsletters on tax topics by subscription, as well as a database of tax information and categorized archives of these podcasts. Here at our firm, I wanted to note that one of my partners, LaVon Martin, is retiring as of the end of this year. We have worked both as employees of the firm and, eventually, as owners of the firm for over 20 years together. It has been a joy to work with her over these years, and it will certainly be different around here without her this tax season. Hopefully she'll remember us while she is actually getting to enjoy the winter and spring here in the Valley while those of us remaining are working our way through tax season. May all of you have a Happy New Year (enjoy those last few days before the deluge begins...)

Listen Now:

For our Christmas Eve edition of the podcast we look at the controversy that has arisen about a modification the IRS made to this year's Schedule D instructions. In the 2005 edition of the instructions, the IRS specifically indicates that taxpayers may not enter "See Attached" and reference a schedule of detailed transactions for Schedule D, but rather must fill the details on Schedule D-1. Download the materials prior to listening to the podcast. This podcast is sponsored by Leimberg Information Services. May you have an enjoyable holiday season. And, remember, tax season is just around the corner...

Listen Now:

This week we look at adequate disclosure under Revenue Procedure 2005-75 for purposes of escaping the substantial understatement penalty under Section 6662(a). Download the materials for the podcast from http://www.edzollars.com/Adequate_Diclosure.pdf. The podcast is being sponsored by Leimberg Services.

Listen Now:

This week we look at the issue of legal fees and settlement, and the tax status of such. We'll look at the result in the Hauge case where a taxpayer and the partnership she owned virtually all of the interests in settled the same legal dispute with quite different tax consequences. I am going to be speaking this week in Columbus, Ohio on Thursday and have a pretty full day Friday, so we may be late getting next week's podcast up--but we'll try and get it up on time.

Listen Now:

Be sure to download the materials from http://edzollars.com/2005-12-03_Alimony_Defintion.pdf. This week's podcast deals with the tax issues related to alimony, and looks at two recent cases where taxpayers lost in their attempts to get certain payments treated as alimony. In one case (D.E. Lofstrom, 125 T.C. No. 13) the taxpayer attempted to claim an alimony deduction on the transfer of a note receivable from a third party. In the second case (D.K. Vanarsdall, T.C. Summary Opinion 2005-170) the taxpayer attempted to get the court to count as alimony payments the decree stated were not alimony because the statement did not spell out the matter exactly as Section 71 provides for disqualifying an otherwise qualified payment from alimony treatment. In both cases, the taxpayer lost. In this podcast we look at the general issues surrounding alimony payments, and what you need to look for when dealing with a client who is either going through a divorce or who comes to you after the fact with a signed and sealed divorce decree. While I was able to record the podcast back in Phoenix, I'm posting the materials while in Tulsa, Oklahoma from the 2005 Oklahoma Tax Institute put on by the Oklahoma Society of CPAs. I'll be back in Phoenix next week before flying out one final time this year for a presentation in Columbus, Ohio at the Ohio State and Federal Tax Conference on December 15. There I will be giving a three hour presentation on federal tax developments during 2005. As always, if you comments on the podcast feel free to click the comment link below and leave your comments or discussions.

Listen Now:

This week we look at a case involving two doctors who receive funds from the local school to use for the education of their autistic child. The doctors attempted to claim they were running a business and attempted to deduct the net losses they incurred. The Tax Court analyzed this case under Section 183. We also go on beyond this case (whose result probably isn't surprising to most listeners) to discuss the general "hobby loss" rules under Section 183. The materials can be downloaded here. I will be in Tulsa, Oklahoma this week speaking on technology and the tax practice, so hopefully we'll get the podcast up timely this week, but it may be delayed.

Listen Now:

We look at a recent private letter ruling where the IRS made it clear that taxpayers who use the 60 day rollover rule to "borrow" from their IRA do so at their own risk, even if events completely out of their control intervene to make it impossible to complete the rollover. This podcast discusses the law surrounding the 60 day rollover, and the details of this particular ruling. Be sure to download the materials before listening to the podcast. I am posting this from The Founders Inn in Virginia Beach, Virginia, where the second run of the Virginia Accounting & Auditing Conference is talking place. I'll next be speaking (again on technology matters) at the Oklahoma Tax Institute on December 2. Information on that conference can be found at this website.

Listen Now:

This week's podcast is based on my presentation today at the Arizona Society of CPAs' Arizona Federal Tax Insitute held at the Arizona Biltmore. The Biltmore is located just south and slightly west of Piestewa Peak and not terribly far from my office in Phoenix (less than a ten minute drive--and that only because my office is closest to the back side of the resort, so you have to drive around it first). There are a number of pieces of material for this podcast available. You probably will want each of the following: 1. The Manual 2. Excel Example File 3. The Slides In the upcoming week I will be in Virginia Beach, Virginia for the Virginia Accounting and Auditing Conference's second run. It will be the same presentation I gave in Roanoke back in September. I have two more "on the road" presentations scheduled--the first in Tulsa, Oklahoma for the Oklahoma Tax Institute where I'll do a technology update for tax professionals on December 2. The next (and most likely final) road trip this year will be at the Ohio Society of CPA's Ohio Federal and State Tax Insitute to be held in Columbus on December 15 and 16th. I'll be doing the Federal Tax Update the morning of the 15th. If any of you are going to be attending those conferences, let me know or stop by and say hi at the conference.

Listen Now:

This podcast deals with three cases that dealt with attempts to have the court deal with the substance of a transaction as opposed to its form. We'll discuss why the IRS can succeed at this, while taxpayers have an uphill fight in most cases. This week's developments in the area of extensions for 2006 and the IRS's losing battle on the excise tax on flat rate per minute long distance and the excise tax on toll calls are also discussed. The materials can be downloaded here.

Listen Now:

This week we look at two recent Tax Court cases that dealt with contributions to charity and the values of the items donated. In one case, the item donated was a car while in the other case it was a monastery. In both cases, actual sales of the property in question made the courts seriously question the taxpayer's appraisal--and eventually made the court decide against the taxpayer. Materials for this podcast are available from this link. Please download those to use while listening to the podcast itself.

Listen Now:

This week we discuss the issues surrounding the use of the mail and electronic filing to prove a filing date. The materials can be downloaded from this link and can be referred to while listening to the podcast. There are a number of myths and misunderstandings among practitioners in this area, so we review the authority in this area. We also talk about the split among the Circuits on whether Section 7502(c) provides the exclusive method to have a presumption of timely filing if the IRS can't find the return, as well as the IRS's idea on how to solve this split. Not surprisingly, it's not by going along with those Circuits where the IRS lost.

Listen Now:

Today Anthony Forschino, Legilsative Liaison for the Arizona Department of Revenue spoke at the Arizona Society of CPAs Arizona DOR Liaison Luncheon about legislation passed the last legislative session, and those bills the Department of Revenue plans to ask to be considered in the upcoming session. Anthony also noted the "old" email addresses no longer work for the Department of Revenue, so you need to update your address book for any contacts you may have to their new azdor.gov address.

Listen Now:

This podcast is based on the September 20 presentation I gave for the Arizona Society of CPAs on the changes to Circular 230 that became effective over the summer. The manual that was distributed at the lunch session is available for download here. Again, please post your commments on the blogsite here at http://ezollars.libsyn.com.

Listen Now:

This week we look at two Tax Court opinions released on the same day that both dealt with whether a transaction represented a loan to the taxpayer or was income. The cases are Teymourian v. Commissioner (TC Memo 2005-232) and Karns Prime and Fancy Food, Ltd. (TC Memo 2005-233). The results may initially appear to be at odds with most tax professional's expectation based on the fact that in the case where the taxpayer prevailed, the loan in question was with his closely held corporation and poorly documented, while in the case where the IRS prevailed the purported loan was from an unrelated third party and clearly documented as a loan. I also briefly discuss the IRS's release of new proposed regulations to explain Section 409A that Congress put into the law last October. If your client either participates in a nonqualified plan or sponsors one, you should review these new proposed regulations, which modify the original guidance the IRS provided in Notice 2005-1. Please post comments here on ezollars.libsyn.com by clicking on the comment line just below the description.

Listen Now:

Comments sparked by an online discussion on Yahoo Groups Taxprofessionals group with Drew Edmundson. I wanted to clarify that I didn't mean to be completely negative about Microsoft or the responsibilities those of us who are users have to bear for the security issues we face (especially the outbreak of ZOTOB). I do expect Vista to become the next dominant operating system and I am cautiously optimistic that Microsoft will choose to force users and developers to pay attention to security. But we still have to be aware of the temptations that exist for Microsoft to back off of this or for users to rebel when they think Vista has "broken" their applications.

Listen Now:

This is a recording of a presentation made on the morning of September 27 at the Virginia Accounting & Auditing Conference on the Accounting Office of the Future (or at least that's the title) from the Hotel Roanoke in Roanoke, Virginia. This presentation deals with the release of Windows Vista Beta 1 and the potential impact of that on accounting firm practitioners. The slides from the conference can be downloaded here. The Hotel Roanoke is known for a somewhat unusual dish served in its restaurant--peanut soup. Think of it as thin peanut butter and you've got it. It's actually quite good, though most people's initial reaction to the idea is that they want to look at something else on the menu. I'll be doing a similar session at the Virginia Accounting & Auditing Conference held later this year in Virginia Beach, Virginia. If you are in the area, you should check with the Virginia Society of CPAs and can sign up at this link.

Listen Now:

This file contains a correction/clarification to yesterday's KETRA update. As is pointed out in this program, Section 303 of the Act does limit these higher rates to provision of Katrina relief. As well, there is a short period where the rate is lower than the rate noted--the new business rate took effect on September 1, but the 70% rule goes into effect on August 25, 2005 Thanks to Michael Wing, CPA on Yahoo Groups' Taxprofessionals group for pointing out these issues.

Listen Now:

This quick update summarizes the items contained in the Katrina Emergency Tax Relief Act of 2005 (KETRA), concentrating on those items that have impact across the country, as well as summarizing provisions that are targeted directly at the Katrina disaster area. I recorded this file this morning using the Samsung portable player, so audio quality is a bit lower than normal. I'm getting ready to fly back to Phoenix later today and am uploading this before I leave. An outline can be downloaded via this link. If you are reading this in iTunes, come to the main website (noted below) to see that link and get the outline. Please post any comments you may have at the home page for the podcast at http://ezollars.libsyn.com.

Listen Now:

This week's podcast deals with arbitration awards and IRA accounts. What happens when a taxpayer is awarded an amount in arbitration regarding the management of an IRA account, but the award is paid to the taxpayer? Can these funds be put back into the IRA? This week we look at three IRS private letter rulings on the subject to show both what has worked and what has not, at least in the IRS's view. We also look at the case of a taxpayer who tries to invoke the Cohan case, only to have the Tax Court explain the limits of the use of that case. As well, the court points out that merely because the IRS settled a similar case in a certain manner doesn't entitle the taxpayer to the same settlement. The case is Stewart v. Commissioner, TC Memo 2005-212. Be sure to download the related materials for this podcast from this link.

Listen Now:

No, we're not talking about reconsidering your vote from last November. Rather, this week's podcast deals with both the automatic and discretionary extensions the IRS grants to make elections for which a due date is specified. This topic was brought up a while back on the California Society's TaxTalk list and it was mentioned that these were important regulations to keep in the back of your mind. Please download the materials before listening to the podcast. Note that this week's podcast is a bit longer than normal. I recorded this podcast last week while down in Tucson at the University Marriott next to the University of Arizona. My wife was down there attending a conference at the Tucson Convention Center, so I had time available while she was away at conference. If you read this before Tuesday and will be in Phoenix, you can still sign up for the Circular 230 Update I will be giving at the Hilton Garden Inn at Central & Thomas in Phoenix. Along with the talk, you get lunch and CPE, though of course for a fee.

Listen Now:

Today's podcast reports on the Arizona Society of CPAs' Arizona Department of Revenue Liaison luncheon today. Speaking at the lunch was Christie Comanita, Manager in the Tax Policy & Research at the ADOR who oversees rulings on taxes other than income taxes at the Department of Revenue. She discussed the system for obtaining and issuing various rulings, as well as an update on the Streamlined Sales Tax Project and Arizona's position on that program. The program also details Arizona Individual Income Tax Ruling ITR 05-2 on claiming the exemption for your child if you did not claim the child on the federal return so the child could claim one of the education credits.

Listen Now:

This week’s podcast deals with two recent cases, one a win for taxpayers and one a loss. You can download the material (which consists of the two cases) from this link. In the first case, Davis v. Commissioner, TC Memo 2005-202, a taxpayer had to foot the bill for over nearly $7,900 in fees to contest an IRS assessment because of a mix-up over his address that caused notices of the pending exam, as well as the notices prior to assessment when the case could have gone to appeals, to be sent to the address the taxpayer shared with his ex-spouse. The Tax Court held that while the IRS apparently misdirected one notice that should have gone to a different address per its own files, later notices that would have enabled the taxpayer to contest matters earlier went to the wrong address because the taxpayer continued to list his old address on the 1040s he filed. In the second case, Allemeier v. Commissioner, TC Memo 2005-207, a taxpayer proves that what many tax preparers “know” is not necessarily the case—that obtaining an advanced degree will automatically cause education expenses to fail the test on whether the taxpayer has qualified for a new position and thus lose the deduction. Mr. Allemeier succeeded, representing himself, in having the court allow him to claim the costs of his MBA educational program over the objections of the IRS. I’m uploading this show before I head to Tucson for a day, so it’s going up a little early this week. I’ll likely be taping the podcast for next week while in Tucson (I usually try and get them ready in advance so there’s less pressure to meet a schedule.

Listen Now:

This week we look at a recent decision (Brooks v. Commissioner, TC Memo 2005-204) involving the impact of repaying S corporation debt during the year when, at the beginning of the year, the shareholder’s basis was less than the face amount of the note. In the case in question, the shareholders repaid such a debt in its entirety at the beginning of the year, the corporation sustained a loss during the year, and then the taxpayer loan back enough money to both return the entire repayment and then advance enough additional to give basis to take the loss. The court analyzed this case and how it differed from the case of Corneilus v. Commissioner, 58 TC 417, affd CA-5, 74-1 USTC ¶9446, 494 F2d 465, 33 AFTR 2d ¶74-1331). As we normally do, the podcast materials can be downloaded here on the ezollars.libsyn.com website—to get them click this link (if you are reading notes attached to the podcast in iTunes you’ll need to actually go to the site first to do that clicking). The Phoenix Tax Workshop will start its new year’s programs this month. I won’t be able to attend the first meeting (I’m going to be speaking at the Virginia Accounting & Auditing Conference in Roanoke, Virginia sponsored by the Virginia Society of CPAs and Virginia Tech University at that time), but I would suggest those in Phoenix consider signing up for the program. Of course, if you're close to Roanoke go ahead and sign up for that conference. My topic is on technology in the local accounting practice, but there are lots of other issues covered in those two days. The conference will be repeated in November in Virginia Beach, and I'll be there as well, so that's another option for anyone in Virginia or nearby. As well, continuing from the midweek podcast earlier this week, remember to consider the needs of the agencies serving those affected by Hurricane Katrina. The Red Cross, along with Yahoo, have established a website that makes it very easy to donate a standard amount to hurricane relief using your credit card. Please take the time to make a donation to help the relief effort, either via that site or through another relief agency. Remember that, unfortunately, these types of tragedies spawn their own scams—so be sure to check out any charity you aren’t familiar with before parting with your check. The crooks are going to be calling, sending out emails and and setting up their own websites. On the latter issue—the safest way to be sure you are at the website for the real charity is to be sure and type the address into your browser’s address bar or click only on links where you trust that those responsible for the website are both trying to send you to the proper site and have done their homework to assure that they have linked to the real charity. I expect “phishing” emails to start to hit mailboxes soon taking advantage of this situation. On an administrative aside: the text below allows me to “claim” this podcast on Odeo (an online podcast listening service). My Odeo Channel (odeo/4410b05381cc2d63)

Listen Now:

Given the disaster that has taken place on the Gulf Coast with Hurricane Katrina and its aftermath, I’ve put together a quick and dirty summary of some of the tax issues involved in casualty losses and federally declared disaster areas that may be of use for those of us who have clients that are located in the affected areas. Note that since this was put together rather quickly, you should confirm all of these details. I also added brief consideration of the issues to be considered with off-site backups due to the risk of a common disaster hitting both the original files and the backup—a situation that, unfortunately, has likely happened to some businesses in New Orleans. A list of the federally declared disaster areas can be found at the FEMA website, so that you can determine the counties in Louisiana, Mississippi and Alabama that are subject to these rules. In related matters, the AICPA has posted a set of resources for CPAs related to disaster recovery, as well as a link to the document Disaster Recovery: A Guide to Financial Issues that was written jointly by the National Endowment for Financial Education, the American Red Cross, and the AICPA, . As well, the AICPA has posted a page linking to various organizations to which contributions can be made to support relief efforts.

Listen Now:

Weekly podcast 12 dealing with children of divorced parents. A recent Tax Court Summary Opinion (Oman v. Commissioner, TC Summary Opinion 2005-110) potentially sheds some new light on the rule under the law in effect prior to 2005 about the dependency exemption for the noncustodial parent. The matter at hand is what happens if the divorce decree clearly provides that the noncustodial spouse should be given the exemption, but a proper Form 8332 isnÃïït filed with the return. The answer in this case may surprise some practitioners who have followed other cases through the Tax Court. As well, the podcast discusses the importance of the changes made to Section 152 by last yearÃïïs tax law changes. There are written materials you should download by clicking this link to look over while listening to the podcast.

Listen Now:

Weekly podcast 11, dealing with the solar energy provisions of the Energy Tax Incentives Act of 2005 and the related credits available under Arizona income tax law. The Podcast Materials for this podcast are available for download at http://ezollars.libsyn.com. The Phoenix Tax Workshop is also now accepting memberships for next year’s programs. The cost for a one year membership is $260 for the first member of a firm, with discounts available for additional members from the same firm that are described on the websites. The dates of programs for the 2005-2006 are also now on the calendar on the organization’s website.

Listen Now:

Arizona Tax Update podcast report on the Arizona Society of CPAs Arizona Tax Liaison Committee luncheon today at the Phoenix Doubletree Guest Suites at the Gateway Center (44th Street & Van Buren). Today’s presentation primarily dealt with legislative changes outside of the income tax, and the Arizona Department of Revenue’s current audit program related to purchases of furniture from a single out of state vendor in North Carolina.

Listen Now:

Podcast 10, produced and uploaded on a MacIntosh mini just for something different to do. This is the first of what I hope will be a set of three podcasts dealing with the Energy Bill that President Bush signed into law on Monday. Download the materials for this presentation from the http://ezollars.libsyn.com website, or simply go to http://www.edzollarstaxupdate.com. Also discussed briefly on this podcast is some informaton on how I recorded it using Audacity on the MacIntosh (or the virtually identical Windows version). I also mention an interesting Internet streaming radio station, www.radiofreephoenix.com. If you grew up in Phoenix in the 1960s and 1970s and remember listening to KCAC, the original KDKB, Mike Condello and know who Comptom Terrace was named in memory of, it's an interesting listen. Maybe even if you don't know what any of that refers to as well...

Listen Now:

A general update on tax developments this week, including a summary on two new tax bills, two revenue rulings that were published, and a discussion of the IRS announcement of National Research Project exams for S corporations for 2003 and 2004. The materials should be downloaded from the ezollars.libsyn.com website to follow along with on the FICA presentation.

Listen Now:

Postcast 8 on uninsured medical reimbursement plans--a structure that's not for everyone, but which is a perfect fit in the right situation. Download the materials via the ezollars.libsyn.com website before listening to this broadcast.

Listen Now:

TaxUpdate goes Live! Podcast 007 dealing with reportable transactions and the penalty for failure to disclose added by last year's law. Download materials that consist of the Powerpoint for this presentation, recorded live at the Arizona Forum for Improvement of Taxation summer conference at the Arizona State University downtown Phoenix facility. I'm looking for comments on the recording, which was captured using a Samsung YT-MT6 voice recorder (and MP3 player). One problem with a live presentation is that questions from the audience aren't very audible, but hopefully you'll figure out the questions from the answers. I hope to be able to do some more live work from presentations I give, so I'm working on dealing with this. But it is a first try right now.

Listen Now:

Weekly show 6 dealing with employee business expenses and reimbursable plans per IRC Section 62(c). You should download the "handout" in addition to listening to the podcast itself. The presentation deals with the requirements that must be met for reimbursement of an employee's expenses to be excluded from the employee's income. This version of the file is the same as the prior one, except the audio has been amplified.

Listen Now:

Weekly show 6 dealing with employee business expenses and reimbursable plans per IRC ÃÂ62(c). You should download the "handout" in addition to listening to the podcast itself. The presentation deals with the requirements that must be met for reimbursement of an employee's expenses to be excluded from the employee's income.

Listen Now:

Show 5.5 (not a weekly show--kind of a "special report"). This show presents a "first day" view of the Strangi decision issued today by the Fifth Circuit Court of Appeals. The Fifth Circuit upheld the Tax Court's decision in TC Memo 2003-145, but did so without ruling on the merits of the Â2036(a)(2) analysis that many practitioners viewed as the major concern in that case. From a CPA's perspective, this discussion looks at the risks involved from the fact that it's become clear that Â2036(a)(1) attacks on operational problems with the FLP will render the FLP ineffective as a transfer vehicle. Accountants' journal entries are a recurring theme in the cases that lose in court on Â2036(a)(1), and this fact should not be lost on CPAs who will be doing 1065s and other accounting for such partnerships. As well, I do a quick discussion of what types of clients likely should not be advised to make use of a family limited partnership given the Â2036(a)(1) problems.

Listen Now:

Show number 5. The self-employed health insurance deduction under IRC Section 162(l) is covered by this podcast. The information for the podcast is found at http://www.edzollars.com/SelfEmployedHealthInsurance.pdf. The program also covers the recently issued IRS Chief Counsel Memorandum 200524001. Please post your comments here.

Listen Now:

This week's "regular" podcast (assuming two weeks make this regular) deals with how three states determine if a trust or estate is a resident or nonresident entity, as well as containing a discussion of how to approach state filing issues in general with trusts and estates. The states we look at will be Arizona, California and Michigan. The materials you can refer to are located here: State Resident Fiduciary Returns" There are links to the California forms and instructions on my personal website at http://www.edzollars.com. I appreciate comments about this webcast--just send them to ed@hmtzcpas.com.

Listen Now:

Updated discussion of self-employment matters to cover matters raised by posters to Yahoo Groups' taxupdate discussion group. The IRS poster referenced is at: http://www.irs.gov/pub/irs-pdf/p3204.pdf

Listen Now:

The status of self-employment tax and limited liability companies. This a portion of a presented made at the Phoenix Tax Workshop. The materials for the full presentation, which also covers S are available.

Listen Now:

A summary of the tax laws passed and signed into law in the most recent Arizona legislature session, based on a summary presented to the Phoenix Tax Workshop. You should download the materials in order to get the full benefit of this presentation.

Listen Now: