Cases, Rulings, Regulations

This PodCast pertains to the distinction between compensation income and gifts. Specifically, the issue is, Is a payment to a person taxable compensation income or a non-taxable (for income tax purposes) 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_Gift_Comp.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.. This Podcast is sponsored by Leimberg Information Services, Inc. at http://www.leimbergservices.com Please visit our software, books, and PowerPoint Presentations site at http://www.leimberg.com

This PodCast pertains to Self-Employment tax issues. 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. 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 a podcast from back in January.The materials can be downloaded at http://www.edzollars.com/2008-03-24_Self_Employment.pdf. This Podcast is sponsored by Leimberg Information Services, Inc. at http://www.leimbergservices.com Please visit our software, books, and PowerPoint Presentations site at http://www.leimberg.com

This PodCast is about the difference between an error and an accounting method. The question of whether a problem on a return was an error or a method of accounting is important. We'll look 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 "481.The materials for this podcast can be found at http://www.edzollars.com/2008-03-17_CPA_Says_Error.pdf . This Podcast is sponsored by Leimberg Information Services, Inc. at http://www.leimbergservices.com Please visit our software, books, and PowerPoint Presentations site at http://www.leimberg.com

This PodCast examines an LLC debt restoration provision. We look at the Tax Court's second pass at the case of Hubert v. Commissioner, TC Memo 2008-46, a case 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 . This Podcast is sponsored by Leimberg Information Services, Inc. at http://www.leimbergservices.com Please visit our software, books, and PowerPoint Presentations site at http://www.leimberg.com

This PodCast is about Section 1031 exchanges of personal use property. The IRS has issued a safe harbor treatment for "1031 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 "1031 status.The materials for the podcast can be found at http://www.edzollars.com/2008-03-02_1031_Exchange.pdf This Podcast is sponsored by Leimberg Information Services, Inc. at http://www.leimbergservices.com Please visit our software, books, and PowerPoint Presentations site at http://www.leimberg.com

This PodCast pertains to the issue of "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 This Podcast is sponsored by Leimberg Information Services, Inc. at http://www.leimbergservices.com Please visit our software, books, and PowerPoint Presentations site at http://www.leimberg.com

This Podcast discusses an issue highlighted in the instructions to Form 1065 and pertains to 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 "761(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 "761(f) for any entity.The materials for the podcast are located at http://www.edzollars.com/2008-02-11_Joint_Venture.pdf . This Podcast is sponsored by Leimberg Information Services, Inc. at http://www.leimbergservices.com Please visit our software, books, and PowerPoint Presentations site at http://www.leimberg.com

This PodCast is about the distinction between a capital and non-capital assets. 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 This Podcast is sponsored by Leimberg Information Services, Inc. at http://www.leimbergservices.com Please visit our software, books, and PowerPoint Presentations site at http://www.leimberg.com

This PodCast concerns Revenue Procedure 2008-12 and final regulations under "7216, both of which deal with taxpayer authorizations for the use or disclosure of tax return information by tax preparers. The 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 . . Direct download: 2008-01-21.mp3 This Podcast is sponsored by Leimberg Information Services, Inc. at http://www.leimbergservices.com Please visit our software, books, and PowerPoint Presentations site at http://www.leimberg.com

This PodCast is about the 2% of AGI floor on certain trust expenses. The Supreme Court 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 . . This Podcast is sponsored by Leimberg Information Services, Inc. at http://www.leimbergservices.com Please visit our software, books, and PowerPoint Presentations site at http://www.leimberg.com

This PodCast concerns the economic substance doctrine. 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 . This Podcast is sponsored by Leimberg Information Services, Inc. at http://www.leimbergservices.com Please visit our software, books, and PowerPoint Presentations site at http://www.leimberg.com

This PodCast examines 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 This Podcast is sponsored by Leimberg Information Services, Inc. at http://www.leimbergservices.com Please visit our software, books, and PowerPoint Presentat

This PodCast concerns guidance for Preparers of tax returns. 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 "6694 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

This PodCast is about the S Corporation election. Here, 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 .. This Podcast is sponsored by Leimberg Information Services, Inc. at http://www.leimbergservices.com Please visit our software, book

<P>This PodCast is about the home sale exclusion, Section 121. 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.&nbsp; The case is <SPAN style="font-style: italic">Farah v. Commissioner</SPAN>, T.C. Memo 2007-369.<BR><BR>The materials for the podcast can be downloaded from <A href="http://www.edzollars.com/2007-12-26_Section_121.pdf">http://www.edzollars.com/2007-12-26_Section_121.pdf</A> .<BR><BR>.</P> This Podcast is sponsored by Leimberg Information Services, Inc. at http://www.leimbergservices.com Pl

This PodCast is about the Self-Employed Health Insurance Deduction for S corporation owners. The IRS has issued Notice 2008-1 that details how an S corporation shareholder can qualify for the self-employed health insurance deduction under "162(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. >. This Podcast is sponsored by Leimberg Information Services, I

This PodCast concerns wash sale rules and IRA investments. IRS Revenue Ruling 2008-5 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 .   This Podcast is sponsored by Leimberg Information Services, Inc. at http://www.leimbergservices.com Please visit our software, books, and PowerPoint Presentations site at http://www.leimberg.com

This PodCast is about changes to Circular 230.  Two days, two revisions:  the IRS on September 25 issued proposed regulations to revise Circular 230 "10.34, and the very 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 .   This Podcast is sponsored by Leimberg Information Services, Inc. at http://www.leimbergservices.com Please visit our software, books, and PowerPoint Presentations site at http://www.leimberg.com

This PodCast is about Code Section 121.  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 podcast can be  found at http://www.edzollars.com/2007-09-01_Residence.pdf . This Podcast is sponsored by Leimberg Information Services, Inc. at http://www.leimbergservices.com Please visit our software, books, and PowerPoint Presentations site at http://www.leimberg.com

This PodCast is about transfer tax valuation.The Second Circuit Court of Appeals decided that the Tax Court had been too quick to dismiss a penalty under 6662 in the Estate of Thompson, 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 7491.The materials for the podcast are available at http://www.edzollars.com/2007-08-26_Estate_Tax_Value.pdf . This Podcast is sponsored by Leimberg Information Services, Inc. at http://www.leimbergservices.com Please visit our software, books, and PowerPoint Presentations site at http://www.leimberg.com