Personal Income Tax Planning

This is the first of two PodCasts with discussions between Randy Zipse of the John Hancock and Steve Leimberg on the topic of life insurance in charitable planning.  This first Podcast discusses some of the issues a charity's development officer must consider before considering a life insurance proposal - and some of the roadblocks a life insurance agent faces when trying to present a proposal involving the use of life insurance in charitable planning.Part II considers some of the many positive, ethical, and highly beneficial ways life insurance can be used in charitable planning. 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 is PART I of a two part PodCast, THE FUTURE VISION OF ESTATE PLANNING, a special presentation of Leimberg Information Services, Inc. (LISI) and is courtesy of the Wilmington Trust Company of Wilmington, Delaware.    Wilmington Trust Company has been hosting panel discussion seminars entitled, "The Future Vision of Estate Planning" in major U.S. cities throughout 2006.  WTC was kind enough to allow LISI to tape and share with LISI members its Wednesday, November 8th, 2006 program which was presented in Philadelphia.     The panel was moderated by Wilmington Trust's Managing Director and Trust Counsel for Wilmington Trust's Wealth Advisory Services (and frequent LISI commentator) Richard (Dick) Nenno and included other three renowned attorneys as panel participants, Francis (Frank) J. Mirabello, Esquire - partner and manager of the Personal Law Practice of Morgan Lewis, Pam H. Schneider, Esquire - founding partner of the law firm of Gadsden Schneider &

This PodCast deals with rulings related to the accountable plan rules, and how the IRS interprets the options for implementing those rules.  Specifically, we will focus on Revenue Rulings 2006-56 and 2005-52.The materials can be downloaded at http://edzollars.com/2006-11-25_Accountable_Plan_Per_Diem.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 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 . 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 83 elections.   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.   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 . 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 proposed IRS regulations that will radically change the taxation of private annuities, making Revenue Ruling 69-74 obsolete as of October 18.  It discusses the new treatment the IRS is proposing, and how it would impact such transactions.  See Steve Leimberg's Estate Planning Newsletter # 1037 for more on this change. This PodCast also summarizes some other recent developments, including the new updated numbers for qualified plan limitations.  See Steve Leimberg's Employee Benefits and Retirement Planning Newsletter # 388 for more on this IRS release of the 2007 key numbers.  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 deals with the coordination of the capital loss rules of 1211 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 .Be sure to check out Michael Kitces' recent article on the AMT ( Qureshi v. U.S., 96 AFTR2d 2005-5949 (67 Fed. Cl. 783), 8/31/2005, Qureshi v. U.S., 98 AFTR2d 2006-6473, 9/6/2006)  at http://www.leimbergservices.com 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 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 . 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 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 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.Be sure to check out the important LISI Charitable Planning Newsletters # 104 and 105 at http://www.leimbergservices.com on this topic.  They discuss the changes made by the Pension Protection Act of 2006 to substantiation requirements for cash gifts.The materials for this week's podcast are located at http://edzollars.com/2006-09-23_Charity_Appraisals.pdf . This Podcast is sponsored by Leim

This PodCast concerns 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.  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 . 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 deals 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 'exciting' 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 'simplified' rules available for this purpose.The materials can be downloaded at http://edzollars.com/2006-09-01_Employee_Cars.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 covers some of the things you need to consider if your children are on your payroll.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.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  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 . 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 taxpayer advice and its reliability and its credibility in court.  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

This PodCast is about the Section 72(t) penalty tax on premature distributions and the question, "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 . 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 reasonable cause for late filing.  The logic of the application of the IRC to specific situations at times seems to defy common logic. Here, we look at a specific example 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.  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 us

This Podcast is about construction costs.  We take a look at the regulations under Section 199 as they define construction found at Regulation 1.199-3(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 . 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 importance of following proper form in corporate debt situations.  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, f

This PodCast concerns FICA taxation of payments made in exchange for tenure rights as part of an early retirement package offered to teachers.  Another Circuit chimes in on the issue. 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 ap

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. 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