Text of Arizona Department of Revenue NOL FAQ

Below is the text of the Arizona Department of Revenue’s questions and answers on net operating losses that was distributed at the Arizona Society of CPA’s luncheon on September 17, 2009:

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Arizona Department of Revenue Statement on 2008 Net Operating Losses

Today at the 2009 Arizona Tax Legislation Update at the Arizona Society of CPAs offices, James Busby distributed a new document that was issued today by the Arizona Department of Revenue. While not an official ruling in the sense of an Individual Tax Procedure, this does serve as the most “official” position to date of [...]

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Taxpayer Forms Two FLPs, Loses Transfer Tax Benefits Two Different Ways

The IRS picked up another victory in the family limited partnership transfer tax wars in the case of the Estate of Malkin v. Commissioner, TC Memo 2009-212. For one family limited partnership the Tax Court found that the taxpayer had an implied retained life estate in the assets transferred, bringing them back into his estate [...]

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Tax Court Allows Mileage for Portion of First and Last Trip of Day to Delivery Driver

The IRS asserted a general rule that the first and last trip of the day involving a taxpayer’s nonbusiness related home had to be nondeductible commuting in the case of Freeman v. Commissioner, TC Memo 2009-213. However, given the unique facts of this case, the Tax Court found otherwise, granting Mr. Freeman a deduction for [...]

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No Portion of Legal Settlement Excludable from Income—Taxpayer Could Not Establish What Portion, If Any, Related to Physical Injuries

In Save v. Commissioner, TC Memo 2009-209, a taxpayer attempted to exclude from income amounts she had received in settlement of litigation. She had alleged in her complaint a number of violations by the defendant, which included violation of her First Amendment rights, whistleblower retaliation, intentional and negligent infliction of emotional distress and defamation.

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Deduction Allowed for Conservation Easement Granted, but at a Reduced Amount

In Simmons v. Commissioner, TC Memo 2009-208, the IRS was challenging a taxpayer’s claimed deduction for the donation of a facade easement under §170(h)(1). A conservation easement is one of the limited number of exceptions to the general rule that a taxpayer may not claim a charitable deduction for a grant of a partial interest [...]

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In Case You Were Wondering-Payments to a Prostitute Do Not Count as Deductible Medical Expenses

A tax attorney in the case of Halby v. Commissioner, TC Memo 2009-204 attempted, apparently seriously, to argue that payments he made to prostitutes and the purchase of pornography were deductible medical expenses. The taxpayer claimed medical expenses for payments to prostitutes in 2004 of $65,934 and in 2005 of $42,152. He also claimed as [...]

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The Two Issues Raised by Excess Passive Income in S Corporation Require Separate Remedies from IRS

In a brief email notice (CCA 200937029), the IRS Chief Counsel’s office pointed out that the waiver of the excess passive income tax for an S corporation under §1375(d) does serve to automatically solve an inadvertant termination of the S election under §1362(d).

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IRS Modifies Appeals Mediation Revenue Procedure

The IRS modified the mediation process in Appeals in Revenue Procedure 2009-44. Revenue Procedure 2002-44 is superseded by the new procedure.

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Not sleeping.

A local sole proprietor owns and operates a dry cleaner/tailor shop and a formal attire shop. One day while in the formal attire store we start talking about business and how she keeps sinking money in to cover rent.

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