Coming to a Tax Return of Your Client Soon – Congress Moving on a Bill with Tax Provisions

Congress is back at work on a new tax bill, and I’ve prepared a brief summary of what appears to be the provisions in the bill reported out of the Senate Finance Committee.  The title of the Act is the Worker, Homeowner and Business Assistance Act of 2009, HR 3548.  While the House version had [...]

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IRS Says Infant Formula for Child of Mastectomy Patient Not a Medical Expense

In Private Letter Ruling 200941003, the IRS turned down the request of a taxpayer to be able to deduct infant formula as a medical expense.  The woman in question had undergone a double mastectomy to address two medical conditions.  She later gave birth to a healthy child.  She asked the IRS to rule that she [...]

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IRS Reverses Course on $1,100,000 Acquisition Debt vs Equity Debt Issue

The IRS Chief Counsel’s office has done an apparent “about face” regarding the treatment of acquisition debt on a home. In Chief Counsel Advice 200940030 issued on October 2, the IRS decided that a taxpayer can treat up to $100,000 in excess of the $1,000,000 limit on acquisition debt as “home equity debt” for deduction [...]

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Results of Google Search Not Reasonable Cause for Failure to Report Income

A former CPA’s attempt to establish a “self-directed” IRA failed to comply with the requirements of the law, subjecting the distribution he received from his Vanguard IRA to tax―a matter not in question in this case. But in the case of Woodard v. Commissioner, TC Summary Opinion 2009-150, the former CPA argued that he should [...]

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Estate Cannot Escape Late Filing Penalty Due to Reliance on Attorney to Timely File Request for Extension

In the case of the Estate of Fuertes from the US District Court for the Northern District of Texas, the court denied the estate relief from penalties for late filing of the estate tax return. The executrix of the estate testified that she hired an attorney to handle matters related to the completion and filing [...]

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Claim of Breach of Fiduciary Duty Under ERISA For Promised Plan Modification Requires Written Document

Former participants in a retirement plan in the case of Ladocuer, et al v. Credit Lyonnais (CA2, 9/30/09) claimed that oral representations made to them about pension plan credit they would receive for service in an entity being merged into another entity should serve as the basis for damages based on a breech of fiduciary [...]

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Taxpayer Reasonably Relied Upon Advice of Attorney in Fact Specific Son of BOSS Case

Even though the attorney in question had been actively involved in promoting Son of BOSS shelters and, in fact, was later indicted for his involvement in structuring such transactions, the taxpayer in the case of American Boat Company, LLC (CA7, 10/1/09) was held to have reasonably relied upon the attorney’s advice when reporting the result [...]

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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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