Ed Zollars' Tax Update Podcast

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 .

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 .

Last year there was lots of discussion regarding the changes to §6694 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 §6694(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 .

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.

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 .

The Tax Court recently decided a pair of cases related to the innocent spouse provisions of §6015 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 §6015(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 §6015(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 .

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 §409(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 §409(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 .

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 .

This week we look at a case dealing with the trust fund recovery penalty under §6672.  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 .

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 .

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 .

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 .

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 .

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 .

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 .

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 §213.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 .

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 .

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 .

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 .

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 .

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 §475(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 .

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 .

We look this week at a difference in application of IRC §162(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 .

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 §71(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 .

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 .

We review the requirements found in the regulations for obtaining the required support for a tax position, concentrating on the methods outlined in Reg. §1.6662-4(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 .

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 .

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 .

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 .

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 .

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 .

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.

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 .

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 .

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 .

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 .

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 .

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 .

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 .

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.

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.

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 .

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 ¶50,310 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 .

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 .

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 §761(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 .

The issue of whether §7502(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.

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 .

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 .

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 §481.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 .

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 .

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 .The podcast is sponsored by http://www.leimbergservices.com .