Ed Zollars' Tax Update Podcast

Congress hates employees--that's a fact of life that a worker learns the hard way in the case of Alley v. Commissioner, (TC Summary Opinion 2006-4) that we discuss this week. Mr. Alley had a "creative" way of getting around the fact that Section 62 does not allow employee business deductions to be taken in computing adjusted gross income. Unfortunately for Mr. Alley, the Tax Court did not appreciate his creativity. The case offers an option to look at the overall structure of where deductions are taken and the controlling provisions, so it useful beyond just the employee business expense context. The supporting materials can be downloaded here. This podcast is sponsored by Leimberg Information Services.

This week we finally get a break from the Schedule D developments and move on to a new topic. We discuss simplified employee pensions, including the basic rules that apply to them, and the gotchas that clients tend to run into. The materials are available from this link. This podcast is sponsored by Leimberg Information Systems.

In what has become an unintended series of podcasts, we deal once again (and hopefully for the final time) with the IRS's revisions to the Schedule D instructions, and the subsequent "clarifications" (some might say abandonment) of those changes that have come out due to the storm of protests. When last we left our story last Sunday, a solution acceptable to most on paper filings had been endorsed by the IRS. However, many questions remained on how efiling was impacted by this. This week we get a revised clarification that apparently will grant relief for efiling. The materials with all the details can be found at this link. This podcast is sponsored by Leimberg Information Services.

While highly unofficial at this point, the IRS has begun circulating a "clarification" of the Schedule D issue. This special podcast discusses this email document and what it means for the upcoming tax season. Of special interest is its apparent lack of a solution to the problem for those filing returns via electronic means. This podcast is sponsored by Leimberg Informaiton Services.

This week we look at the updated uniform definition of a child and other changes to the dependency exemption under Section 152 that Congress passed last year, as well as a technical correction Congress just passed that removes what had been a potentially significant change in the treatment of the exemption for divorced parents. You can download the materials from here. This podcast is being sponsored by Leimberg Information Services.

We mark six months of podcasts this week (the first Tax Update was posted right after Apple opened up the iTunes music store to podcasts). To close out the year and get ready for the upcoming tax season, we look at the documentation rules for charitable contributions. The materials can be downloaded from http://www.edzollars.com/2005-12-31_Charitable_Documentation.pdf. This podcast is being sponsored by http://www.leimbergservices.com, who provide an excellent set of email newsletters on tax topics by subscription, as well as a database of tax information and categorized archives of these podcasts. Here at our firm, I wanted to note that one of my partners, LaVon Martin, is retiring as of the end of this year. We have worked both as employees of the firm and, eventually, as owners of the firm for over 20 years together. It has been a joy to work with her over these years, and it will certainly be different around here without her this tax season. Hopefully she'll remember us while she is actually

For our Christmas Eve edition of the podcast we look at the controversy that has arisen about a modification the IRS made to this year's Schedule D instructions. In the 2005 edition of the instructions, the IRS specifically indicates that taxpayers may not enter "See Attached" and reference a schedule of detailed transactions for Schedule D, but rather must fill the details on Schedule D-1. Download the materials prior to listening to the podcast. This podcast is sponsored by Leimberg Information Services. May you have an enjoyable holiday season. And, remember, tax season is just around the corner...

This week we look at adequate disclosure under Revenue Procedure 2005-75 for purposes of escaping the substantial understatement penalty under Section 6662(a). Download the materials for the podcast from http://www.edzollars.com/Adequate_Diclosure.pdf. The podcast is being sponsored by Leimberg Services.

This week we look at the issue of legal fees and settlement, and the tax status of such. We'll look at the result in the Hauge case where a taxpayer and the partnership she owned virtually all of the interests in settled the same legal dispute with quite different tax consequences. I am going to be speaking this week in Columbus, Ohio on Thursday and have a pretty full day Friday, so we may be late getting next week's podcast up--but we'll try and get it up on time.

Be sure to download the materials from http://edzollars.com/2005-12-03_Alimony_Defintion.pdf. This week's podcast deals with the tax issues related to alimony, and looks at two recent cases where taxpayers lost in their attempts to get certain payments treated as alimony. In one case (D.E. Lofstrom, 125 T.C. No. 13) the taxpayer attempted to claim an alimony deduction on the transfer of a note receivable from a third party. In the second case (D.K. Vanarsdall, T.C. Summary Opinion 2005-170) the taxpayer attempted to get the court to count as alimony payments the decree stated were not alimony because the statement did not spell out the matter exactly as Section 71 provides for disqualifying an otherwise qualified payment from alimony treatment. In both cases, the taxpayer lost. In this podcast we look at the general issues surrounding alimony payments, and what you need to look for when dealing with a client who is either going through a divorce or who comes to you after the fact with a signed and sealed

This week we look at a case involving two doctors who receive funds from the local school to use for the education of their autistic child. The doctors attempted to claim they were running a business and attempted to deduct the net losses they incurred. The Tax Court analyzed this case under Section 183. We also go on beyond this case (whose result probably isn't surprising to most listeners) to discuss the general "hobby loss" rules under Section 183. The materials can be downloaded here. I will be in Tulsa, Oklahoma this week speaking on technology and the tax practice, so hopefully we'll get the podcast up timely this week, but it may be delayed.

We look at a recent private letter ruling where the IRS made it clear that taxpayers who use the 60 day rollover rule to "borrow" from their IRA do so at their own risk, even if events completely out of their control intervene to make it impossible to complete the rollover. This podcast discusses the law surrounding the 60 day rollover, and the details of this particular ruling. Be sure to download the materials before listening to the podcast. I am posting this from The Founders Inn in Virginia Beach, Virginia, where the second run of the Virginia Accounting & Auditing Conference is talking place. I'll next be speaking (again on technology matters) at the Oklahoma Tax Institute on December 2. Information on that conference can be found at this website.

This week's podcast is based on my presentation today at the Arizona Society of CPAs' Arizona Federal Tax Insitute held at the Arizona Biltmore. The Biltmore is located just south and slightly west of Piestewa Peak and not terribly far from my office in Phoenix (less than a ten minute drive--and that only because my office is closest to the back side of the resort, so you have to drive around it first). There are a number of pieces of material for this podcast available. You probably will want each of the following: 1. The Manual 2. Excel Example File 3. The Slides In the upcoming week I will be in Virginia Beach, Virginia for the Virginia Accounting and Auditing Conference's second run. It will be the same presentation I gave in Roanoke back in September. I have two more "on the road" presentations scheduled--the first in Tulsa, Oklahoma for the Oklahoma Tax Institute where I'll do a technology update for tax professionals on December 2. The next (and most likely final) road trip this

This podcast deals with three cases that dealt with attempts to have the court deal with the substance of a transaction as opposed to its form. We'll discuss why the IRS can succeed at this, while taxpayers have an uphill fight in most cases. This week's developments in the area of extensions for 2006 and the IRS's losing battle on the excise tax on flat rate per minute long distance and the excise tax on toll calls are also discussed. The materials can be downloaded here.

This week we look at two recent Tax Court cases that dealt with contributions to charity and the values of the items donated. In one case, the item donated was a car while in the other case it was a monastery. In both cases, actual sales of the property in question made the courts seriously question the taxpayer's appraisal--and eventually made the court decide against the taxpayer. Materials for this podcast are available from this link. Please download those to use while listening to the podcast itself.

This week we discuss the issues surrounding the use of the mail and electronic filing to prove a filing date. The materials can be downloaded from this link and can be referred to while listening to the podcast. There are a number of myths and misunderstandings among practitioners in this area, so we review the authority in this area. We also talk about the split among the Circuits on whether Section 7502(c) provides the exclusive method to have a presumption of timely filing if the IRS can't find the return, as well as the IRS's idea on how to solve this split. Not surprisingly, it's not by going along with those Circuits where the IRS lost.

Today Anthony Forschino, Legilsative Liaison for the Arizona Department of Revenue spoke at the Arizona Society of CPAs Arizona DOR Liaison Luncheon about legislation passed the last legislative session, and those bills the Department of Revenue plans to ask to be considered in the upcoming session. Anthony also noted the "old" email addresses no longer work for the Department of Revenue, so you need to update your address book for any contacts you may have to their new azdor.gov address.

This podcast is based on the September 20 presentation I gave for the Arizona Society of CPAs on the changes to Circular 230 that became effective over the summer. The manual that was distributed at the lunch session is available for download here. Again, please post your commments on the blogsite here at http://ezollars.libsyn.com.

This week we look at two Tax Court opinions released on the same day that both dealt with whether a transaction represented a loan to the taxpayer or was income. The cases are Teymourian v. Commissioner (TC Memo 2005-232) and Karns Prime and Fancy Food, Ltd. (TC Memo 2005-233). The results may initially appear to be at odds with most tax professional's expectation based on the fact that in the case where the taxpayer prevailed, the loan in question was with his closely held corporation and poorly documented, while in the case where the IRS prevailed the purported loan was from an unrelated third party and clearly documented as a loan. I also briefly discuss the IRS's release of new proposed regulations to explain Section 409A that Congress put into the law last October. If your client either participates in a nonqualified plan or sponsors one, you should review these new proposed regulations, which modify the original guidance the IRS provided in Notice 2005-1. Please post comments here on ezoll

Comments sparked by an online discussion on Yahoo Groups Taxprofessionals group with Drew Edmundson. I wanted to clarify that I didn't mean to be completely negative about Microsoft or the responsibilities those of us who are users have to bear for the security issues we face (especially the outbreak of ZOTOB). I do expect Vista to become the next dominant operating system and I am cautiously optimistic that Microsoft will choose to force users and developers to pay attention to security. But we still have to be aware of the temptations that exist for Microsoft to back off of this or for users to rebel when they think Vista has "broken" their applications.