Ed Zollars' Tax Update Podcast

This is a recording of a presentation made on the morning of September 27 at the Virginia Accounting & Auditing Conference on the Accounting Office of the Future (or at least that's the title) from the Hotel Roanoke in Roanoke, Virginia. This presentation deals with the release of Windows Vista Beta 1 and the potential impact of that on accounting firm practitioners. The slides from the conference can be downloaded here. The Hotel Roanoke is known for a somewhat unusual dish served in its restaurant--peanut soup. Think of it as thin peanut butter and you've got it. It's actually quite good, though most people's initial reaction to the idea is that they want to look at something else on the menu. I'll be doing a similar session at the Virginia Accounting & Auditing Conference held later this year in Virginia Beach, Virginia. If you are in the area, you should check with the Virginia Society of CPAs and can sign up at this link.

This file contains a correction/clarification to yesterday's KETRA update. As is pointed out in this program, Section 303 of the Act does limit these higher rates to provision of Katrina relief. As well, there is a short period where the rate is lower than the rate noted--the new business rate took effect on September 1, but the 70% rule goes into effect on August 25, 2005 Thanks to Michael Wing, CPA on Yahoo Groups' Taxprofessionals group for pointing out these issues.

This quick update summarizes the items contained in the Katrina Emergency Tax Relief Act of 2005 (KETRA), concentrating on those items that have impact across the country, as well as summarizing provisions that are targeted directly at the Katrina disaster area. I recorded this file this morning using the Samsung portable player, so audio quality is a bit lower than normal. I'm getting ready to fly back to Phoenix later today and am uploading this before I leave. An outline can be downloaded via this link. If you are reading this in iTunes, come to the main website (noted below) to see that link and get the outline. Please post any comments you may have at the home page for the podcast at http://ezollars.libsyn.com.

This week's podcast deals with arbitration awards and IRA accounts. What happens when a taxpayer is awarded an amount in arbitration regarding the management of an IRA account, but the award is paid to the taxpayer? Can these funds be put back into the IRA? This week we look at three IRS private letter rulings on the subject to show both what has worked and what has not, at least in the IRS's view. We also look at the case of a taxpayer who tries to invoke the Cohan case, only to have the Tax Court explain the limits of the use of that case. As well, the court points out that merely because the IRS settled a similar case in a certain manner doesn't entitle the taxpayer to the same settlement. The case is Stewart v. Commissioner, TC Memo 2005-212. Be sure to download the related materials for this podcast from this link.

No, we're not talking about reconsidering your vote from last November. Rather, this week's podcast deals with both the automatic and discretionary extensions the IRS grants to make elections for which a due date is specified. This topic was brought up a while back on the California Society's TaxTalk list and it was mentioned that these were important regulations to keep in the back of your mind. Please download the materials before listening to the podcast. Note that this week's podcast is a bit longer than normal. I recorded this podcast last week while down in Tucson at the University Marriott next to the University of Arizona. My wife was down there attending a conference at the Tucson Convention Center, so I had time available while she was away at conference. If you read this before Tuesday and will be in Phoenix, you can still sign up for the Circular 230 Update I will be giving at the Hilton Garden Inn at Central & Thomas in Phoenix. Along with the talk, you get lunch and CPE, though of co

Today's podcast reports on the Arizona Society of CPAs' Arizona Department of Revenue Liaison luncheon today. Speaking at the lunch was Christie Comanita, Manager in the Tax Policy & Research at the ADOR who oversees rulings on taxes other than income taxes at the Department of Revenue. She discussed the system for obtaining and issuing various rulings, as well as an update on the Streamlined Sales Tax Project and Arizona's position on that program. The program also details Arizona Individual Income Tax Ruling ITR 05-2 on claiming the exemption for your child if you did not claim the child on the federal return so the child could claim one of the education credits.

This week’s podcast deals with two recent cases, one a win for taxpayers and one a loss. You can download the material (which consists of the two cases) from this link. In the first case, Davis v. Commissioner, TC Memo 2005-202, a taxpayer had to foot the bill for over nearly $7,900 in fees to contest an IRS assessment because of a mix-up over his address that caused notices of the pending exam, as well as the notices prior to assessment when the case could have gone to appeals, to be sent to the address the taxpayer shared with his ex-spouse. The Tax Court held that while the IRS apparently misdirected one notice that should have gone to a different address per its own files, later notices that would have enabled the taxpayer to contest matters earlier went to the wrong address because the taxpayer continued to list his old address on the 1040s he filed. In the second case, Allemeier v. Commissioner, TC Memo 2005-207, a taxpayer proves that what many tax preparers “know” is not necessarily the case—that ob

This week we look at a recent decision (Brooks v. Commissioner, TC Memo 2005-204) involving the impact of repaying S corporation debt during the year when, at the beginning of the year, the shareholder’s basis was less than the face amount of the note. In the case in question, the shareholders repaid such a debt in its entirety at the beginning of the year, the corporation sustained a loss during the year, and then the taxpayer loan back enough money to both return the entire repayment and then advance enough additional to give basis to take the loss. The court analyzed this case and how it differed from the case of Corneilus v. Commissioner, 58 TC 417, affd CA-5, 74-1 USTC ¶9446, 494 F2d 465, 33 AFTR 2d ¶74-1331). As we normally do, the podcast materials can be downloaded here on the ezollars.libsyn.com website—to get them click this link (if you are reading notes attached to the podcast in iTunes you’ll need to actually go to the site first to do that clicking). The Phoenix Tax Workshop will start its new y

Given the disaster that has taken place on the Gulf Coast with Hurricane Katrina and its aftermath, I’ve put together a quick and dirty summary of some of the tax issues involved in casualty losses and federally declared disaster areas that may be of use for those of us who have clients that are located in the affected areas. Note that since this was put together rather quickly, you should confirm all of these details. I also added brief consideration of the issues to be considered with off-site backups due to the risk of a common disaster hitting both the original files and the backup—a situation that, unfortunately, has likely happened to some businesses in New Orleans. A list of the federally declared disaster areas can be found at the FEMA website, so that you can determine the counties in Louisiana, Mississippi and Alabama that are subject to these rules. In related matters, the AICPA has posted a set of resources for CPAs related to disaster recovery, as well as a link to the document Disaster Rec

Weekly podcast 12 dealing with children of divorced parents. A recent Tax Court Summary Opinion (Oman v. Commissioner, TC Summary Opinion 2005-110) potentially sheds some new light on the rule under the law in effect prior to 2005 about the dependency exemption for the noncustodial parent. The matter at hand is what happens if the divorce decree clearly provides that the noncustodial spouse should be given the exemption, but a proper Form 8332 isn�t filed with the return. The answer in this case may surprise some practitioners who have followed other cases through the Tax Court. As well, the podcast discusses the importance of the changes made to Section 152 by last year�s tax law changes. There are written materials you should download by clicking this link to look over while listening to the podcast.

Weekly podcast 11, dealing with the solar energy provisions of the Energy Tax Incentives Act of 2005 and the related credits available under Arizona income tax law. The Podcast Materials for this podcast are available for download at http://ezollars.libsyn.com. The Phoenix Tax Workshop is also now accepting memberships for next year’s programs. The cost for a one year membership is $260 for the first member of a firm, with discounts available for additional members from the same firm that are described on the websites. The dates of programs for the 2005-2006 are also now on the calendar on the organization’s website.

Arizona Tax Update podcast report on the Arizona Society of CPAs Arizona Tax Liaison Committee luncheon today at the Phoenix Doubletree Guest Suites at the Gateway Center (44th Street & Van Buren). Today’s presentation primarily dealt with legislative changes outside of the income tax, and the Arizona Department of Revenue’s current audit program related to purchases of furniture from a single out of state vendor in North Carolina.

Podcast 10, produced and uploaded on a MacIntosh mini just for something different to do. This is the first of what I hope will be a set of three podcasts dealing with the Energy Bill that President Bush signed into law on Monday. Download the materials for this presentation from the http://ezollars.libsyn.com website, or simply go to http://www.edzollarstaxupdate.com. Also discussed briefly on this podcast is some informaton on how I recorded it using Audacity on the MacIntosh (or the virtually identical Windows version). I also mention an interesting Internet streaming radio station, www.radiofreephoenix.com. If you grew up in Phoenix in the 1960s and 1970s and remember listening to KCAC, the original KDKB, Mike Condello and know who Comptom Terrace was named in memory of, it's an interesting listen. Maybe even if you don't know what any of that refers to as well...

A general update on tax developments this week, including a summary on two new tax bills, two revenue rulings that were published, and a discussion of the IRS announcement of National Research Project exams for S corporations for 2003 and 2004. The materials should be downloaded from the ezollars.libsyn.com website to follow along with on the FICA presentation.

Postcast 8 on uninsured medical reimbursement plans--a structure that's not for everyone, but which is a perfect fit in the right situation. Download the materials via the ezollars.libsyn.com website before listening to this broadcast.

TaxUpdate goes Live! Podcast 007 dealing with reportable transactions and the penalty for failure to disclose added by last year's law. Download materials that consist of the Powerpoint for this presentation, recorded live at the Arizona Forum for Improvement of Taxation summer conference at the Arizona State University downtown Phoenix facility. I'm looking for comments on the recording, which was captured using a Samsung YT-MT6 voice recorder (and MP3 player). One problem with a live presentation is that questions from the audience aren't very audible, but hopefully you'll figure out the questions from the answers. I hope to be able to do some more live work from presentations I give, so I'm working on dealing with this. But it is a first try right now.

Weekly show 6 dealing with employee business expenses and reimbursable plans per IRC Section 62(c). You should download the "handout" in addition to listening to the podcast itself. The presentation deals with the requirements that must be met for reimbursement of an employee's expenses to be excluded from the employee's income. This version of the file is the same as the prior one, except the audio has been amplified.

Show 5.5 (not a weekly show--kind of a "special report"). This show presents a "first day" view of the Strangi decision issued today by the Fifth Circuit Court of Appeals. The Fifth Circuit upheld the Tax Court's decision in TC Memo 2003-145, but did so without ruling on the merits of the §2036(a)(2) analysis that many practitioners viewed as the major concern in that case. From a CPA's perspective, this discussion looks at the risks involved from the fact that it's become clear that §2036(a)(1) attacks on operational problems with the FLP will render the FLP ineffective as a transfer vehicle. Accountants' journal entries are a recurring theme in the cases that lose in court on §2036(a)(1), and this fact should not be lost on CPAs who will be doing 1065s and other accounting for such partnerships. As well, I do a quick discussion of what types of clients likely should not be advised to make use of a family limited partnership given the §2036(a)(1) problems.

Show number 5. The self-employed health insurance deduction under IRC Section 162(l) is covered by this podcast. The information for the podcast is found at http://www.edzollars.com/SelfEmployedHealthInsurance.pdf. The program also covers the recently issued IRS Chief Counsel Memorandum 200524001. Please post your comments here.

This week's "regular" podcast (assuming two weeks make this regular) deals with how three states determine if a trust or estate is a resident or nonresident entity, as well as containing a discussion of how to approach state filing issues in general with trusts and estates. The states we look at will be Arizona, California and Michigan. The materials you can refer to are located here: State Resident Fiduciary Returns" There are links to the California forms and instructions on my personal website at http://www.edzollars.com. I appreciate comments about this webcast--just send them to ed@hmtzcpas.com.