The logic of the application of the IRC to specific situations at times seems to defy common logic, and this week we look at a specific case of such.  In this case, the Tax Court decided that a reasonable cause for late filing that allowed a taxpayer to avoid the late filing penalty was that the court believed the taxpayer in reality had mailed the return on time, even if as a matter of law the return was late filed.  This is an extension of the issue discussed in the October 2005 podcast on proving timely filing.

The case in question is Gregorian v. Commissioner, TC Summary 2006-99.

The materials can be downloaded from http://edzollars.com/2006-07-15_Late_Filing.pdf .

Apologies for some of the audio glitches you'll notice this week.  For various reasons this week I used my Windows laptop to record the podcast--and, as should be clear, the machine proved "suboptimal" even though it used the same tools (hardware and software) as the old Mac iBook I normally use.  We'll be back on the iBook in next week's podcast.

The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

The issue of the taxation of prepaid purchase discounts that may need to be refunded if purchase goals are not met has resurfaced as the Ninth Circuit Court of Appeals reversed the Tax Court in the case of Westpac Pacific Foods v. Commissioner.  The Ninth Circuit's views on this topic differ both from those of the Tax Court and the IRS, each of which has it own views o this topic.

In the podcast, the question to be addressed is what do we tell our clients who are faced with this issue? 

The materials for this podcast can be downloaded from http://edzollars.com/2006-07-08_Westpac_Advances.pdf .

The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .

For our one year anniversary show, we take a look at the newly released regulations under Section 199 as they define construction found at Regulation §1.199-3(m).  These definitions are key for anyone who works with clients in construction related entities. 

The materials for this podcast can be downloaded at http://edzollars.com/2006-07-01_Construction.pdf .

As I noted last week, I returned this week from visiting Syracuse, New York where  I presented a couple of continuing education courses for the New York Society of CPAs, and this was one of the topics we talked about in the course I gave Tuesday.

This podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com .

A few weeks ago (back in April) we looked at the case of Ruckreigel where a taxpayer lost an IRS challenge on whether a debt was truly from the shareholders to the corporation due to a failure to follow the necessary formalities.  This week, the taxpayers strike back with a taxpayer victory in the case of Miller v. Commissioner (TC Memo 2006-125) where the IRS fails in its attempt to reclassify debt that followed the proper form but which the IRS attempted to claim was really debt from the bank to the corporation.

The taxpayer achieved victory on this point and the issue of whether the taxpayer was truly at risk as defined in Section 465, even though when all was said and done the taxpayer got out of all liability as the debt was actually paid by other investors who had guaranteed the entire loan structure.  This is an interesting case in showing the extreme importance of following proper form because, from an economic standpoint, the taxpayers in Ruckreigel seem to have much real exposure to potential loss than Mr. Miller actually ended up having, but he got his deduction.

The materials can be downloaded from http://edzollars.com/2006-06-23_S_Debt.pdf.

This podcast is sponsored by Leimberg Information Services, Inc., on the web at http://www.leimbergservices.com.

Another Circuit chimes in on the issue of the FICA taxation of payments made in exchange for tenure rights as part of an early retirement package offered to teachers.  In a combined appeal of two contradictory opinions of lower courts under their jurisdiction, the Sixth Circuit upheld the lower court's finding in favor of FICA taxation in Appolini and reversed the opposite lower court holding in Klender, both cases that involved early retirement payments to teachers subject to Michigan's tenure law.

The Sixth Circuit, in a 2-1 split decision, specifically called into question the Eigth Circuit's holding in North Dakota State University where payments for professor's tenure rights were held not to be subject to FICA.  We look at why the majority believes the North Dakota holding was in error, as well the reasoning behind the dissenting opinion.  As well, we consider the IRS changes to Revenue Rulings in this area, as well as how the courts dealt with the prior rulings that were applicable to these cases.

The materials can be downloaded at http://edzollars.com/2006-06-17_FICA.pdf.

The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com.

The IRS on May 15 issued a "Headliner" on their website directed at tax professionals that attempted to explain the treatment of policies purchased by a single employee shareholder of an S corporation in the shareholder's own name.

In this podcast we look at the headliner, and consider whether Revenue Ruling 61-146 offers an option that solves the problem this ruling points out.

The materials can be downloaded at http://edzollars.com/2006-06-10_Medical_S_Corporation.pdf.

The podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com.

A special podcast this week of interest to practitioners (and their clients) who bulk filed paper extensions with the Fresno Service Center.  The IRS recently admitted to a mistake in processing extensions received in Fresno.

Materials for the podcast, including two IRS releases on this issue, can be downloaded from http://edzollars.com/2006-06-04_Fresno_4868.pdf.

The podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com.

Divorce settlements at times are frustrating for tax preparers to work with, since they often leave dangling the issue of whether payments were or were not intended to be alimony and, not surprisingly, the former spouses may have very different views on that issue.  In this week's case, the Tax Court was forced to settle the issue after lecturing the warring spouses in his opinion about how the issue should have been taken care of well before this point.

The case in question is the case of Johanson and Melzig v. Commissioner, TC Memo 2006-105.  You can download the materials from http://edzollars.com/2006-06-02_Alimony.pdf.

This podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com.

For Memorial Day, the podcast will take a break from tax related topics and consider rather some issues that arise when you, like many this weekend, are traveling and take your laptop with you to "stay connected" with your office and clients.  There are a number of risks that have been discussed in recent weeks on Steve Gibson and Leo Laporte's Security Now podcast that I wanted to discuss in the context of a tax professional.

We look at how your system may be compromised and your data exposed rather easily by any other machine on a network you are connected to (incluidng a hotel high speed network or a wifi hotspot at your local coffee shop).  And by this I mean a machine of any other guest or patron of the shop, or just someone in distance of the hotspot.   As well, we discuss why wifi encryption does not address this problem, and why additional steps are necessary.  We also discuss the steps you can take to make your transmissions truly secure.

The materials for this podcast can be downloaded from http://edzollars.com/2006-05-20_Secure_Data.pdf.

This podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com.

We finally have a 2005 extender bill, albiet missing a few extenders and with a few surprises (some good, some not so great).  The President signed the bill into law this week, so it's time to look at the details that were in the bill.

The materials for this podcast can be found at http://edzollars.com/2006-05-20_TIPRA.pdf.

The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com.