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DUE DATE MEANS DUE DATE; CLARK MCLEOD'S 2001 TAX LOSS

May 09, 2005

The Department of Revenue added two interesting releases to its website this morning.

DUE DATE MEANS APRIL, NOT OCTOBER

Iowa permits an automatic extension of returns if 90% of the return is paid in by the return due date. Sioux City businessman William Feiges came up short of the 90% of their 2002 taxes when the April 30, 2003 due date for Iowa 1040s rolled around. They paid in an additional $125,000 by October 31 - the due date for extended returns.

The Departement of Revenue assessed Mr. Feiges a 10% late return penalty. Mr. Feiges argued that as long has he was 90% paid in by the October date, his April extension was valid.

The Department said that April, not October, is the date that you need to have 90% paid in. That is also the answer we would give.

Cite: Protest Resolution, December 17, 2004

CLARK MCLEOD WINS AMT ARGUMENT

Telecom entrepreneur Clark Mcleod had a net operating loss carryback to 1999 and 2000. The Department initially said that the regular tax itemized deduction phase-out shouldn't be adjusted for AMT purposes in computing the alternative minimum tax operating loss. Mr. McLeod protested, and the Department (correctly) reversed itself, agreeing that the Iowa AMT NOL should be adjusted in the the same way as the federal NOL for the (stupid) phase out. The change gives Mr. Mcleod an additional refund of $8,364.

The Department's letter does not give the year in which the loss arose, but it presumably was 2001.

Cite: Protest response, January 27, 2005.

THANKS FOR SHARING

These letters provide useful lessons for Iowa taxpayers and practitioners. It's good that these letters are public, as they help prevent the Department from having a secret body of law for the well-connected.

They also provide an unintended lesson: this stuff is public. Whether or not he meant to tell us, we all know about Mr. Mcleod's 2001 Iowa NOL.

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