Tax Update Blog: December 2006 Archives
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LAST DAY OF THE TAX YEAR
December 31, 2006
It's a bit much to expect to do a year's worth of tax planning in one day, but you can still do a few things, if you really try.
The easiest deduction you can get today is to give a charitable contribution by credit card. We have some ideas here.
If you can get a check for a deductible expense issued and postmarked today, that will also work. For most folks, the most likely deduction would be for a state estimated tax payment. There's no mail today, so if you need something done today that needs postmarking today, you have a challenge on your hands. Some main post offices will postmark today, but you probably won't be able to get a certified mail receipt.
If you really need something shipped today, your best bet might be a UPS Store or Fed-ex office, if you can find one open. The IRS recognizes certain shipping services waybills as postmarks. Details here.
Finally, don't forget to cast your vote for Taxpayer of the Year. The voting will be held open until Tuesday sometime.
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TAXPAYER OF THE YEAR, 2006: THE POLLS REMAIN OPEN
December 30, 2006
"Survivor" star Richard Hatch and actor Wesley Snipes are pulling away from the field in our first-ever "Taxpayer of the Year" poll, but a dark horse could still make a move. You can learn more about the nominees here, or just vote below. Make a difference and vote!
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W-H-O RADIO JOE
December 29, 2006
I am slated to be on WHO radio (AM-1040) at 4:35 pm (central) today to talk about year-end tax planning. If you are outside WHO's enormous range, you can listen on the internet here. Brian Gongol is the host, filling in for Steve Deace.
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POLLS EVERYWHERE
December 29, 2006
The TaxProf has a poll going, too. He asks what year-end planning moves you made in December. Go there after you take my poll!
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TAXPAYER OF THE YEAR NOMINEES, 2006
December 29, 2006
As year-end bears down like a runaway train, lets pause for a moment and consider which worthy taxpayer should be our 2006 Taxpayer of the Year. The only requirement for the award is that the taxpayer has done something, for good, for ill, or for humor (usually unintended) on the tax scene in 2006. I will list a few names and put the issue to a reader vote. If you feel I missed somebody worthy, make a note in the comments.
The initial slate of nominees:
Marrita Murphy, whose whistleblower lawsuit looked for awhile like it would upset decades of accepted tax law.
Tommie Underwood, ex-IRS agent who claimed his dead father-in-law as a dependent.
Wesley Snipes, actor and proponent of an, er, alternative theory of the tax law.
Walter Anderson, who pleaded guilty in America's "biggest tax evasion" case.
Ruth Harrell, who deducted $5,625 for cleaning her husband's UPS uniforms because that's how much she estimated having them cleaned professionally would cost.
Treasury Secretary Paulson, who took a big pay cut, but gets to diversify his portfolio tax-free.
David Guardino, the clairvoyant who was convicted of tax evasion, even though he had to see it coming.
Richard Hatch, convicted of failing to report $1 million of income the entire nation saw him earn on television.
Ladies and Gentlemen, it's up to you:
Vote early, vote often.
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YEAR-END CHECKLIST
December 29, 2006
On the last business day of the year, let's review a few last-minute items for your year-end tax planning:
Consider whether you need to get your checks issued by year end to get your deduction this year.Can you benefit by having your broker sell some loser stocks today for you?
Do you have an S corporation? Do you know where your basis is?
If you are starting a retirement plan for 2006, have you executed your plan documents?
Did you make your year-end charitable gifts?
Did you make your College Savings Iowa Section 529 plan contribution?
If you aren't going to have alternative minimum tax for 2006, did you consider paying your 4th quarter state estimated tax, and maybe your balance due, this year? Look here for a discussion of the economics of prepaying your taxes.
If you are an Iowan, maybe you should pay your fourth quarter federal estimated tax now to get a 2006 deduction.
Did you use your annual personal gift tax exclusion?
And, if you really want a deduction this year, and the stars are right, you can consider this. This sort of gift keeps on giving.
Happy new year! We wish you many happy returns next April.
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DEDUCT NOW, PAY LATER
December 29, 2006
If you are still looking for a last-minute deduction, remember: charitable donations made with credit cards before the end of the day December 31 are deductible this year, even if you don't pay your credit card bill until next year. Many charities make it easy to donate on their websites. Here are a few:
National Parkinson's Foundation
Your alma mater would appreciate some help:
Southern Illinois University Foundation
Or you can give "to care for him who shall have borne the battle and for his widow and his orphan" at one of these sites:
The Injured Marine Semper Fi Fund
The United Warrior Survivor Foundation
Naval Special Warfare Foundation
If you want your gift to be close to home, consider the Iowa Donor Network, the organization that coordinates organ donations in Iowa; and the Hospice of Central Iowa.
If your favorite charity isn't set up to take online gifts, you probably can still get them an online contribution by visiting the Network for Good website.
If you are trying strictly to save money, charitable donations aren't for you; a tax deduction at best reduces the cost of your donation. But if you are willing to give to help others, the tax man will make it a little easier.
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DON'T MOST BABYSITTERS DRIVE 676 MILES EVERY DAY?
December 28, 2006
They used to hold a flea market at the old Waukegan Drive-in theater near where I grew up. I remember finding treasures like used dictaphone machines and primitive adding devices that I would take home and try to operate. One thing I never saw there was a tax return preparer. Maybe I just wasn't looking in the right flea market.
A Department of Justice Press Release has the story (emphasis mine):
JUSTICE DEPARTMENT ASKS FEDERAL COURT TO BAR FLEA MARKET TAX PREPARER FROM PREPARING FEDERAL TAX RETURNS FOR OTHERSFlorida Woman Allegedly Promotes Scam Claiming Bogus Fuel Tax Credits for Customers
WASHINGTON - The Justice Department announced today that it has sued a federal income tax preparer in U.S. District Court in Miami seeking to bar her from preparing tax returns for others. According to the government’s civil injunction complaint, Tashanna McFarland of Miramar, Fla., prepared federal tax returns claiming fraudulent fuel tax credits, a scam that the complaint explains is a serious enforcement problem for the Internal Revenue Service (IRS). The suit alleges that McFarland operates her tax preparation business out of a booth at a flea market in Miami.
Your honor, that's not a booth, technically. It's a card table!
Federal law imposes a fuel tax on gasoline and diesel fuel sold in the United States. The tax is included in the purchase price at the pump. Businesses can claim a fuel tax credit in certain rare circumstances, but most businesses and consumers who use cars or trucks on roads and highways are not eligible for the credit. According to the government’s complaint, McFarland claimed the fuel credit on her customers’ returns so they could claim tax refunds to which they were not entitled.
If they'd just call it an "ethanol credit," maybe that makes it ok?
The complaint says that on a return for one customer—a babysitter—McFarland claimed that the customer purchased 16,451 gallons of gasoline for business-related purposes. The suit notes that for such a claim to be accurate, the babysitter (whose total income for the year was $9,316) would have had to spend approximately $36,192 for gasoline that year—nearly four times her total income—and would had to have driven approximately 246,765 miles during the year, an average of 676 miles each day, seven days a week.
What do you expect? Good sitters are few and far between. Still, that doesn't sound right; it's the parents that would drive that far for a sitter, not the other way around.
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LIKE SEASON'S GREETINGS FROM THE MORTICIAN
December 28, 2006
This happy e-mail header starts my day off just right:
"Happy New Year from Bankruptcy-Divorce.com"
Yes, it's always good to have things to look forward to for the coming year. No wonder people drink a lot on New Year's Eve.
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WISE WORDS ON TAX POLICY
December 28, 2006
Villanova tax law professor Jim Maule offers some free advice to the new Congress:
Jettison the dozens of exclusions, deductions, and credits directed toward special interests, put an end to special low tax rates, remove the working poor from the tax rolls, and restore progressivity so that someone with $30,000,000 of taxable income is taxed at meaningfully higher rates than someone with $1,000,000 or $400,000 of taxable income. Done properly, a genuine reform would permit reduction of tax rates so that there would not be as much incentive for special interest groups to seek special tax breaks and would permit repeal of the AMT.
I disagree with Dr. Maule's emphasis on progressivity. I don't really care whether the multi-millionaire has to pay at a higher rate than the mere millionaire, and I think steps to make it so - especially higher marginal rates - do more harm than good. I also think that the working poor are pretty much off the tax rolls, unless "working poor" has been defined upward so as to mean nothing. I think the elimination of the bottom of the income tax base is a bigger problem than excess income tax on the working poor.
Yet I think Dr. Maule is dead-on about the "dozens of exclusions, deductions and credits directed towards special interests." I especially wish Iowa's policy makers would heed this comment of Dr. Maule's:
The Pennsylvania individual income tax, with few exclusions, almost no deductions, a handful of credits, a prohibition against using a loss in one category of income to offset income in another category, and a rate of just over 3 percent, simply doesn't attract the sorts of power brokering, back room dealing, hideaway dinner meetings, and disguised lobbyist favors that have infected the federal income tax.
Here in Iowa we have a rate of nearly nine percent and a boatload of credits and deductions. Pennsylvania has the right idea here.
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OTHER YEAR-END PLANNING LINKS
December 28, 2006
If you've had all the year-end planning tips from me that you can stand, maybe you should get out and see the tips at Don't Mess With Taxes and Gina's Tax Articles.
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WHEN DO I HAVE TO PAY IT TO DEDUCT IT THIS YEAR?
December 28, 2006
Tomorrow is the last "business day" of the year. If you have a business, what do you have to do before 2007 to get a 2006 deduction?
CASH BASIS TAXPAYERS
If you file your business returns on a "cash basis," you generally can get your deduction if the check for a deductible expense is postmarked by December 31. If you are talking big numbers, you should consider a wire transfer, or at least a certified mail receipt to prove you sent the check on time. Postage meter postmarks are almost worthless in trying to prove a timely payment.
There is one common expense that can be paid after year-end by a cash-basis taxpayer without losing the deduction: pension and profit-sharing contributions. If your plan is in place by year-end, you have until the due date of the 2006 return to fund the 2006 contributions; if you extend the return, you also extend the funding deadline.
ACCRUAL BASIS TAXPAYERS: RELATED PARTIES
Life is a bit more complicated for accrual-basis taxpayers. They have less flexibility in controlling their income and deductions, but they usually have more ability to deduct unpaid income.
There are some expenses that accrual-basis taxpayers can only deduct on a cash basis. If you owe money to a "related party," there is no deduction until the related party has to take the payment into income. For example, a calendar-year corporation cannot deduct a bonus to its sole shareholder for 2006 unless the bonus is paid by year-end and included on the shareholder's 2006 W-2. The same goes for interest, rent, or any other accrued expense.
The related party rules can be tediously complex. For purposes of deducting accrued expenses of C corporations, related parties include 50% owners and other corporations with 50% or more common control. "Family members" of 50% owners also are related parties; for this purpose, "family" is:
...brothers and sisters (whether by the whole or half blood), spouse, ancestors, and lineal descendants
This does cut off, though. You are considered to own what your husband owns directly, but you aren't considered to own what your husband's brother owns, even though your husband is considered to own it. A famous tax commentary explains this elegantly:
A fortiori, this limitation ensures that stock owned by Bittker will not be attributed to his parents and then from them to their parents, and so on back to Adam and Eve, and then down through the family of man to Eustice.
For S corporations and partnerships, the related party net is wider. You are considered a "related party" if you own any stock in the S corporation or any capital interest in the partnership. The constructive ownership rules also extend out one level further. So while your husband's brother's C corporation may deduct an expense accrued to you at December 31, 2006 that isn't paid until January 2007, his S corporation may not.
The related party rules can also apply to trusts. If you are accruing an expense to somebody who might be related, ask your tax advisor to help sort out whether it needs to be paid by December 31 to get a 2006 deduction.
ACCRUAL BASIS TAXPAYERS: NON-RELATED PARTIES
If an expense is accrued to a non-related party, the deduction timing depends on what the expense is for. Accrued compensation must be paid within 2 1/2 months after year-end to be deductible in the year it was accrued. Most other accrued expenses must be paid within 8 1/2 months of year-end under the "recurring item" rules we discussed last week.
But be careful - if you sign a service contract or insurance contract by year-end, you won't get a deduction unless payment on the contract is also made by year-end, under new Revenue Ruling 2007-03.
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THERE'S STILL TIME TO FUND YOUR COLLEGE SAVINGS IOWA PLAN
December 27, 2006
December 31 is the last day you can fund a contribution to College Savings Iowa and still get a deduction on your 2006 Iowa personal tax return for it.
College Savings Iowa is Iowa's "Section 529" plan. Earnings in a Section 529 plan grow tax free, and are tax exempt if they are withdrawn for college costs. The Iowa plan invests in low-cost Vanguard funds, popular among people who don't care to squander their investments on high-priced fund managers.
You may deduct College Savings Iowa contributions in 2006 of $2,500 per donor, per donee. That means a married couple with two children can deduct up to $10,000 on their Iowa return. Visit the College Savings Iowa website for details, or to enroll online. The CSI website says checks must be received by January 6, 2007 to be credited for 2006.
Even if you already have a child in college, this is a good deal for Iowans. To the extent you can funnel your tuition payments through CSI, you can get an Iowa tax deduction for tuition up to the Iowa contribution limits.
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WSJ ON UNINTENDED CONSEQUENCES OF COMP DEDUCTION CAP
December 27, 2006
The TaxProf links today to a Wall Street Journal piece ($link) on the tax-law origins of the stock option backdating scandals -- a topic we have discussed here.
First, it passed a law, pushed by President Clinton, seeking to rein in executive pay by limiting the tax break for it. The 1993 law said companies couldn't deduct yearly compensation of more than $1 million for any one of their top five officers. But it exempted certain kinds of pay linked to performance, which included stock options. Companies rushed to restructure pay plans to grant more options. In 1994, the first year the law was in effect, the value of option grants to CEOs at S&P 500 firms leapt by 45% on average, according to Mr. Murphy, and nearly doubled again over the next two years. The 1993 law "deserves pride of place in the Museum of Unintended Consequences," said Christopher Cox, chairman of the Securities and Exchange Commission, this fall.
The sensible thing would be to allow the consenting adults on public company boards to set their own pay levels and policies. Don't bet on Congress being sensible.
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FORD AND TAXES
December 27, 2006
Former President Gerald Ford died yesterday. While taxes didn't play a large role in his brief term in office, the tax law had a large part in getting him to the White House.
Mr. Ford wasn't Richard Nixon's elected Vice-President. Spiro Agnew was Mr. Nixon's running mate in both his elections, including the 1972 drubbing of George McGovern. Things went downhill rapidly in the second Nixon term. Less than nine months after taking his second oath of office, Mr. Agnew resigned and pleaded "no contest" to tax evasion charges. The charges arose from bribes received by Mr. Agnew as Governor of Maryland.
For the first time, the 25th Amendment to the constitution kicked in, and Mr. Ford was nominated for the Vice-Presidency and confirmed by the Senate. Less than a year after that, Mr. Ford capped his resume when President Nixon resigned in disgrace.
There was one significant piece of tax legislation in the Ford administration, the Tax Reform Act of 1976. The current structure of the estate and gift tax dates from the 1976 act, as do the $3,000 capital loss cap, the limits on vacation home losses, and the "at-risk" rules of Section 465. President Ford left behind a top tax rate of 70% (starting at $100,000 on joint returns), a top capital gains rate of 35%, and a top corporate rate of 26%. No wonder there were a lot of C corporations then.
As his term saw the pardon of a disgraced former president, the fall of Saigon, and the risible "Whip Inflation Now" campaign, tax policy probably won't be what historians talk about when Mr. Ford's name comes up. He failed to win re-election in his own right, but a few years of President Carter made Mr. Ford look pretty good by comparison. Given the awful political hand he was dealt, he held things together well. Rest in peace, President Ford.
Link: Pajamas Media Ford Roundup
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YEAR-END CARNIVALS
December 27, 2006
Start your uninhibited celebration of the end of 2006 by visiting this week's blog carnivals. The Carnival of the Capitalists is at Worker Bees, and the Carnival of Personal Finance is (logically enough) at My Personal Finance Blog.
These "carnivals" are roundups of topical blog postings. Much good reading is available at each one. Bring your own adult or alternative beverage.
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MURPHY'S LAW UNDONE?
December 26, 2006
A three-judge panel of the Federal Circuit Court of Appeals shocked the tax world in August when they barred as unconstitutional the taxation of emotional damages. The broad language of the Murphy decision threatened many long-accepted elements of the tax law.
Last Friday the same three judges had second thoughts. They have vacated their own decision and scheduled a rehearing on it in April.
The IRS had petitioned the appeals court for an "en banc" rehearing, in which all 12 (I think) D.C. Circuit appeals judges would re-hear the case. The three original Murphy panel members ordered the rehearing "on the court's own motion," so they will do the rehearing themselves.
Presumably the three judges wouldn't have bothered with the rehearing -- including a full briefing schedule and oral arguments -- absent serious doubts about their original decision.
Hat tip: The TaxProf, who has an excellent set of links to the relevant documents and prior coverage.
Link: Complete Tax Update Murphy Coverage.
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YEAR-END PLANNING - WHERE TO DRAW THE LINE?
December 26, 2006
I'm a big fan of year-end tax planning. Still, you can overdo a good thing. Dr. Maule discusses a recent New York Times story that points in that direction, anyway:
In the story, To-Do List: Wrap Gifts. Have Baby, David Leonhardt provides an interesting array of observations:
1. Modern medical technology has made it easier for women to select a day for their child's birth.
2. For four of the seven years from 1997 through 2003, December has pushed September aside as the month with the highest number of births; data for years since 2003 has not been released.
3. Since the early 1990s, the tax code has provided an increasing number of tax benefits based on the existence of, and number, of a taxpayer's children.
4. The tax value of a child being born before the end of the year, in contrast to after the beginning of the next year, is in the thousands of dollars.
5. Among the tax breaks are the dependency exemption deduction, the child tax credit, the earned income tax credit, and the medical expense deduction.
From these observations, Leonhardt concludes that the tax law is encouraging people to have children in December.
Accelerating childbirth seems like a somewhat drastic step to take for tax reasons, but it's never been a close call in my family. I did suggest a December wedding 19 years ago for tax reasons, but one look from my June bride made it clear that non-tax considerations would govern.
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DON'T STOP GIVING YET
December 26, 2006
Just because it's December 26 doesn't mean you should stop giving - at least not if estate planning matters to you.
The tax law allows you to give $12,000 tax-free to any individual donee each year. Gifts that qualify for this "annual exclusion" are not subject to gift tax and don't eat into your lifetime estate and gift tax exclusion.
With the lifetime estate tax exclusion up to $2 million, the $12,000 annual gift exclusion may seem less important. Unfortunately, current law is set to expire. If you have the good fortune to survive 2010, the exclusion will fall back to $1 million, and the tax rate goes back up to 55%. Unless they want to count on Congress acting sensibly, taxpayers who might face estate taxes under the post-2010 rules should tax advantage of the annual exclusion.
A married couple with two children can make transfer $48,000 to them tax-free each year under the annual exclusion. In addition to getting the $48,000 out of their taxable estates, they also move all future earnings on that $48,000 to the next generation. Assuming a modest 4% annual return, annual gifts of $48,000 add up to over $576,000 10 years.
And remember: once 2006 is over, the 2006 annual gift tax exclusion is gone forever.
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DES MOINES REGISTER ON BUSINESS BLOGS
December 24, 2006
Today's business section of the Des Moines Register has a nice article about local business blogs. I like it, as it says nice things about this site. It also points out a law blog that is new to me, www.rushonbusiness.com. It looks like it may be a good place to follow the Microsoft shakedown trial now underway at the Polk County Courthouse.
The Register piece features Mike Sansone, Des Moines' disciple of business blogging. Which reminds me: he's supposed to organize this winter's Iowa Blogger Bash. We're waiting for our invitations, Mike!
As I said, I like the article. I do have one quibble: The Register's web site provides the URL for the blogs in the article, but it doesn't link to them. It's not that much extra work to add a link, and it helps the reader. But that's a quibble with the web site, not the article. I'm curious to see if any of the Register's own bloggers have any comments on it.
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IRS: SIGNING THE DEAL ISN'T ENOUGH TO EARN A DEDUCTION
December 22, 2006
The IRS yesterday spelled out (Rev. Rul. 2007-03) the rules for when deductions are available to accrual method taxpayers for insurance and service contracts. It also issued a procedure (Rev. Proc. 2007-14) for taxpayers to change their accounting methods to conform with the new revenue ruling.
CONTRACTS FOR SERVICES
The ruling said that an accrual-method taxpayer who signs a contract for services to be performed in a subsequent year cannot deduct the costs under the contract until the earlier of the performance of the services or the due date for payment under the contract. If the performance of services occurs after payment, it has to meet the tax law's "economic performance" requirements to be deductible.
CONTRACTS FOR INSURANCE
The ruling applies the same basic pattern to insurance contracts. Signing the contract doesn't accrue the liability for tax purposes; the liability doesn't create a deduction until payment is due.
ECONOMIC PERFORMANCE
The tax law applies two tests to determine when an expense may be accrued. The first test, the "all events" test, occurs when "all events" have taken place to determine the existence of the liability; the amount of the liability must also be determinable with "reasonable" accuracy.
The second test requires "economic performance" to occur. The ruling recaps how these rules apply to services and insurance (emphasis mine):
Section 1.461-4(d)(2) provides that if a liability of a taxpayer arises out of the providing of services or property to the taxpayer by another person, economic performance occurs as the services or property is provided.
Section 1.461-4(g)(5) provides that if a liability of a taxpayer arises out of the provision to the taxpayer of insurance, economic performance occurs as payment is made to the person to which the liability is owed.
The tax law does provide some leeway:
Section 1.461-5(b)(1) provides a recurring item exception to the general rule of economic performance. Under the recurring item exception, a liability is treated as incurred for a taxable year if: (i) at the end of the taxable year, all events have occurred that establish the fact of the liability and the amount can be determined with reasonable accuracy; (ii) economic performance occurs on or before the earlier of (a) the date that the taxpayer files a return (including extensions) for the taxable year, or (b) the 15th day of the ninth calendar month after the close of the taxable year; (iii) the liability is recurring in nature; and (iv) either the amount of the liability is not material or accrual of the liability in the taxable year results in better matching of the liability against the income to which it relates than would result from accrual of the liability in the taxable year in which economic performance occurs.
In other words, if the all-events test is met, you normally get the deduction if economic performance occurs within 8 1/2 months of year-end. This provision accounts for the "recurring item elections" routinely seen in tax returns for new businesses.
THE MORAL: If you want the deduction under an insurance or service contract this year, you'll need to pay this year.
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WHAT DID NIXON SAY WHEN HE BUMPED INTO FORD?
December 22, 2006
Two tax violators made the list of Christmastime pardons issued yesterday. President Bush pardoned a San Antonio man convicted in 1985 on income tax charges and a Georgia man convicted of alcohol tax violations ($link).
Sometimes the motivation to seek a pardon is clear, as in the case of the pardoned Iowa meth dealer who gets to go home from prison 12 years early.
But why would somebody who finished serving his sentence almost 20 years ago bother to go through the pardon process? If Google is any indication, the San Antonio man has developed a business, and maybe the pardon helps him deal with some licensing issues. Good luck and congratulations to him.
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THE GOOD STUFF
December 21, 2006
The Essential Iowa website has a feature up on Templeton Rye, the legendary bootleg whiskey of west-central Iowa. It is now being distilled and marketed legally.
I'm sure the packaging is a little more sophisticated than the "brand's" historic customers are used to:
Alleged historical sample of "Templeton Rye"
One taste and you'll want to sing.
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IT'S LOSER TIME!
December 21, 2006
While we all like to remember our good investments, this is the time of year to give some thought to your losers. We often neglect these red-headed stepchildren of our portfolios. It's not pleasant to think of that stock or mutual fund we purchased with such high hopes, only to see them cruelly dashed by an unforgiving market. We let them lurk in the recesses of our brokerage accounts, in the vague hope that someday they will redeem themselves.
Well, forget about it. They're toast. So make them do something useful for once. Sell them, and take the losses on your tax return.
Capital losses are deductible to the extent of your capital gains, plus $3,000. If you have losers in the portfolio, paying taxes on your capital gains this year is at least partly optional.
To deduct these losses, keep a few simple rules in mind:
The loss has to be realized in a taxable account. Selling a loser in an IRA or 401(k) plan doesn't give you a deductible loss.Be sure the trades are executed no later than December 31. For long positions, the trade date controls.
If you have a loss on a short sale, the settlement date has to be no later than December 31.
You can't buy the same stock within either 30 days before the sale or 30 days afterwards. If you do, the "wash sale" rules disallow your loss.
Don't pay optional capital gain taxes; send your losers out with a smile.
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EXTENDER BILL SIGNED
December 21, 2006
President Bush signed the extender bill into law yesterday. In addition to temporarily re-enacting the usual suspects, the bill enhances Health Savings Accounts and provides alternative minimum tax relief to those who got clobbered from carelessly managing their incentive stock options during the telecom bust.
The Tax Prof and Don't Mess With Taxes also have coverage.
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SCHULING STAYS ON AT IOWA DEPARTMENT OF REVENUE
December 21, 2006
Governor-elect Chet Culver announced that Des Moines Attorney Mark Schuling will stay on as Director of the Iowa Department of Revenue. Mr. Schuling took the post a year ago after Mike Ralston resigned to become president of the Iowa Association of Business and Industry. From the Cedar Rapids Gazette online:
Schuling became director of the Iowa Department of Revenue one year ago. He had been a practicing attorney for 25 years in Des Moines and has worked in private practice on tax litigation. During four of those years, he was an assistant attorney general in the Iowa Attorney General's Office and advised the department on statutes, rules, and declaratory rulings.
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HOLIDAY RISK PARTY
December 21, 2006
The new Cavalcade of Risk is up. This roundup of blog posts on insurance and risk managment is at InsureBlog this week. Among the usesful posts linked there are 15 Ways to Lower Your Car Insurance. They don't list the one that worked best for me: "Turn 25." Too bad I can't do that again.
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TARGETED STATE TAX BREAKS: DISCLOSE OR DISPOSE?
December 20, 2006
The Iowa Fiscal Partnership, a left-side think tank in Des Moines, issued a useful report on Iowa's economic development tax breaks yesterday. The report calls for more disclosure of Iowa's economic development tax breaks:
“The problem is that itʼs hard to tell how effective these tax breaks are in promoting new economic activity,” said Victor Elias, senior policy associate at the Child and Family Policy Center (CFPC) in Des Moines and co-author of the report for the nonpartisan Iowa Fiscal Partnership (IFP).
“These tax breaks have almost no reporting requirements and individual recipients remain unknown,” Elias said. “This is the publicʼs business, and no one is minding it.”
As Mike Ralston pointed out when he was state Revenue Director, you can go to jail for disclosing this information under current Iowa law. This is so even though some of these breaks are "refundable," meaning the state actually gives cash to businesses if the tax breaks exceed their tax liability.
To beneficiaries of these breaks, that's a feature, not a bug. It allows you to get subsidized without annoying questions from reporters, legislators and lobbyists for your competitors. For the public, though, it's a bad deal - it's subsidies to private interests with no accountability.
The report recommends sunlight as a cure for this problem. The recommendations include:
• An annual Economic Development Tax Expenditure Report, showing all such tax expenditures, shall be provided to the General Assembly within three months of the close of the state's fiscal year.
• All data in the Economic Development Tax Expenditure Report and the state's new tax credits tracking system shall be public record under Iowa's Public Records law and made available online through a searchable data base.
• A searchable data base of economic development tax expenditures, by company, shall be available to the public online within three months of the close of the state's fiscal year.
• Sunset provisions for each economic development tax expenditure shall be included to force a review of its annual cost and to determine if it is accomplishing the intended public purpose.
• Provisions should assure the state's ability and authority to recapture tax credits from businesses that do not accomplish stated goals.
The report also tells how other states handle these issues. In some states (e.g., Minnesota), you can actually look at the tax forms for these breaks for individual companies.
This all makes sense if you think these breaks make sense in the first place. Right now these breaks are an insider game with no accountability. As long as the state taxes existing businesses to lure and subsidize their competitors, disclosure is only fair.
Still, that begs the question: should the state be granting these breaks in the first place? Almost certainly not. Any "targeted" tax break is by definition a form of central economic planning. Even Japan has moved away from its discredited "industrial policy." If they can't pull it off in Tokyo, what chance do the economic geniuses at the statehouse have?
Far better to simplify the tax system by culling the loopholes and lowering rates for everyone -- not just the folks with the best connections at the Capitol.
Links:
Iowa Fiscal Partnership press release
Full Report (pdf)
Des Moines Register coverage.
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JANUARY 2007 APPLICABLE FEDERAL RATES (AFR) ISSUED
December 20, 2006
The IRS has issued (Rev. Rul. 2007-02) the minimum interest rates for loans made in January 2007:
-Short Term (demand loans and loans with terms of up to 3 years): 4.88%
-Mid-Term (loans from 3-9 years): 4.58%
-Long-Term (over 9 years): 4.73%
Historical AFRs are available at the "links" page at www.rothcpa.com.
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YEAR-END PLANNING: START A RETIREMENT PLAN?
December 19, 2006
Sometimes a business can accomplish a lot of tax savings by setting up a retirement plan before year-end. While Simplified Employee Plans (SEPs) don't have to be set up until your tax return due-date, full-fledged qualified plans must be in place before year end. But - if the documents are in place, the plan can be funded anytime before the due date of your return, including extensions.
A full-fledged profit-sharing plan can be especially helpful if you are profitably self-employed and don't control any other businesses. Such taxpayers may be able to set up a plan by year-end and make as much as a $44,000 deductible contribution to their own retirement savings via a "solo-401(k)" profit-sharing arrangement. It's a sweet deal - you reduce your current taxes merely by taking money from one pocket and putting it into another, figuratively.
If you think you might qualify, though, you'd better get to work - you'll have to move fast to get the paperwork in place by December 31.
You can also find some other year-end business planning tips at About.com.
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WITHERING ON THE VINES
December 19, 2006
SEE UPDATE
Earlier this year class-action plaintiffs lawyer Larry Vines won a Tax Court victory allowing him to make a late mark-to-market election for his day-trading losses. This "Section 475(f)" election, which has to be made by the non-extended due-date of the return for the year preceding the year the election takes effect.
An important factor in Mr. Vines' case is that he made no trades between the time he should have filed the election and the time he made the election (Another factor might be that he could afford to pay white-shoe firm Sullivan and Cromwell to litigate his case). The mark-to-market election turned Mr. Vines' $14 million or so in day-trading losses into an ordinary deduction right away, instead of a capial loss deductible at the rate of $3,000 per year for hundreds of years.
Another taxpayer tried to win permission to make a late Section 475(f) election yesterday, but without success. This taxpayer tried to make the election for 1999, 2000 and 2001 in October 2001, trading all the way. The Tax Court said the facts here dictated a different result than in Vines' case (citations omitted):
Unlike the taxpayer in Vines (who filed the election only months late and discontinued trading during the brief interlude), petitioners and SPK continued their trading activities in the meantime. The facts here present yet another example where a taxpayer seeks to use hindsight to make the mark-to-market election when it is most advantageous. Accordingly, petitioners and SPK are deemed not to have acted reasonably and in good faith and are not qualified for section 9100 relief.
The moral: If you're going to be late, don't overdo it.
Cite: Knish, T.C. Memo. 2006-268
Prior Tax Update Coverage: TAX COURT GIVES CLASS-ACTION MAGNATE AND DAY-TRADER A MULLIGAN
UPDATE: In the comments, Jeff Jacobs corrects an error I made:
Yes, I agree with you about the reasons for Vines' success. But I do have to point out that Vines' attorney - David Aughtry - is managing partner of the Atlanta office of Chamberlain Hrdlicka. It is an excellent Houston-based law firm, but it is hardly "white-shoe" [which Sullivan & Cromwell certainly is].
He is, of course, correct. I made the mistake of relying on my memory of the case, when I should have re-read it before posting. I made the additional mistake of getting two law firms wrong in one post; he hired Caplin and Drysdale (not Sullivan and Cromwell) to represent him before the IRS in trying to get them to consent to his accounting method change (The case did involve a friend of Mr. Vines named Sullivan, which somehow remained in the wrong place in my eroding short-term memory). It was the failure of this attempt that led to the Tax Court litigation, which Mr. Aughtry handled successfully.
My apologies for the error and my thanks to Mr. Jacobs for setting me straight.
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TAX COURT DOESN'T PENALIZE DOUBLING DOWN ON S CORP SALARY
December 19, 2006
The tax preparer for an S corporation inadvertently double-deducted the owner's salary on the corporation return. The IRS was miffed and tried to impose a substantial underpayment penatly on the taxpayer. The Tax Court yesterday ruled in the taxpayer's favor:
The error underlying petitioner's income omission of $173,093, wherein his accountants failed to remove that amount from salaries generally when they separately stated it as officer compensation in the electronically stored version of petitioner's S corporation's Form 1120S, resembles the kind of isolated computational error generally intended to give rise to relief.
Tax lawyer-blogger Kreig Mitchell comments:
My problem with this type of case is that the IRS did not concede the case at the administrative level or in court. It is this type of denial at all cost stance of the IRS that results in a number of taxpayers simply paying the tax – especially if they cannot afford to take the IRS to court. I suppose the lesson is that taxpayers should not let the IRS bully them, especially when the IRS takes a frivolous position.
Link: Thrane, T.C. Memo 2006-269
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TAX CARNIVAL
December 19, 2006
The Carnival of Taxes now appears twice a month! The second December edition is up at Don't Mess With Taxes.
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DECEMBER SHADOWS
December 18, 2006
The Polk County Courthouse casts a long December shadow on the Federal Building in Des Moines this afternoon.
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I SUPPOSE THEY DO GO TOGETHER
December 18, 2006
It somehow seems fitting that these arrived today in the same package:
Administering an estate or trust, and covering your backside - everything the fiduciary needs.
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IOWA CAPITAL GAINS DEDUCTION NOT REDUCED BY OTHER LOSSES
December 18, 2006
An email to preparers from the Iowa Department of Revenue has this nugget:
Capital Gains Deduction: Beginning January 1, 2006, Iowa follows Federal holding period rules. The material participation requirements have not changed.In addition to the legislative change, the department has revised its position on another aspect of the capital gains deduction. Previously, the department had taken the position that in order to claim a capital gain exclusion for individual income tax, a taxpayer must be in a net capital gain position on the federal return. If a taxpayer was in a net capital gain position, then the capital gain exclusion could exceed the capital gains reported on the federal return if the qualifying gain was offset by non-qualifying capital losses (such as stock sales). After a review by the Attorney General's office, the department has changed its position on this issue and will allow a capital gain exclusion from qualifying gains even if the taxpayer was in a capital loss position on the federal return.
This is helpful. If you have a big capital gain, standard tax planning suggests that you harvest capital losses in your portfolio to offset them on the federal return. Now it is clear that doing so won't cost you your Iowa "10 and 10" capital gain exclusion. This exclusion applies to sales of business land and assets if you have "materially participated" in the business for 10 years and have held the property for at least that long.
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PATTERN RECOGNITION
December 18, 2006
David O'Bryant, a St. Louis tax preparer, has caught the attention of the IRS. The tax agency is suing for a permanent injunction to prevent Mr. O'Bryant from preparing any more returns.
Perhaps the problems arose because Mr. O'Bryant's returns tended to follow a pattern:
O’Bryant frequently claims false Schedule C income and expenses in identical amounts for multiple customers. For example, many of the 76 O’Bryant-prepared 2003 returns that the IRS has examined listed 2,400 for gross receipts. Twelve of the returns claimed $210 as a deduction for “professional subscriptions,” and eighteen of the 76 returns claimed a $688 deduction for union dues. IRS examinations revealed that these deductions were false.
I suppose it could be just an amazing coincidence that all these Schedule C's grossed $2,400 for the year.
The worst thing about hiring a scam preparer is that it comes back to haunt you. From the request for injunction:
17. IRS agents examined at least 157 returns that O’Bryant prepared for 54 customers for the 2002 through 2004 tax years.
18. The agents determined that every one of the 157 returns they examined contained one or more false or inflated Schedule A deductions for charitable contributions, personal property taxes, or other miscellaneous deductions.
And that's just 157 so far. As part of the injunction, the IRS wants Mr. O'Bryant's customer list, including addresses, phone numbers, and social security numbers.
The injunction request also has this nugget:
7. In 2001, O’Bryant began preparing returns for a Jackson Hewitt franchise in St. Louis, where he worked through 2005.8. O’Bryant also taught a tax-preparation course from 2002 through 2004 while he worked at the Jackson Hewitt franchise.
That's a vivid thought. I wonder how many thousands of returns get prepared in St. Louis every year by folks who learned everything they know from Mr. O'Bryant?
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CORPUS DELINDA EST
December 18, 2006
Joel at Death and Taxes has a shattering discussion of alternatives in handling the asset we all leave behind at death:
-freeze-drying ("the decedent's body is flash-frozen to minus 18 C..., then dipped in liquid nitrogen at a temperature of minus 196 C.... The body, which is then brittle, is subjected to sound waves that reduce it to powder. The body can then be cremated or buried in a coffin made of cornstarch, which, when placed in the ground, will degrade in about a year").
Brr...
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MISSOURI VALLEY CARNIVALS
December 18, 2006
We can celebrate the ascendancy of the mighty Missouri Valley Conference in men's basketball here in Iowa* with new editions of the Carnival of the Capitalists and the Carnival of Personal Finance.
The Capitalists are partying at The Entrepreneurial Mind, with a Christmas-themed list. Brian Gongol is there with an important discussion of the unintended baneful consequences of a higher minimum wage.
The personal finance party is at A Penny Saved this week. Don't miss Insureblog's discussion of hidden rate increases in your health insurance bills.
* Iowa's Missouri Valley Conference teams have swept their instate "major" conference rivals this year in basketball; Drake and the University of Northern Iowa have both swept Iowa and Iowa State. Just to rub it in, Bradley came over from Peoria Saturday and whipped Iowa State.
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TAX TIP: DON'T ASSUME A STUPID TAX COURT JUDGE
December 15, 2006
I read Tax Court opinions daily, and the thinking and knowledge behind them is up to a pretty high standard. Clearly, being stupid does not get you a seat on the Tax Court. The judges have strong backgrounds. For example, consider Judge Diane Kroupa's C.V.:
B.S.F.S. Georgetown University School of Foreign Service, 1978; J.D. University of South Dakota Law School, 1981. Prior to appointment to the Court, practiced tax law at Faegre & Benson, LLP in Minneapolis, MN. Minnesota Tax Court Judge from 1995 to 2001 and Chief Judge from 1998 to 2001. Attorney-advisor, Legislation and Regulations Division, Office of Chief Counsel and served as attorney-advisor to Judge Joel Gerber, United States Tax Court, 1984-1985. Admitted to practice law in South Dakota (1981), District of Columbia (1985) and Minnesota (1986). Member, American Bar Association (Tax Section), Minnesota State Bar Association (Tax Section), National Association of Women Judges (1995 to present), American Judicature Society (1995 to present). Distinguished Service Award Recipient (2001) Minnesota State Bar Association (Tax Section).
She's clearly no lightweight. So why did taxpayer Kai-Chung C. Lam traipse into her courtroom with a case that had to assume that the judge would be a moron?
Mr. Lam is an entrepreneur Tennessee. On audit, the IRS disallowed lots of expenses deductions because there was no evidence that the expenses were ever incurred.
For example:
Petitioner submitted a few documents that appear to have been drafted by third parties, but the amounts listed were crossed out, and petitioner wrote in different amounts. Petitioner explained that he made these alterations after negotiating a better price for the services, but he did not explain why he, and not the third party, made the alteration.
Aw, come on, Judge! I'm sure you always get bills from, say, the power company, scratch off their number, write in your own number and send the check, and they're just fine with that.
I love this part:
Petitioner presented documents and offered testimony regarding the repair and maintenance expenses claimed as deductions. Petitioner did not introduce a single receipt, though, that showed he paid a repair or maintenance expense for either of his businesses.
Petitioner suggested that some of the individuals and businesses with whom he dealt did not differentiate between receipts and invoices. Petitioner suggested that we therefore treat the invoices he submitted as receipts.
Petitioner testified that he used service providers who did not know how to read or write, so petitioner would occasionally himself prepare the invoice for the work done. Petitioner also presented invoices from a numbered "receipt book" he kept for use by service providers who did not produce their own documentation.
What a helpful guy - he goes out of his way to hire out service work to illiterates, and he even prepares their invoices! Lord knows how the illiterates get their other customers to pay.
Unlike his vendors, Judge Kroupa isn't illiterate - unfortunately for Mr. Lam. His apparent operating assumption - that she would be stupid enough to believe him - failed to pan out, and he owes $65,645 in additional taxes and $13,129 in penalties.
Cite: Lam, T.C. Memo 2006-265.
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EAT MORE, LOSE WEIGHT
December 15, 2006
The Des Moines Partnership, our local chamber of commerce-like body, has issued its legislative agenda for 2007. It is the Partnership's usual crony-capitalism agenda, including support for municipal property seizures to benefit "economic development," new tax loopholes, and Vision Iowa make-work projects.
They also say they support prpoposals to "Streamline government to reduce costs and increase efficiencies" -- while advocating more government intervention in the economy. That's a recipe for streamlined goverment in the same way eating more dessert is the path to weight loss.
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BLOGS OF THE SEASON
December 15, 2006
The Tick Marks blog is running its annual review of tax-related blogs, the Twelve Blogs of Christmas. The newest addition to his list is Joel Sheonmeyer's worthy Death and Taxes, covering two of my favorite topics.
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IRS GUIDANCE ON YEAR-END GIVING
December 15, 2006
This week the IRS issued a helpful summary (IR-2006-192) of the rules on charitable giving. They also covered the changes in the charitable giving rules made earlier this year. Some highlights:
To be deductible, clothing and household items donated to charity after Aug. 17, 2006, must be in good used condition or better. However, a taxpayer may claim a deduction of more than $500 for any single item, regardless of its condition, if the taxpayer includes a qualified appraisal of the item with the return.
So no deduction for your your old briefs, unless they appraise out at over $500.
Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of the year count for 2006. This is true even if the credit-card bill isn’t paid until next year. Also, checks count for 2006 as long as they are mailed this year.
If you mail a big check, a certified mail receipt with a postmark will help a great deal if you get audited.
Check that the organization is qualified. Only donations to qualified organizations are tax-deductible. IRS Publication 78, available online and at many public libraries, lists most organizations that are qualified to receive deductible contributions. The searchable online version can be found on IRS.gov under, “Search for Charities.” In addition, churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even though they often are not listed in Publication 78.
For individuals, only taxpayers who itemize their deductions on Schedule A can claim a deduction for charitable contributions. This deduction is not available to people who choose the standard deduction, including anyone who files a short form (1040A or 1040EZ).
For all donations of property, including clothing and household items, get from the charity, if possible, a receipt that includes a description of the donated property. If a donation is left at a charity’s unattended drop site, keep a written record of the donation that includes a description of the property and its condition.
The deduction for a motor vehicle, boat or airplane donated to charity is usually limited to the gross proceeds from its sale. This rule applies if the claimed value of the vehicle is more than $500. Form 1098-C, or a similar statement, must be provided to the donor by the organization and attached to the donor’s tax return.
Giving is worthy, but deducting is wise. Make sure you document your gifts. And remember, if you donate property other than publicly-traded securities, and your donation exceeds $5,000, you'll need a qualified appraisal.
The Tax Prof has more.
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STOCK UP ON FIXED ASSETS?
December 14, 2006
December is the year-end for most closely-held businesses. If you are looking for a way to reduce your 2006 tax bill from the business, you might be able to do so by moving up some asset purchases.
The tax law's "Section 179" allows you to expense equipment and software purchases of up to $108,000 in 2006 that would otherwise have to be capitalized and depreciated or amortized over several years. If you are going to buy some new equipment soon anyway - say, new computers, printers, or machinery - you may be able to reduce your 2006 taxes by getting them in place before year end.
But be careful: if you have over $430,000 of fixed asset additions in a year, the Section 179 deduction begins to phase out. The $108,000 limit applies with S corporations and partnerships at the company and the owner levels. And you have to have either wage or other active business income to use the Sec. 179 deduction. Sometimes retirees find that they don't have enough "active" income to take the deduction.
Link: Publication 946 on Section 179 deduction and depreciation.
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BETTER BITTER BLOGGER BUDGET BOOK
December 14, 2006
Brilliant but bitter tax professor and blogger Daniel Shaviro has a new book out, "Taxes, Spending, and the U.S. Government's March Towards Bankruptcy." A must-have for tax policy geeks, especially those on the left.
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TAX COURT CALLS 'NO DO-OVERS' ON STOCK DEAL
December 14, 2006
If you ever do a $24 million transaction involving your family business, get your tax advice before closing the deal.
That's the lesson of yesterday's Tax Court decision in Becker v. Commissioner. Becker Holding Corporation (BHC), owned by the Becker family, was a significant player in the Florida citrus industry. Richard Becker and his son, William, had a falling out, and they negotiated a deal to buy out William's stock in BHC for $23,953,934. They closed the deal on April 1, 1991.
The Tax Court opinion shows where the trouble starts (emphasis mine):
In the fall of 1991, William Becker's accountant, Richard Lynch (Mr. Lynch), informed William Becker that BHC missed tax advantage opportunities by not allocating any portion of the consideration to the covenant not to compete. Mr. Lynch suggested that William Becker meet with Mr. Dempsey (BHC's chief financial officer) to discuss the possible allocation of a portion of the purchase price to the covenant not to compete in exchange for additional consideration or a shorter noncompete period. In February 1992, William Becker and Mr. Lynch met with BHC, Mr. Dempsey, and an accountant for BHC to discuss redrafting the purchase documents. However, the discussions terminated, and no agreement was reached.
No deal? No kidding. To allocate part of the deal to a covenant not to compete, William would have to agree to convert some of his capital gain to ordinary income - leading to a higher tax. "Oh, by they way, we just realized we screwed up the agreement for our tax purposes. Will you agree to change the deal and pay extra tax so we can get more deductions?"
The holding company then went ahead and made its own allocation to a non-compete and filed the return accordingly, while William ignored the unilateral allocation and treated it all as capital gain. As is its policy in such "whipsaw" cases, the IRS assessed deficiencies on both William and BHC and let them fight it out.
To make a long opinion short, the Tax Court said that the time to allocate part of the purchase price to a non-compete was before the deal closed. Without a clear indication that both parties agreed to a non-compete, the court wasn't willing to believe that one was implied (citations omitted):
The purchase documents explicitly and unambiguously allocate the entire $23.9 million of consideration to William Becker's stock. At the time the purchase documents were executed, there was no mutual intent to allocate a portion of the consideration to the covenant not to compete. Therefore, we conclude that 100 percent of the consideration paid by BHC to William Becker is allocable to the purchase of William Becker's stock, and none of the consideration is allocable to the covenant not to compete.
I don't know about you, but I think $23,953,934 is a lot of money. If you have that much involved, it's likely worth few hours of professional time up front to figure out the tax consequences.
Cite: Becker, T.C. Memo. 2006-264
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CARNIVALS OF THE SEASON
December 14, 2006
I'm delinquent in noting this week's carnivals. Kirk Walsh hosts this weeks Carnival of Personal Finance, and the Sama Blog has the Carnival of the Capitalists. Lots of good reading at each.
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OBLIVION CAN BE A DESTINY
December 13, 2006
"Economic development leaders" plan a July 2007 referendum on a 1-cent increase in our 6-cent local sales tax. They're calling the plan "Project Destiny." From yesterday's Des Moines Register:
Residents in Polk, Dallas and Warren counties are expected to vote next summer on a sales-tax increase that was pulled from the November ballot because of concerns about public distrust caused by the CIETC salary scandal.
Supporters say the 10-year tax increase is designed to generate $750 million, which would be used to lower property taxes in 45 cities and support Des Moines-area cultural attractions such as Urbandale's Living History Farms and Polk County's Wells Fargo Arena.
A midsummer vote when nothing else is on the ballot is a classic recipe to slip something through in a low-interest, low-turnout election. Even so, it seems unlikely to pass. Whether or not they like it, the pro-tax increase forces are saddled with two unofficial, but real, spokesmen:
Sure, memories are short, but I think it's going to be a long time before people are ready to trust our local governments with a lot of new tax money.
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MUTUAL FUND INVESTORS: DON'T BUY A TAX LIABILITY
December 12, 2006
While putting money away in mutual funds for long-term savings is a good idea, this time of year you should look before you invest. The tax law requires mutual funds to distribute thier accumulated dividends from their portfolio, and their accumulated capital gains, annually. Many do so in December. If you're not careful, you could get a year's worth of tax liability on your 1099 for the privilege of owning fund shares for as little as one day.
Visit your favorite mutual fund's website and to find their tax dividend plans for December before you send them your money; you might be a lot happier next April if you wait a few days before making your next investment.
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STRANGE NEW DEDUCTION HIDDEN IN TAX BILL
December 12, 2006
Don't Mess with Taxes has the scoop on a one-year tax deduction for mortgage insurance tucked into the new "extender" tax bill. It is only available for taxpayers with incomes under $110,000, and only for mortgages obtained in 2007.
Presumably this will join the parade of "temporary" tax breaks that get extended forever.
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MEET NORMAN BATES, EX-IRS AGENT
December 12, 2006
Tax Analysts this morning reports ($link) that the firing of Tommie Underwood, an IRS agent, has been upheld by the Federal Court of Appeals for the Federal (D.C.) Circuit. Given the difficulty of firing members of the Treasury Employees Union, that's news. The offense? From the brief opinion:
It is undisputed that Underwood's stepfather died in 2000, and that Underwood understated his tax liability by reporting him as a dependent on his 2001 tax return. The finding that he did so willfully is supported by substantial evidence, including the fact that he was employed as a Tax Examining Assistant and had familiarity with reading and interpreting tax regulations and guidelines.
I just wonder what the grounds for appeal were?
"'E's not dead, your honor. 'E's just sleeping!
"Father, I'd like you to meet the nice circuit court judges."
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IOWA LAW BLOGGER ON CUSP OF TENURE
December 12, 2006
Congratulations to longtime Iowa blogger Tung Yin, professor at the U of Iowa law school, for being approved for tenure and full professorship by the tenured faculty at Iowa. Dr. Mr. Yin is proprietor of the Yin Blog, a fixture in our permalinks.
Now that he has tenure, will Dr. Yin drop the mask of geniality? Does he forsake game-show blogging for devastating exposes of the incompetence of the Board of Regents and the iniquity of the Iowa basketball program?
Oh, that's not a mask? Anyway, great news.
UPDATE: Tung Yin informs me that he's not a "doctor," strictly speaking. Close enough for government work, I say.