Tax Update Blog: August 2008 Archives
« Previous · Tax Update Blog Home · Next »
AT SUMMER'S END
August 29, 2008
It's the first weekend of high school football and marching bands. It's not official, but summer is over. But why is the color guard hiding their heads?
Have a great weekend, and see you at the halftime show!
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
ISOS: THE TAXMAN TAKES A HOLIDAY
August 29, 2008
The TaxProf tells us that ISO-AMT victims will have a new reason to enjoy the long weekend:
Senate Finance Committee Ranking Member Charles Grassley today announced that he has secured a commitment from the IRS to suspend the collection of the AMT (including interest and penalties) arising out of employees’ exercise of incentive stock options. The suspension gives Congress time to enact legislation that would ease these burdens on affected taxpayers.
The entire ISO statute should be repealed - tax breaks and tax penalties alike. It's a relic of forgotten origins with no policy justification.
As for Senator Grassley's efforts to help the AMT-ISO victims - the good Senator has been on the Finance Committee since 1986 or so, and has had a hand in dozens of tax bills. It's good that he's working to fix a bad law, but it makes me think of this article.
Background here: TAX COURT TO MCLEOD AMT VICTIMS: SORRY, BUT YOU'RE STILL SCREWED
Link • AMT • Comments (0) Bookmark: del.icio.us • Digg • reddit
SARAH PALIN?
August 29, 2008
I have no idea whether she will be a good pick for McCain, but I do know that today nobody is talking about the Obama speech last night. That must be worth something to McCain.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
OWE THE IRS? YOUR INTEREST RATE GOES UP OCTOBER 1
August 29, 2008
The IRS has announced (Rev. Rul. 2008-47) the interest rates for tax overpayments and underpayments for the quarter beginning October 1. The rates are as follows.
- Individual overpayments and underpayments: 6% (from 5%)
- Corporate overpayments: 5% (from 4%)
- Corporate underpayments: 6% (from 5%)
- Large Corporation underpayments: 8% (from 7%)
- Corporation overpayments > $10,000: 3.5% (from 2.5%)
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
NEWS YOU CAN USE
August 29, 2008
The Tax Policy Blog tells us "The Internal Revenue Code Would Fit on Approx. 80 Rolls of Toilet Paper." It might work better than Metamucil.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
VIRGIN ISLAND COURT TRIMS LIST OF CHARGES ON TAX SHELTER
August 29, 2008
We can see why St. Louis-area auto dealer James Auffenberg wanted the criminal trail arising from his Virgin Islands tax planning moved to St. Criox. A district court judge there dropped 11 of the 35 counts in his indictment this week. The dropped counts were those that depended on whether the Virgin Islands income was "effectively connected" with a Virgin Islands trade or business. The court ruled that the term "effectively connected" was too vague to enforce because regulations had not been issued under the special code section enacted to combat Virgin Islands tax avoidance, Section 934.
That seems like an odd assertion. The entire foreign tax credit scheme in the income tax is based on the concept of "effectively connected" income. If that's "void for vagueness," a lot of people are filing returns under void tax law.
The judge's decision is based on the last paragraph of Sec. 934(b), which reads:
The determination as to whether income is derived from sources within the United States or is effectively connected with the conduct of a trade or business within the United States shall be made under regulations prescribed by the Secretary.
The judge ruled that this meant the entire code section was inoperative until regulations were issued. Looking at the conference report issued when the section was enacted, it seems that's news to Congress (emphasis added):
The provision generally codifies the existing rules for determining when income is considered to be from sources within a possession by providing that, as a general rule, for all purposes of the Code, the principles for determining whether income is U.S. source are applicable for purposes of determining whether income is possession source. In addition, the provision provides that the principles for determining whether income is effectively connected with the conduct of a U.S. trade or business are applicable for purposes of determining whether income is effectively connected to the conduct of a possession trade or business.
If the section just applies existing principles, then what was the code section about "under regulations prescribed by the Secretary" about? The Conference report says this:
The provision also grants authority to the Secretary of the Treasury to create exceptions to these general rules regarding possession source income and income effectively connected with a possession trade or business as appropriate. The conferees anticipate that this authority will be used to continue the existing treatment of income from the sale of goods manufactured in a possession. The conferees also intend for this authority to be used to prevent abuse, for example, to prevent U.S. persons from avoiding U.S. tax on appreciated property by acquiring residence in a possession prior to its disposition.
So according to the Conference Report, the regulation authority of the Sectionn 934(b) is to carve exceptions and to prevent abuses, not to make the section effective in the first place. Now one might argue that committee reports mean nothing when they conflict the the plain language of the statute, but that doesn't seem to be case here. The term "effectively connected" is a fixture of the tax law; the Secretary already has extensive regulations defining "effectively connected" in other contexts. Congress here just applied it to a new problem - Virgin Islands tax schemes.
Mr. Auffenberg still faces serious tax charges, but I wouldn't be surprised if the IRS appeals this ruling just to to correct what looks like a legal error.
Cite: United States et al. v. James A. Auffenberg Jr. et al.; No. 1:07-cr-004
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
LABOR DAY CAVALCADE!
August 29, 2008
Are you in pre-holiday mode? Maybe you're looking forward to a long lunch and a short afternoon, but you need to look busy now? Then visit the new Cavalcade of Risk at Healthcare Manumission! Among the worthy pieces in this roundup of insurance and risk management blog are an Insureblog post on the extra insurance risk of extra pounds and the Cavalcade host's piece on whether the "change we have been waiting for" is a change at all.
Lunchtime on Court Avenue, Des Moines
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
APPEALS COURT AFFIRMS DISMISSAL OF KPMG CASE CHARGES
August 28, 2008
The judge in the criminal case involving tax shelters marketed by KPMG dropped 13 defendants from the case last summer. Five defendants remained under indictment.
The Second Circuit court of Appeals in New York upheld the trial judge's decision today. The courts held that the defendants were denied their right to counsel when the Department of Justice pressured KPMG to not pay employee and partner legal fees.
Cite: United States v. Stein, et.al., CA-2, No. 07-3042-cr.
Media Roundup:
Bloomberg
NY Law Journal
NY Times
And the TaxProf has more.
Link • KPMG ~ • Tax Shelter News • Comments (0) Bookmark: del.icio.us • Digg • reddit
TAX COURT LOSS FOR TAX PROTEST FIGURE BANISTER
August 28, 2008
When we last saw tax protest figure Joe Banister in court, he had been acquitted of tax conspiracy charges by a California federal jury. Tax protesters did a little victory jig at this "evidence" that their theories are other than delusional.
As we've pointed out, beating criminal charges doesn't mean you don't have to pay the tax. The Tax Court demonstrated this to Mr. Banister yesterday. It appears that Mr. Banister, a former IRS agent and defrocked CPA, never got around to filing a 2002 tax return. The IRS computers noticed that Mr. Banister was issued 1099s for $23,325 pension income and $387 in interest income, and a notice of deficiency was issued.
Mr. Banister doesn't seem to have denied that he got the income; he instead tried to get off on technicalities, or something:
He argues that respondent (1) denied him proper due process -- including an Appeals conference -- before issuing the notice of deficiency; (2) denied him a proper notice of deficiency "based upon a true 'Deficiency'"; and (3) determined the deficiency incorrectly by failing to consider his "expenses, losses and deductions, and exclusions (both business and non-business)."
The Tax Court didn't buy it, not least because Mr. Banister never said what these "expenses, losses and deductions, and exclusions" were.
Given his prominence in the tax protest movement, it's a little surprising that the IRS doesn't seem to have done any more than a 1099 match examination of Mr. Banister. Perhaps he just lives frugally enough to get by on less than $24,000 in income.
Cite: Banister, T.C. Memo 2008-201.
Link.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
HOBBY LOSSES DOG IRS AUDITOR
August 28, 2008
We were chatting about hobby losses recently. Yesterday we get a new case where a taxpayer got in trouble under the "hobby loss" rules of Section 183. This wasn't just any taxpayer; it was an IRS auditor.
Section 183 says you can't take business losses if you aren't really trying to make money. The Tax Court says the auditor's conduct made it look like he wasn't in it for the money:
Petitioner did not carry on his greyhound activity in a businesslike manner. He did not maintain complete and accurate books and records regarding his greyhound activity, did not maintain a written business plan, and did not contemporaneously prepare budgets or financial analyses for his greyhound activity. Although petitioner claims to have prepared a "cost analysis plan", at trial he acknowledged that this plan was prepared only in the course of the audit and examination of the tax years at issue. His substantiation of claimed expenses was spotty and consisted largely of some canceled checks supported by his vague testimony. He had no written contracts with the third parties who trained, hauled, and raced his greyhounds
The first sentence is the key: he didn't run his "business" in a "businesslike manner." If they way you go about an activity makes it look like you aren't even trying, you'll lose on an exam. Many multi-level marketers have learned this the hard way.
Our IRS auditor also got hit with penalties:
Petitioner has not shown (or even expressly claimed) that he had reasonable cause or acted in good faith with respect to his understatements of income tax. Any such defense appears especially problematic in the light of petitioner's employment as an IRS auditor.
Ouch.
Cite: Whitecavage, T.C. Memo 2008-203
The TaxProf has more.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
ANOTHER TESTIMONIAL FOR AMERICAN RIGHTS LITIGATORS
August 28, 2008
An upstate New York chiropractor is the latest not-so-satisfied customer of tax-scam outfit "American Rights Litigators." John Weisberg received a 21-month sentence this week for charges arising out of tax advice purchased from ARL, founded by tax-protest figure Eddie Kahn.
Mr. Weisberg joins a list of clients who got more than they bargained for from ARL, including Michigan engineer Kenneth Heath (21 months) and actor Wesley Snipes (3 years). The founder of ARL, Eddie Kahn, has been sentenced to 10 years for his role in the Snipes case.
Quatloos.com says this of Mr. Kahn's tax practice:
Eddie Kahn of "American Rights Litigators" represents the Hee-Haw contingent of the tax protestor movement...Eddie caters to the dumbest of the dumb, and his theories for not paying taxes are thus the dumbest of the dumb.
The moral? Don't buy your tax advice from the man in the bolo tie.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
GOT BUSINESS MILEAGE?
August 28, 2008
If you use your car for business, Bruce the Taxguy has some advice on keeping track of your business mileage.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
ADVENTURES IN MORTGAGE DOCUMENTATION
August 27, 2008
One of the requirements for a home mortgage interest deduction is, understandably, a mortgage. The lender needs to go down to the courthouse and file the appropriate documents to make sure the loan is secured by the home.
We can only hope that real banks do a better job of documenting their mortgage than the effort shown in a Tax Court case yesterday. A California couple claimed a $42,950 home mortgage interest deduction for 2003. They said they paid the mortgage interest to their wholly-owned corporation. The Tax Court Special Trial Judge Goldberg had some questions about the loan documents (emphasis added):
Petitioners attempted to have the Court receive into evidence a document entitled "Promissory Note Secured by Deed of Trust". This document recited a promise on the part of petitioners to repay California Digital, Inc., $450,000 at an annual interest rate of 9.544 percent. Upon examination of the document, the Court suspected that it was self-serving and inauthentic. To wit, although the paper was lightly affixed with a raised, notary's stamp, it appeared in all other ways (printed on an ink-jet printer; multiple grammar and spelling errors; undated on signature line; not witnessed or signed by the notary) to be a poor reconstruction of a purported promissory agreement between petitioners and their corporation, California Digital, Inc.
If you are forging a document, folks, is it too much trouble to run the spell-checker?
When further questioned by the Court, petitioners finally admitted that the document was not an authentic copy of a promissory note but rather their attempt to reconstruct the terms of the loan that they testified was entered into between them and California Digital, Inc., in 1988. Petitioners insisted that a promissory note was, in fact, executed in 1988 but that they were unable to presently find a copy of it.
At this point, I suspect the taxpayers had an uphill battle.
Second, and also contrary to petitioners' testimony, there was no recordation of any mortgage on the property held by California Digital, Inc. Petitioners testified that the mortgage was recorded on the property on the morning of the Tax Court trial, 9 years after the purported title transfer.
Come on, judge - better late than never!
Apparently not. Decision for IRS.
The Moral: If you want to deduct mortgage interest, get down to the county courthouse to record the mortgage when you make the loan; don't wait until the Tax Court trial date. And when preparing the documents, remember that Dan Rather isn't on the Tax Court.
Cite: Reiter, T.C. Summary Opinion 2008-110.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
YOU DON'T NEED TO BE SMART TO GET ON TV
August 27, 2008
There clearly is no standardized intelligence exam for getting on reality TV shows. "Survivor" Richard Hatch is killing time in federal prison for not paying taxes on $1 million he won before a national TV audience. 2003 American Idol Ruben Studdard apparently didn't get the point.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
AN 8.0 EARTHQUAKE WOULD CAUSE LESS DAMAGE
August 27, 2008
A Californian must really hate his state. What other explanation could there be for the initiative he is trying to get on the California Ballot in 2010 that has these provisions:
- Impose a one-time tax of 55% on property exceeding $20 million of a California resident or held in California by nonresident;- Imposes a tax of between 36.5% to 54.3% when a resident dies or leaves California;
- Imposes additional 17.5% tax on total incomes of taxpayers with income exceeding $150,000 if single, $250,000 if married;
- Imposes additional 35% tax if incomes exceed $350,000 if single, $500,000 if married;
- Requires State to acquire shares of specified corporations (i.e. GM, Ford, ExxonMobil, etc.) to influence environmental practices.
If they get the needed 694,354 ballot signatures for this, it still faces some huge constitutional hurdles. It just goes to show - as bad as things are in California, there's always somebody working to make it worse.
More from the Tax Policy Blog and the TaxProf.
Link • Comments (2) Bookmark: del.icio.us • Digg • reddit
OH BOY, A NEW CODE SECTION!
August 26, 2008
Cable TV subscribers know the minor thrill that comes while flipping through the channels when you find that they've added a new channel to your subscription. The thrill quickly passes when you realize that there isn't much on the new channel, either.
That's the way it felt last week when the IRS finally issued proposed regulations for Section 336(e), which has been dormant since it was enacted in 1986. This section, which only becomes effective when final regulations are issued, allows C corporations selling the stock of a controlled subsidiary to elect to treat the sale as an asset sale.
Now the tax law has long provided for the treatment of the sale of a stock as an asset sale under Section 338(h)(10). Under these new regulations, though, the seller can make the election unilaterally, rather than with the consent of the buyer, and the buyer doesn't have to be another corporation.
Like with many cable channels, though, much of what is found in 336(e) is already available elsewhere. Usually buyers prefer asset sale treatment, so Section 338(h)(10) elections haven't been hard to negotiate when the buyer is a corporation. If the buyer is a partnership, a "cash merger" of the sold corporation into an LLC is taxed as an asset sale.
Still, cable channels and 336(e) do have niche markets. Sometimes you don't like the buyer to have one more club to use to extract concessions from you, so a unilateral electon can be handy. Sec. 336(e) will also be available for stock distributions, when there is no "buyer," strictly speaking. They may also make deals cleaner by eliminating the need for extra legal steps, like a merger. Tax Analysts has a good discussion of these issues ($link) for their subscribers.
These regulations, and the ability to make Sec. 336(e) elections, will take effect when they are published as final regulations. As it took almost 22 years for the proposed regulations to appear, don't hold your breath for the final regs.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
WHAT DO YOU EXPECT? THEY ONLY WANT TO BE PRESIDENT
August 26, 2008
Prof. Maule has been lamenting the unwisdom shown in the making of tax law. He notes that aspiring presidents don't grasp the basics either:
In another link sent by Mary, Obama tried to explain his mortgage credit proposal , but he slipped up describing current law. When he claimed that homeowners who itemize "get a mortgage deduction, up to $1 million," he made a mistake so classic that I usually find a way to work it into the exam or a semester exercise in the basic tax course. The $1 million limitation is on the amount of the acquisition mortgage, the interest on which is deductible. So if the interest rate on the mortage is 6%, the deduction is limited to $60,000.
Senator McCain isn't flawless on this score, either, as his referring to a proposed $7,000 dependent exemption as a "credit" shows.
I have the answer to this problem, of course -- require that all Congresscritters do their returns in public themselves via a live webcast. They can use Turbotax or the software of their choice, as long as all input screens and output are broadcast live on the web, with a sidebar for running viewer commentary. Or, perhaps, selected tax pros could do the kibitzing - think "Mystery Science Theater 3000," tax geek version. Naturally, the whole comedy should also be available for playback on YouTube. I think this would have two useful results: Congresscritters would have a stake in tax simplification, and they would learn the difference between a deduction and a credit.
Link • Comments (3) Bookmark: del.icio.us • Digg • reddit
MARC YOUR CALENDARS
August 26, 2008
I will be teaming up with Marc Ward to conduct half-day seminars in Cedar Rapids on December 8 and Des Moines on December 9. Marc will be covering the new Iowa LLC Act; I will talk about tax problems that often get overlooked in setting up LLCs. They are sponsored by the National Business Institute. I will post enrollment information when I get it.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
SO MUCH FOR OUR SHOT AT VAST RICHES
August 26, 2008
Sure, we have dreams of this blog making us enormous amounts of money. I still sometimes dream I can fly if I run into the wind, too. The Wandering Tax Pro wakens me. TWTP, a/k/a Robert D. Flach, set up a website called "Ask the Tax Pro." He tells the sad tale:
When I set up the separate ATTP blog, and required a small payment for my service, the questions stopped completely! I guess the blog reading public is only looking for free advice and is not willing to pay even a token amount for the benefit of a tax professional’s knowledge and expertise.
Amazon, Google and E-Bay seem to have internet business models that work. So do people who post naughty pictures and who run poker sites. Maybe we can turn the Tax Update into a strip poker tax auction search site?
Link • Comments (1) Bookmark: del.icio.us • Digg • reddit
GREETINGS TO OUR FRIENDS IN NEW ZEALAND!
August 26, 2008
Yes, we have had visitors to the Tax Update from New Zealand - at least one, an expat who had worked in Antarctica. As a public service to him and others, and to annoy a judge without judgment, we'll pass on the following from Popehat (via Instapundit):
The names of the accused murderers whose names can't be run on the Web in New Zealand -- but can be printed in newspapers -- Nathan Tuiti Reo Mutunga Williams and Daniel Bobby Tumata. Remember, innocent until proven guilty.
You're welcome. I hope I can still visit someday. We now resume our regular tax programming.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
BILLABLE HOUR TO GO THE WAY OF THE THREE-PIECE SUIT?
August 25, 2008
Can professionals live without the billable hour? Rush Nigut tells about the movement towards flat-fee pricing for legal services today at IowaBiz.com.
If law firms go that way, accountants can't be far behind. Many audits and tax returns are already priced that way. It would sure help keep my billing timely. The hard part is figuring out how to price consulting services for open-ended projects, like acquisitions, without hourly billing. Maybe if we get a percentage of the sales price, professionals will behave better because they wouldn't have an incentive to show off and drag out the deal.
Link • Comments (2) Bookmark: del.icio.us • Digg • reddit
ONLY FIRST-LINE CASUALTIES QUALIFY FOR 9/11 TAX BREAK, SAYS DISTRICT COURT
August 25, 2008
Congress passed a special tax reduction those killed in the terror attacks. A widow of one of the victims committed suicide five weeks later. Last month a U.S. District Court in California ruled that the 9/11 tax relief didn't apply to her.
Very sad. It does illustrate the problem with these sympathy provisions. If you are going to tax dead people, do we really want to make some deaths count more than others? It's just as tragic if somebody dies in a car wreck, or takes her life because terrorists killed her husband, as when a terrorist kills somebody directly. Showing favoritism to one group, however sympathetic, is by definition unfair to everyone else who dies prematurely. No politician would ever be caught dead saying so.
Cite: ESTATE OF PRASANA KALAHASTHI, DC-CA Central District, No. 2:07-cv-05771
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
IRS CRACKS DECODER RING
August 25, 2008
Russ Fox's usual roundup of tax miscreants includes coverage of permanent injunction entered against Tacoma "tax decoder" Sharon Kukhan. As covered here, Ms. Kukhahn said she could "decode" IRS information to prove that you don't have to pay taxes. The court order says that Ms. Kukhahn has sold her special sauce to over 300 taxpayers in 43 states. Of course it doesn't work.
Ms. Kukhahn had already been shut down under a preliminary injunction.
As usual in these deals, Ms. Kukhahn will have to turn over her customer list; they can look forward to a little unwanted extra attention from the IRS.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
BIG MEDIA AND DEMUTUALIZATION
August 25, 2008
The Associated Press has run a profile on Charles Ulrich, the Minnesota CPA behind the recent IRS defeat on demutualization. The article had a piece of background information I didn't know: that the IRS had accused him of being an illegal tax shelter promoter, and demanded his client list. They backed off after the Taxpayer Advocate's office intervened, but that's still disgraceful IRS behavior.
Via The TaxProf.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
WHAT'S A HEAD OF HOUSEHOLD?
August 25, 2008
The Tax Guy reviews the much-misunderstood head of household filing status, including a handy chart.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
YOU KNOW YOU REALLY HAVE A HOBBY LOSS PROBLEM WHEN...
August 22, 2008
Earlier this week the IRS discussed the factors they look at to see whether a business has a real profit objective under the "hobby loss" rules. As a public service, the Tax Update reveals the secret factors that tell the IRS there REALLY is no profit objective.
* You tell the IRS that you need your Learjet to get from West Des Moines to Altoona for your business of slot machine gambling.
* You hold "board meetings" for your Mary Kay sole proprietorship in Aruba and Switzerland.
* "Financial records? We don't need no stinking financial records."
* Your business is a stand that sells celery sticks, carrots and "meat is murder" t-shirts at the Iowa State Fair.
The emergency nicotine relief wagon at the 2008 Iowa State Fair. The deep-fried Oreo wagon beckons in the background.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
SPILLOVER EFFECTS
August 22, 2008
Supporters of subsidies like those used to lure Microsoft's server farm to West Des Moines like to talk about "spillover effects," where the money spills into the rest of the economy, for example though data center construction. Economically, of course, that's nonsense, unless you assume that the money given to Microsoft would otherwise just disappear. Now it looks as though the "spillover" will be even less than you might expect -- unless you own a shipping container company:
A Microsoft spokeswoman confirmed that Microsoft plans to house the servers in shipping containers but declined to comment specifically on the size of the facility or the number of servers to be located there.
Shipping containers? What did you expect, cardboard boxes?
"We are still in the process of completing the design of the center. Once that is finalized, we will have an estimate for these questions," she wrote via e-mail.However, Microsoft said its $500 million, 550,000-square-foot data center in Chicago will house up to 220 containers, each filled with as many as 2,000 servers, or 440,000 servers. The software maker said the server-filled containers are easier to transport, set up and maintain than servers on conventional racks, though not all observers agree.
So Microsoft will be assembling shipping containers full of servers, putting them on trains or trucks, and sending them here to be put together in a big steel barn like Lego bricks. The "spillover" Iowa will get will mostly be for the crane operator, unless there's a derailment somewhere in the state.
Flickr image by photohome uk.
More on the containerized servers here.
Related: LOCAL CPA FIRM VOWS TO SWALLOW PRIDE, ACCEPT $28 MILLION
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
FLOOD DEADLINE EXTENSION EXPIRES SOON
August 22, 2008
The rivers have gone down, and the dreary work of rebuilding continues in Cedar Rapids and the rest of flood-ravaged Eastern Iowa. But life goes on, and next week so do taxes. Absent further IRS action, all Federal and Iowa tax returns and payments otherwise due since May 25 in flood-affected Iowa counties are due next Friday, August 29.
You can find a list of the flood-affected Iowa counties here; the Iowa guidance is here.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
THE CHURCH OF THE DIVINE LEASE FINANCING
August 22, 2008
Convicted tax evader Robert Beale is in hot water for allegedly saying that "God wants me to destroy the judge" that presided over his tax trial. He also is reputed to have said that God wanted him to "take out" the judge, presumably not for a candlelight dinner.
As it turns out, Mr. Beale's spiritual mentor is having tax troubles of his own. The Minneapolis Star-Tribune reports that the IRS is investigating the Brooklyn Park church where Mr. Beale once served on the board. The report says that the church is defying an IRS summons. The investigation involves the finances of the pastor of the church, Mac Hammond:
According to the petition, the IRS wants to examine Hammond's compensation, benefits and deals in which the church financed an airplane for him, which he in turn leased back to the church. The IRS also is asking for details on loans for Hammond's residence that were later forgiven by the church.
None of this getting by on locusts and wild honey stuff for this pastor:
Hammond's church's creed, often called the "prosperity Gospel," says that following God's word will lead not only to spiritual salvation but also earthly wealth."I think it's important that I not be embarrassed about the increase the Lord does bring me," Hammond said last year.
It's not clear from the story what role the Almighty had in the sale-leaseback deal.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
BUT WHAT WAS THE BUSINESS PURPOSE?
August 22, 2008
The tax law requires you to document the meals and entertainment expenses, including the parties involved and the business purpose. A North Carolina man must have been quite creative when he filled out his expense reports:
James Smith pleaded guilty to a tax evasion charge Thursday morning. He is the owner of a Charlotte paving company called Red Clay Industries.Smith admitted in court that he wrote off payments to a company called Soft Touch Promotions as business expenses. Soft Touch Promotions was one of the names used by Sallie Saxon for her prostitution ring.
And to think "Mr. Smith" was his real name all along. He will have to pay up more than $19,000 in taxes and up to $30,000 in fines.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
LOCAL CPA FIRM VOWS TO SWALLOW PRIDE, ACCEPT $28 MILLION
August 21, 2008
In a tearful virtual press conference held at their corporate headquarters, Roth & Company spokesman Joe Kristan recanted his opposition to targeted tax breaks and vowed to accept massive government subsidies on behalf of the firm.
"We are really excited about the new Microsoft server farm. The bipartisan enthusiasm for taking money from taxpayers and giving it to selected businesses frankly moved us," said Kristan. "With Microsoft receiving tax breaks worth $40 million to create 50 jobs next year, and maybe 75 eventually, we realized that our 35-employee firm must be eligible for $28 million or so." While the Microsoft benefits are in the form of tax breaks, said Kristan, "We prefer cash. We've already created the jobs and have been doing so for years. We're willing to swallow our pride and take money for it. We could charge interest and muck up the tax law, but we're a good corporate citizen. We'll just take the money."
Kristan pointed out that it was a better deal for the state than the Microsoft server farm in a number of ways. "We're using a building that's already there. You don't have to put in roads or run fiber lines. Just write us a check. A wire transfer would be fine too."
Kristan said the firm was committed to creating "dozens, maybe hundreds of thousands of jobs" eventually -- "someday, somehow, somewhere."
The firm, which was started in 1990, plans to use the money on a number of projects. Kristan said it would be nice to have a couple of fully redundant sets of file servers for the office. "Not so much a server 'farm' as a server patio garden," he explained. The firm also plans to install a state of the art coffee maker to provide fresh brewed coffee from freshly-ground beans on demand. The remainder of the funds are expected to be used to fund energy independence, affordable health care and retirement security for the firm's owners.
"We thank Governor Culver, Senator Grassley, Congressman Boswell and Senator Gronstal for opening our eyes to the benefits of these targeted incentives," said Kristan. "We are confident that the necessary legislation will pass. All it will take is for our elected officials to give our proposal the same scrutiny they gave to the proposals by Microsoft and Google."
Link • Satire • Comments (2) Bookmark: del.icio.us • Digg • reddit
YOU CAN LOSE MONEY, AS LONG AS YOU ARE TRYING TO MAKE SOME
August 21, 2008
The IRS has issued a new "fact sheet" (FS-2008-23) on the so-called "hobby loss" rules of Code Section 183. The tax law itself doesn't use the term "hobby loss"; it revers to "activities not engaged in for profit." Even if you aren't having any fun at all, the IRS will disallow loss deductions if they think you aren't serious about trying to show a profit.
The fact sheet lists the following factors the tax law uses to determine whether there is a profit objective:
* Does the time and effort put into the activity indicate an intention to make a profit?* Do you depend on income from the activity?
* If there are losses, are they due to circumstances beyond your control or did they occur in the start-up phase of the business?
* Have you changed methods of operation to improve profitability?
* Do you have the knowledge needed to carry on the activity as a successful business?
* Have you made a profit in similar activities in the past?
* Does the activity make a profit in some years?
* Do you expect to make a profit in the future from the appreciation of assets used in the activity?
The classic "bad facts" under the hobby loss rule would be someone with a full-time job - say, a dentist - who offsets a high level of salary income with losses from a farm - maybe a horse farm - that never comes close to showing a profit. Multi-level marketers also frequently have trouble with the hobby loss rules.
If you are really trying to make a living from your business, Section 183 isn't a problem. If you're just playing at it because you like the tax deduction, you have a problem.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
THEY GOT THE MORTICIAN DEAD TO RIGHTS
August 21, 2008
They got Al Capone on tax charges. They also got a Northwest Iowa mortician that way. Mark Rhode of Kingsley reportedly pleaded guilty to theft and tax evasion charges in Plymouth County District Court:
Rohde was arrested in May for allegedly stealing more than $160,000 from Mauer-Johnson Funeral Home in Le Mars. Police said Rohde, who had recently opened his own funeral home in Kingsley, stole the money over five years while he was a percentage partner with Mauer-Johnson owner Joel Johnson.The plea agreement requires Rohde to pay Johnson $179,420.53 in restitution. He also agreed to pay $31,526.72 to the Iowa Department of Revenue.
Maybe next time he'll hit up the SBA for his start-up funding.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
MATH IS STILL HARD
August 21, 2008
CNN reports:
One of the negatives to earning a high salary is that your marginal tax rate is higher than other people's. While you might be earning more than your co-worker, he or she might be taking home a similar -- or higher -- amount per check because they aren't taxed as much.
Note to CNN: your "maginal" rate is the rate that applies to the next dollar of income. A 35% marginal rate means you pay 35 cents on the next dollar you earn. You can't reduce your after-tax income with an increase in your pre-tax income unless the marginal rate exceeds 100%. Yes, taxes may be too high, but they aren't that high.
The Tax Foundation explains this in some detail.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
COULDN'T WE CALL THEM SIN USER FEES?
August 21, 2008
Professor Maule has a valuable nugget of wisdom:
Theoretically, there is no limit to the number of products or activities that can be swept within the reach of a sin tax.
He even has a Pet Shop Boys reference!
If bottled water is sinful, like in Chicago, you know that virtue has gotten beyond our reach.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
IS NOT PLANTING SELF-EMPLOYMENT?
August 21, 2008
The IRS says Conservation Reserve Program (CRP) payments are self-employment income. Recent legislation overrules this for taxpayers receiving social security benefits. Roger McEowen reports how the IRS is dealing with this change.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
WEST DES MOINES GETS TO HOST SUBSIDIZED SERVER FARM FOR MICROSOFT!
August 20, 2008
A Cedar Rapids TV station is reporting that my current hometown, West Des Moines, gets to subsidize Microsoft's newest server farm:
Culver has scheduled a "major economic development announcement" on the west steps of the Statehouse on Thursday morning, at which he will announce Microsoft's plans to build a center in West Des Moines, said an official with knowledge of the announcement who spoke on condition of anonymity to avoid pre-empting Culver's announcement.
Good thing he didn't pre-empt the Governor's announcement there.
Microsoft is getting $36 million in tax breaks to generate jobs for maybe 50 server farmhands (75, according to this article) in the fastest-growing part of Iowa. You can do the math to see how much each "job" costs. The package includes property tax breaks so that I, along with other West Des Moines residents and businesses, can cover the costs of their street maintenance and police and fire protection. Lord knows Microsoft can't afford it. Do you think they'll give us free copies of Excel and Vista?
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
SHAWN!
August 20, 2008
Congratulations to Shawn Johnson of West Des Moines on her gold medal! Not to mention her three silvers.
Sadly, things didn't work out for Lolo Jones, who has cleared tougher hurdles than those on a track.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
JOHNSTON HAS A MODEST PROPOSAL FOR HOUSING
August 20, 2008
David Cay Johnston, in a Tax Analysts piece reproduced at the TaxProf Blog, notes the elephant in the room in our housing policy: the way the tax law promotes excessive mortgage debt. As bad home loans are staggering the economy, the piece is worth reading. Here's a taste:
The news media typically report with a bias in favor of higher home (and stock) prices, which are presented as a good thing. This is a bizarre assumption unless you are a banker or real estate broker, whose income rises when people borrow more money or pay percentage commissions on artificially inflated prices.A major reason housing costs so much is that Uncle Sam has effectively put his thumb on the scale on the side of the existing owners. Making mortgage interest tax deductible inflates the price of housing as people chase the subsidy. The mortgage interest deduction, representatives of the National Association of Realtors once told me, explains a third of the price of homes that cost more than $250,000.
Go to the Tax Prof to read the whole thing. I believe the Tax Analysts pieces reproduced there are available for only two weeks (correction: one week). Tax Analysts subscribers will continue to have access the whole thing here ($link).
Speaking of misguided tax law housing breaks, the TaxGrrrl makes an important point: First Time Home Buyers Are Cry-Babies.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
HIGH CORPORATE RATES: RESPONSES FROM THE LEFT
August 20, 2008
The Tax Foundation has begun a push against high corporate tax rates, saying they are bad for the economy and reduce economic competitiveness.
There are two notable responses from left-leaning academic bloggers. One is thoughtful:
Also, if we are mainly concerned about incentive effects, efficiency, and net U.S. national economic welfare, rather than distribution - and I think that is the main long-term issue here, as I'll explain in a moment - then it's not the average but the marginal U.S. corporate tax rate that we care about. So, insofar as companies can play games to save some tax inframarginally, but can't get to zero or boost up their sheltering when they make more profits, it's possible that they would be paying closer to 35% than to their average rates at the margin.
One, not so much:
That's because the statutory rate of 35% is only on paper. Corporations engage in aggressive tax planning that cheats the system, and they take advantage of a bountiful number of lucrative loopholes built into the system under the four decades of Reagan-style corporate favoritism and deregulation, including items such as accelerated depreciation, various expensing provisions that let corporations deduct before they really have an economic cost, and the lucrative research & development credit that lowers taxes dollar-for-dollar for R&D expenditures that corporations have to do anyway (so they do not serve as an incentive to greater development) and that corporations have often already done prior to the enactment of the one-year "extensions" of the credit that have been taking place as transitions to no-credit for years.
Some academics engage the system as it exists and struggle to find answers to real problems in tax and economics. Others go forth to do battle with Scrooge McDuck.
Link • Comments (1) Bookmark: del.icio.us • Digg • reddit
KEN FUSON NOW CAN ADVANCE TO 'BLOGGER'
August 19, 2008
Des Moines Register columnist Ken Fuson once had this to say about blogs:
One of the unexpected benefits of the Internet, other than the ability to look really busy at work while filling out your NCAA tournament brackets, is that people can design their own personal Web sites and then report and comment on the big issues of the day as often as they want. These are called blogs.This has proved to be a boon to people who apparently are (A) unemployed, (B) independently wealthy, or (C) no longer content to wait on hold to get their daily fix of attention from a radio talk-show host.
The Des Moines Business Record e-mail bulletin reports today:
Jerry Perkins and Ken Fuson have asked for and received buyouts from The Des Moines Register, according to a memo from Editor Carolyn Washburn and Managing Editor Randy Brubaker to the newsroom.
The story says Mr. Fuson's last day will be September 5. That means his first blog post could come as early as September 6.
Link • Comments (3) Bookmark: del.icio.us • Digg • reddit
IRS ISSUES APPLICABLE FEDERAL RATES (AFR) FOR SEPTEMBER 2008
August 19, 2008
The IRS has issued (Rev. Rul. 2008-46) the minimum interest rates for loans made in September 2008:
-Short Term (demand loans and loans with terms of up to 3 years): 2.38%
-Mid-Term (loans from 3-9 years): 3.46%
-Long-Term (over 9 years): 4.58%
Historical AFRs are available at the "links" page at www.rothcpa.com. You can also click here for the rates for prior months as reported in the Tax Update.
Link • Applicable Federal Rates • Comments (0) Bookmark: del.icio.us • Digg • reddit
S CORPORATION SALARIES NEW IRS EMPHASIS?
August 19, 2008
Peter Pappas at The Tax Lawyer's Blog reports:
John Tuzynski, IRS Chief of Employment Tax, SB/SE Speciality Programs, has announced that the IRS is expanding efforts to close the $15 billion dollar tax gap in the employment tax area. Specifically, Tuzynski stated that S corporation shareholder wages and the issue of reasonable compensation for services rendered would be a target area...Tuzynski stated that tax return preparers would be subject to preparer penalties if they prepared S corporation returns that reflected a “less-than-market’ salary for services rendered by small business owners.
I haven't seen this pushed in S corporation examinations so far, but a threat to return preparers always gets my attention. What will they consider a "market" salary for a money-losing start-up S corporation? I would certainly want a pretty good salary if I were hired to run one from the outside, but can the IRS reasonably expect an S corporation owner-employee to bleed his own business just so he can pay extra employment taxes? And will the IRS really have the nerve to impose penalties on return preparers for not insisting a money-losing S corporation pay a "market" salary? And when did tax preparers suddenly receive the knowledge to know what a "market" salary is in all of the industries they serve?
If the IRS actually is serious about asserting "market" salaries - which I doubt - it will be wandering into a quagmire. It seems unwise to insist that an S corporation owner take a salary larger than Warren Buffet's. Even so, a taxpayer who works at his own profitable S corporation would be foolish to forego a salary entirely.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
'FRAUDE FISCAL' AT THE DMV
August 19, 2008
Miguel Robleto may have been a humble clerk at the Oregon Department of Motor Vehicles, but he was able to hear opportunity when it knocked. His opportunity came in the form of a program to allow private contractors to administer drivers tests for spanish speaking individuals. Mr. Robleto set up a new business, Drive Master Examiners, and the money started pouring in: "Occasionally, busloads of migrant farm workers would arrive from Oregon fields to take the driving tests administered by DME." At $35 to $60 per examination, those were valuable busloads. He also had a side business doing tax returns for DME customers.
Unfortunately, Mr. Robleto declined to report all of his new wealth with the IRS. The IRS was able to determine from state records how many exams he provided. The IRS used this information and the DME fee schedule to compute his income, and it was much more than Mr. Robleto had reported.
Mr. Robleto largely came clean with the Tax Court, and the Court came up with an income lower than the IRS number, but still much higher than Mr. Robleto reported. The IRS argued for fraud penalties, which Mr. Robleto wasn't keen to pay:
Miguel argues that he was overwhelmed by all the customers he had, that he was totally inept in handling the financial aspects of his business, that he could not even pay his utility bills on time, that he had unopened envelopes of cash lying around his home and office, and that the preparation and filing of his and his wife's 2000, 2001, and 2002 joint Federal income tax returns surely constituted negligence, perhaps even gross negligence, but not fraud. For 2003 Miguel contends that because of the seizure of his records in the fall of 2003, he had no records or other information with which he could file his 2003 Federal income tax return, and he did not get the records back until sometime in 2006.
The Tax Court didn't buy it, largely because Mr. Robleto was himself a return preparer at the time, and sustained the 75% fraud penalty on the underpaid taxes.
The Moral: the IRS is unforgiving in any language; if you prepare returns for others, you'd better prepare your own properly.
Cite: Robleto, T.C. Memo 2008-195
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
IRS ALLOWS AUTOMATIC CHANGE TO CASH METHOD FOR BANKS UP TO $50 MILLION GROSS RECEIPTS
August 19, 2008
The IRS issued a new procedure (Rev. Proc. 2008-52) yesterday that governs automatic method changes. It has one provision that will be especially welcome for S corporation banks. The IRS will now allow S corporation banks with gross receipts of up to $50 million to automatically change to the cash method of accounting, except for a few items where special provisions control the timing of income.
The new procedure allows these banks to make this election without a user fee by filing a Form 3115, Application for Change in Accounting Method by the due date of the 1120-S; a copy of the 3115 will also have to be attached to the tax return.
Formerly, only banks with under $10 million gross receipts qualified for the automatic change for the cash method. The IRS had been granting changes to larger banks, but they had to use the cumbersome non-automatic procedure. Such banks had to wait to make the change until they received formal permission of the IRS. The procedure also required the bank to pay a fee of at least $3,800.
The change will allow banks to be on a cash method except for items covered by special tax code provisions. These "special" items include securities covered by mark-to-market accounting, original issue discount, and certain interest income on short term obligations.
The procedure also has rules for automatic changes of accounting method of banks making a "QSUB" election to be included on an S corporation return and changes to changing to the proper method for accounting for interest on nonperforming loans.
The procedure takes effect for accounting method changes filed starting today for 2008 returns. Taxpayers with method change applications outstanding may file amended applciations under the new procedure; the IRS will presumably refund the user fee from the original filing.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
IT'S NOT ROCKET SCIENCE; IT'S WORSE
August 18, 2008
Tax Vox comments on how the complexity of the alternative minimum tax plays out in the real world:
The Treasury Inspector General for Tax Administration (TIGTA) has just released a report, based on a review of tax returns filed in 2006 that includes data on the number of taxpayers who misreported AMT liability, according to IRS computer checks. The TIGTA report shows that 61,000 taxpayers who owed AMT did not report it on their returns, Another 165,000 under-reported their AMT liability. I know one of those 61,000 -- a Ph.D. in biochemistry who is both scrupulously honest and not math-challenged.
It's the consequence of congresscritters who want to tax "the rich" with one hand while frantically giving out tax breaks with the other.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
IRS: LENDER OF FIRST RESORT
August 18, 2008
Professor Maule has been reviewing the stupid tax provisions of the recently-enacated housing bill. His current post addresses the new homebuyer credit that has to be paid back over 15 years:
If the taxpayer would not have purchased the house but for the credit, isn't the Congress putting the United States Treasury into the same position as many sub-prime lenders put themselves when they made it possible for someone to acquire a home who wasn't financially ready to do so? If the banks making the bad loans are bailed out by the United States, who bails out the United States?
The answer: you and I, dear fellow taxpayer.
Link • 2008 Housing Assistance Tax Act • Comments (0) Bookmark: del.icio.us • Digg • reddit
DID HE MAKE ENOUGH TO MAKE THIS WORTHWHILE?
August 18, 2008
A few months ago we mentioned the conviction of Utah attorney Dennis Evanson of charges involving setting up offshore tax evasion schemes for clients. I doubt whether that work was profitable once this is taken into account:
Attorney Dennis B. Evanson of Sandy, Utah, was sentenced today by U.S. District Judge Tena Campbell in Salt Lake City to 120 months in prison and 36 months supervised release, the Justice Department and Internal Revenue Service (IRS) announced. The court also ordered that Evanson forfeit four pieces of real property, a Hummer and a Toyota Tundra, and entered a money judgment in the amount of $2,774,133.04.
No! Not the Hummer!
Even if Mr. Evanson has money left after paying these items off, it won't do him much good for awhile.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
THANK YOU SIR, MAY I HAVE ANOTHER?
August 18, 2008
The Des Moines Register reports that Iowa, having given $40 million in special tax breaks to two server farms, now may get more. Of course the man in charge of taking money from you to give it to rich companies, Economic Development Director Mike Tramontina, takes the credit. But it looks like the server farm companies were looking to Iowa anyway:
Council Bluffs, Ames and Des Moines rank among the 10 lowest-cost locations nationwide for data centers, based on a report from Boyd Co. Council Bluffs is sixth-lowest nationally, with an annual cost of $12 million; Ames is eighth, at $12.1 million; and Des Moines is ninth, at $12.4 million. Costs include labor, power, and property and sales taxes, among other expenses.
So we likely paid Microsoft and Google richly - $500,000 per "job" - to do what they would have done anyway. Another triumph for economic development.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
BUT WHO WOULD BE THAT SILLY?
August 15, 2008
From today's Wall Street Journal:
The new international tax rankings are out for 2008, and congratulations to Washington, D.C., are again in order. Our political class has managed to maintain America's rank with the second highest corporate tax rate in the world at 39.3% (average combined federal and state).Only Japan is slightly higher overall, though if you are silly enough to base a corporation in California, Iowa, New Jersey, Pennsylvania, or other states with high corporate levies, your tax rate on business income is even higher than in Tokyo. For the first time, the U.S. statutory rate is now 50% higher than the average of our international competitors, continuing a long-term trend as the rest of the world keeps reducing corporate tax rates.
Source: The Tax Foundation
Link: Tax Foundation coverage.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
HEY, NEW YORK TIMES: 'REVENUE' ISN'T THE SAME AS 'INCOME'
August 15, 2008
The GAO study on corporation taxes is turning out to be a rich source of unintended humor. The latest is this correction to a New York Times article (via Power LIne):
An article on Wednesday about a Government Accountability Office study reporting on the percentage of corporations that paid no federal income taxes from 1998 through 2005 gave an incorrect figure for the estimated tax liability of the 1.3 million companies covered by the study. It is not $875 billion. The correct amount cannot be calculated because it would be based on the companies paying the standard rate of 35 percent on their net income, a figure that is not available. (The incorrect figure of $875 billion was based on the companies paying the standard rate on their $2.5 trillion in gross sales.)
For the benefit of newspaper writers everywhere, we will explain the Times' error.
"Revenue" is what you sell something for. For example, when the Des Moines Register sells a paper for 50 cents 75 cents per copy, that increases their "revenue" by 75 cents.
"Expenses" are the costs of a business. For a newspaper, these include the cost of the newsprint and the cost of severance payments to all of the reporters who are being laid off because people aren't taking the newspaper anymore (UPDATE, 8/19/08: for example, this).
"Income" is what is left of the "revenue" after all of the "expenses" are paid. For the newspaper industry, this is largely a historical concept. When expenses are bigger than revenue, that is a "loss." That's a bad thing.
In short,
Revenue - Expenses = Income.
"Income" taxes are paid on the "income," not the "revenue."
You know, this level of business knowledge could explain a lot about why the newspaper business is struggling.
Related: MATH IS HARD
Link • Comments (1) Bookmark: del.icio.us • Digg • reddit
MARVIN POMERANTZ
August 15, 2008
We note with sadness the death of Des Moines business leader Marvin Pomerantz. The Des Moines Register has the story.
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
NOT SO INNOCENT
August 14, 2008
Innocent spouse cases usually involve a wife pleading to get out of joint return liability for her scoundrel husband's tax misdeeds. A typical case would be a wife whose husband was stealing at work and not reporting the embezzlement. The"guilty" spouse is usually in charge of family finances and preparing the joint tax return.
That's why a case decided in the Tax Court yesterday was unusual. Here the taxpayer asking for "innocent spouse" relief was the husband. That's not the majority of cases, but it's not that unusual. He was also the household return preparer; that's unusual. But the real unusual part? He had already been convicted of tax evasion for the years involved.
Not surprisingly, the Tax Court decided he wasn't so innocent:
Petitioner argues that we should place little weight on his conviction for tax evasion and on the stipulated decision in docket No. 8493-96, wherein petitioner agreed he is liable for tax deficiencies and fraud additions to tax for 1986 and 1987. We simply note that the validity of petitioner's guilty plea has been litigated and decided by this and other courts.
Not exactly the sort of facts you'd like to have in one of these cases...
Cite: Taylor, T.C. Memo. 2008-193
Link • Comments (0) Bookmark: del.icio.us • Digg • reddit
IT'S A FAIR RISK
August 14, 2008
One of the risks of a trip to the Iowa State Fair is the possibility of consuming calories far in excess of your metabolic calorie burn rate. For other risks, check out the new Cavalcade of Risk. Posts include a primer