This was originally published on PAOO on November 17th, 2010.
I was starting to worry about running out of material, but my last ramble through the hottest stuff on RIA indicated that I am well supplied for a while, so I will continue purging those items that I just couldn't seem to turn into a full length post. I thought they were worth sharing when I first saw them though and have looked at them each a dozen or so times since then, so I hate to let them go without a little salute.
Henry A. Williams v. Commissioner, TC Summary Opinion 2010-125
had a fairly messy set of facts. The bottom line is that when it comes to deducting alimony, oral agreements are not worth the paper they are printed on.
Anthony Cicciarella, et ux. v. Commissioner, TC Memo 2010-195 was about medical expenses, but the issue was really just substantiation. The taxpayers had a not unusual amount of lameness, telling the court that they had "researched" the wrong year, but best of all that some of their records were destroyed in a flood. Unfortunately the flood occurred before the records would have been produced. I was going to title the post "Antediluvian".
THE HENRY E. & NANCY HORTON BARTELS TRUST v. U.S., Cite as 106 AFTR 2d 2010-6004
was a good example of an "is what it is" decision. The exempt trust was taxable on UBIT from securities transactions that it had entered into on margin. Trust's attempt to sidestep statute's clear language with claim that UBIT was really meant only to apply in case of unfair competition was off base since statute was clear and didn't limit UBIT in manner suggested.
More Fun For Landlords
was a title of a post I was working on about the extension of 1099 requirements to landlords. The cautionary note that I wanted to make is the language in several IRS audit manuals :
The examiner must be aware of the potential of the information return test work because it can often lead to significant tax dollars which the primary return (corporate, partnership, or individual) may not produce. Large adjustments can be produced through back-up withholding, return penalties, and even on the returns of the payees who were required to report the compensation but did not receive information returns.
If you were supposed to send somebody a 1099, you were supposed to ask them for their social security number of EIN. Since you didn't ask they didn't give it to you. Therefore you should have subjected their payments to back up withholding. It's a nightmare. You can get out of the back-up withholding by getting them to sign a form swearing they reported the income. Good luck.
Rev. Proc. 2010-36, 2010-42 IRB, 09/30/2010
gives taxpayers a special procedure for claiming a casualty loss from corrosive drywall :
An individual who pays to repair damage to that individual's personal residence or household appliances that results from corrosive drywall may treat the amount paid as a casualty loss in the year of payment.
Taxpayers who have a pending claim for reimbursement may deduct 75% of the amount they spend for repairs in the year they spend it. The loss is claimed on Form 4864 and taxpayers should mark "Revenue Procedure 2010-36" on the top of the form.
Joel P. Arnold v. Commissioner, TC Memo 2010-223
I found the IRS and the Tax Court a little mean spirited in this one. The taxpayer worked as a field auditor for the State of Georgia. He was allowed to check out a state vehicle for his work, but if he travelled more than a certain distance he was required to stay over. This would prevent him from going home to his chronically ill son. So he used his own car and claimed mileage which was disallowed. On the other hand they did allow his job hunting expenses, which were based on the same motivation.
ARGYLE v. COMM., Cite as 106 AFTR 2d 2010-6759 10/14/2010
The taxpayer is a CPA, appealing a Tax Court decision, pro se (That means fool for a client). He tried to file as single even though his divorce had not gone through. He was also trying to deduct legal expenses for criminal proceedings for simple assault, the assault being a kiss. Seemed like an interesting story, but ultimately I couldn't make anything much out of it.
Willard R. Randall v. Commissioner, TC Summary Opinion 2010-163
Mr. Randall was entitled to $69,000 in property equalization from his ex-spouse. He offset the amount against alimony that he was required to pay. The IRS wanted to deny the deduction, but the taxpayer won. I was going to title the post "Still Better to Swap Checks", but as I read it more closely I saw that it was possible that check swapping might not have been a viable alternative (e,g, if the property being equalized was illiquid). It does illustrate the principle that your life will be simpler in the long run if you don't skip transaction steps.