Tax Court Cases of Interest

Document Sample
Tax Court Cases of Interest Powered By Docstoc
					The Tax Professionals                    Editor: Dale Quelle, EA • • 714-899-2221 • 14340 Bolsa Chica Rd. #A • Westminster, CA 92683-4868

                                            Volume 2011 - 2012 Issue 12 June 2012

                                                                        Tax Court Cases
                                                                                                        June 19th , 2012 1 Hr CPE Program

                                                                           of Interest
                                                                                  by By Sherrill Trovato, MBA, MST, EA, USTCP
  New Members                                                                                                Sherrill will help us to understand the legal author-
                                                                                                             ity surrounding case facts and legal issue when we help
                                                                                                             clients with situations in Examination, Appeals and Col-
    Larry Grandfield                                                                                         lection. She will explain the Tax Court process and how
                                                                                                             to find cases that might be valuable for issues that come
    Richard Carlson                                                                                          up. These cases are also of interest to practitioners who
    Barry Fefferman                                                                                          do not specialize in tax controversy, as application of tax
      Jerome Guth                                                                                            law and new rulings are valuable to know when preparing
                                                                                                             tax returns. The focus of Sherrill’s presentation will be of
       Homer Kim                                                                                             general interest to practitioners, including Collection Due
     Gail Newman                                                                                             Process, innocent Spouse, business expense deductibility,
       Pablo Ortiz                                                                                           charitable contributions, income exclusion, penalty
                                                                                                             abatement, and other related topics.

                                                 Sherrill Trovato is the Immediate Past President of NAEA as of May, 2012. She has been an Enrolled Agent for
                                                 20 years and specializes in tax controversy representation. Sherrill has authored articles for the CCH Journal
          Dinner Menu                            of Tax Practice and Procedure and the NAEA EA Journal, and has been interviewed and quoted by USA Today,
        • Three bean salad                       Wall Street Journal and Forbes. She has given numerous radio interviews and twice appeared with a panel of tax
                                                 experts on the Today Show as well as Tax Talk Today. She has taught at NTPI since 2004 and has been a presenter
           •Caesar Salad                         all over the country for NAEA affiliate EA Chapters. Sherrill was admitted to practice as a nonattorney in U.S.
         •Broccoli florets                       Tax Court in 2001 and has developed and teaches a course designed to guide other tax professionals toward that
         •Orzo Rice Pilaf
       •Chicken Parmesan
      •Vegetarian Lasagna                                                                                                             Meetings are held at the Phoenix Club
                                                          HARBOR BLVD

                                                                                                        Ball Rd to Phoenix Club Dr
                                                                                   STATE COLLEGE BLVD

                                                                                                                                        1340 S Sanderson Ave, Anaheim, CA 92806
                                                                                                        Right on Sanderson Ave.
         •Lemon Mousse
            •Cheesecake                                                                                                                               Agenda June 19th
                                                                        BALL RD                                                                      4:30 Board Meeting
                                                                                                                                                       5:30 Social Time
  The Vision of OCEA is to serve, to represent                                                                                                        6:00 Dinner Hour
  the best interests of Enrolled Agents in Or-
  ange County, and to emphasize and enlighten                                                                                                 7:00 1 Hr CPE Program $35/$40
  the general public that an Enrolled Agent is
  the premier tax professional.
                                                              E                                                                      $35 for Member pre-registration before midnight on the Thurs-
                                                                                                                        MAIN ST

  The Mission of OCEA is to encourage              KATELLA AV
  professionalism, personal growth, and
                                                                                                                                     day prior to the dinner meeting; $40 for on-site registration and
  educational growth, while providing member                                                                                         for non-members for meetings with 1 hour of CPE credit.
  benefits and enhancing the role of Enrolled                                                                                        Meetings with 2 hours of CPE credit are $45 and $50 respective-
  Agents among the local governmental agen-
  cies, other professionals, and the general      CHAPMAN AVE                                                                        ly. To make a reservation go online to our web site www.eaoc.
  public.                                                                                                                            org and select the sign up button next to the event you would
                                                                                                                                     like to attend and follow the prompts. If you incur any
  OCEA is 409 Members strong and proud to
  be the largest Chapter of CSEA.                                                                                                    difficulties signing up contact Donna Miller at 562-424-2411
Page 2                                                                                       Volume 2011 - 2012 Issue 12

           by John Kristianson, EA MBA
“Partnership “(n) –                                                                          The Tax Professionals
(a) company (n.) Company, business, firm, cor-                                          President
poration, enterprise, organization, joint venture                                         John Kristianson, EA MBA
                                                                                          5030 Katella Blvd, #228
(b) Affiliation (n.) Affiliation, association, col-                                       Los Alamitos, CA 90720-2819
laboration, alliance, relationship                                                        (562) 438-6059,

                                                                                        First Vice President
  In my last newsletter, I wrote about the value                                          Patricia Yeckel, EA
                                                                                          22342 Avenida Empresa #280
of my relationship with OCEA, CSEA and                                                    Rancho Santa Margarita, CA 92688
                                                                                          (949) 888-2829,
NAEA as an Enrolled Agent. I am not sure if
everyone has seen the news release from NAEA,                                           Second Vice President
                                                                                          Donna Miller, EA
but the term “Enrolled Agent” is now going to                                             2525 Cherry Ave, #368
be included in the Merriam-Webster’s dictionary.                                          Signal Hill, CA 90755
                                                                                          (562) 424-2411,
This was the result of individual Enrolled Agents
responding to an initiative that the national orga-                                       Marilyn Ratliff, EA
nization had started. But it is a great example of the Power of Partnership.              17821 17th St #270
                                                                                          Tustin, CA 92780-2161
                                                                                          (714) 505-6700,
  How did this come to be? NAEA spearheaded the concept of getting the term             Treasurer
Enrolled Agent into the dictionary. Then, via the E@lert, there was a call to ac-         Robin Miller. EA
                                                                                          PO Box 4424
tion for individual members to write to the Merriam-Webster organization. Those           Mission Viejo, CA 92690
letters and emails were written and the desired result was achieved. There were           (949) 347-8522,

no requests for monies from the members. There was just a request for the mem-          Directors
bers to act.                                                                              Hugh Cunningham, EA
                                                                                          1577 S Harbor Blvd
                                                                                          Fullerton, CA 92832
                                                                                          (714) 803-0300,
  Another component of this partnership is money. This money is needed to sup-  
port the local, state and National organizations. The money pays for salaries in          Joseph Dimino, EA
the State and National offices, rent and the other accoutrements that are needed          1901 Newport Blvd, #350
to run effective professional organizations. The monies also help to fund PIA             Costa Mesa, CA 92627
                                                                                          (949) 999-2036
activities at all levels and the provide scholarships to Enrolled Agents or aspiring

Enrolled Agents to further their education.                                               Patricia Patterson, EA
                                                                                          3338 Punta Alta, #1A
                                                                                          Laguna Hills, CA 92637
  Lastly, these monies can be used to further Enrolled Agents’ relationships with         (714) 514-4811,
the legislative bodies that can help or hinder our profession. I realize that there       David Shashoua, EA
can be arguments made for or against using monies to lobby legislative bodies.            3773 McCray St
                                                                                          Riverside, CA 92507
But the truth of the matter is, we, as professionals, need to have our voices heard       (951) 328-0800,
in the halls of government.                                                               Victor Silver, EA
                                                                                          285 E Imperial Hwy, #201
  A great example of this was with CSEA working in concert with other organiza-           Fullerton, CA 92835
                                                                                          (714) 879-1522 ,
tions to ensure that the California Board of Accountancy did not exclude Enrolled
Agents from the preparation of financial statements. While this might not apply to      CSEA Director;
all EAs, it impacts many of our members.                                                 Devang Mehta, EA
                                                                                         22632 Golden Springs Dr, #110
                                                                                         Diamond Bar, CA 91765
  The point of this is this. The Power of Partnership is driven by resources. These      (909) 861-8100,

include two very important resources 1) Time and 2) Money. Some of us have
                                                                                        Immediate Past President;
more time than money. Others have more money than time. It does not matter                Patti Kappen, EA
which resource that you can contribute, it is the fact that you contribute. As I have     31726 Rancho Viejo Rd #215
                                                                                          San Juan Capistrano, CA 92675
said in the past, this IS your business. It is yours to protect.                          (949) 496-1174,
                                                                 Enjoy your summer!
Volume 2011 - 2012 Issue 12                                                                                               Page 3

                                     Nominees for OCEA Board of Directors
                                     by Joe Guccione, EA

                                     The following names and their positions have been selected by the nominating com-
                                     mittee to be placed on the next ballot for the 2012/2013 fiscal year beginning July
                                     1st. The general election will be held at the June 19th dinner meeting. Any regular
                                     Member whose name is not on this list may be nominated from the floor by any other
                                     regular Member at the election.

                                                      President        Pat Yeckel
                                                      1st V P          Joe Guccione
                                                      2nd V P          Scott Grandfield
                                                      Secretary        Marilyn Ratliff
                                                      Treasurer        Robin Miller
                                                      Directors        Hugh Cunningham
                                                                       Patricia Patterson
                                                                       David Shashoua
                                                                       Victor Silver
                                                                       Dan Carlberg
                                                      CSEA             John Kristianson
                                                      Director               ScanWriter OLcl.pdf   2/29/12   2:08:49 PM

                       A PLUS APPRAISALS
                             Real Estate Appraisals
                             • Homes and 2-4 units for divorces,
                               estates, refi’s and sales
                              Forensic Real Estate Appraisals
                              • 1987 to current period for SFR’s and
                                2-4 units LA and OC
                             • Fast turnaround
John Rydell (562) 425-0564   • $350 and up.
                               State certified
                             •Nov 2007        • Expert witness for court
Page 4                                                                      Volume 2011 - 2012 Issue 12

     IRS Announces More Flexible
  Offer-in-Compromise Terms to Help
   a Greater Number of Struggling
    Taxpayers Make a Fresh Start.
IR-2012-53, May 21, 2012
                                                   Today’s announcement focuses on the financial
WASHINGTON — The Internal Revenue Se               analysis used to determine which taxpayers qual-
rvice today announced another expansion of its     ify for an OIC. This announcement also enables
“Fresh Start” initiative by offering more flexible some taxpayers to resolve their tax problems in as
terms to its Offer in Compromise (OIC) program     little as two years compared to four or five years
that will enable some of the most financially      in the past.
distressed taxpayers to clear up their tax problems
and in many cases more quickly than in the past. In certain circumstances, the changes announced
                                                    today include:
“This phase of Fresh Start will assist some tax-
payers who have faced the most financial hard-         * Revising the calculation for the taxpayer’s
ship in recent years,” said IRS Commissioner        future income.
Doug Shulman. “It is part of our multiyear effort      * Allowing taxpayers to repay their student
to help taxpayers who are struggling to make        loans.
ends meet.”                                            * Allowing taxpayers to pay state and local
                                                                                       continued on page 6
The Orange County Chapter of the California Society of Enrolled Agents is offering a review class
to prepare YOU for the IRS Special Enrollment Exam.
Please note, this is a fast paced review course and it is highly recommended that attendees have some
experience in preparing both individual and business income tax returns.

   Part 1:                       Individual Taxation
                                June 23, June 30 and July 7

   Part 2:                       Partnerships, C Corporations, S Corporations, Fiduciaries and other topics
                                July 14, July 21, July 28, August 4, August 11, and August 18

   Part 3:                      Practice before the IRS, Power of Attorney, Ethics and other topics
                                August 25
   Course Fees:                 Early Registration: May 15, 2012 $1,095 for the three parts
                                First Registration Deadline: June 1, 2012 $1, 245 for the three parts
                                Final Registration Deadline: June 8, 2012 $1,345 for the three parts
                                Textbook and online access for test taking is included in the registration fee.

   Last date to register on line, June 10, after, please call Patti Kappen at 949.496.1174 to register.
   Registration for taking Parts 1, 2 or 3 separately available - call 949.496.1174 for pricing

   Location:                    South Coast College, 2011 W. Chapman Ave., Orange, CA 92868
   Time:                        9:00 AM to 4:00 PM
   Instructors:                 Lisa Ihm, EA, Vicki Mulak, EA and Norm Schmidt, EA
   Register online at or use the form below
Enclose your check made payable to: Orange County Chapter, CSEA. OR charge to your credit card.
_______Visa _______MasterCard _______Amer. Express            3-digit security code______
Credit card number_______________________                         Exp. Date ________________________________
Your name______________________________                           Signature_________________________________
Address________________________________                           Phone/days________________________________
City___________________________________                           State______Zip____________________________

Mail to:      Patricia Kappen, 31726 Rancho Viejo Rd. # 215, San Juan Capistrano, CA 92675
Fax to: 949-496-8084 Email: or
       It is OCEA’s policy not to issue refunds once a registrant has registered for an event or class. However, a written
       refund request can be submitted to OCEA’s treasurer by the next board meeting for consideration by the board in
       the following three cases: (1) Cancellation at least 72 hours before the event, or (2) a medical emergency
       preventing the registrant from attending the event, or (3) a death in the family.
Page 6                                                                           Volume 2011 - 2012 Issue 12
continued from page 4

delinquent taxes.                                      Allowable Living Expenses
   * Expanding the Allowable Living Expense
allowance category and amount.                         The Allowable Living Expense standards are
                                                       used in cases requiring financial analysis to de-
In general, an OIC is an agreement between a           termine a taxpayer’s ability to pay. The standard
taxpayer and the IRS that settles the taxpayer’s       allowances provide consistency and fairness in
tax liabilities for less than the full amount owed.    collection determinations by incorporating aver-
An OIC is generally not accepted if the IRS            age expenditures for basic necessities for citizens
believes the liability can be paid in full as a lump   in similar geographic areas. These standards are
sum or a through payment agreement. The IRS            used when evaluating installment agreement and
looks at the taxpayer’s income and assets to           offer in compromise requests.
make a determination of the taxpayer’s reason-
able collection potential. OICs are subject to ac-     The National Standard miscellaneous allowance
ceptance on legal requirements.                        has been expanded to include additional items.
                                                       Taxpayers can use the miscellaneous allowance
The IRS recognizes that many taxpayers are             for expenses such as credit card payments and
still struggling to pay their bills so the agency      bank fees and charges.
has been working to put in place common-sense
changes to the OIC program to more closely re-         Guidance has also been clarified to allow pay-
flect real-world situations.                           ments for loans guaranteed by the federal gov-
                                                       ernment for the taxpayer’s post-high school
When the IRS calculates a taxpayer’s reasonable        education. In addition, payments for delinquent
collection potential, it will now look at only one     state and local taxes may be allowed based on
year of future income for offers paid in five or       percentage basis of tax owed to the state and IRS.
fewer months, down from four years, and two
years of future income for offers paid in six to 24    This is another in a series of steps to help strug-
months, down from five years. All offers must be       gling taxpayers under the Fresh Start initiative.
fully paid within 24 months of the date the offer
is accepted. The Form 656-B, Offer in Compro-          In 2008, IRS announced lien relief for taxpayers
mise Booklet, and Form 656, Offer in Compro-           trying to refinance or sell a home. The IRS added
mise, has been revised to reflect the changes.         new flexibility for taxpayers facing payment
                                                       or collection problems in 2009. The IRS made
Other changes to the program include narrowed          changes to lien policies in 2011 and expanded the
parameters and clarification of when a dissipated      threshold for small businesses to resolve tax is-
asset will be included in the calculation of rea-      sues through installment agreements. And, earlier
sonable collection potential. In addition, equity      this year, the IRS increased the threshold for a
in income producing assets generally will not be       streamlined installment agreement allowing in-
included in the calculation of reasonable collec-      dividual taxpayers to set up an installment agree-
tion potential for on-going businesses.                ment without providing a significant amount of
                                                       financial information.
Volume 2011 - 2012 Issue 12                                                                                                                              Page 7

  ENROLLED AGENT/FINANCIAL PLANNER                              websites. Please contact me when seeking a professional,
  SEEKING TO PURCHASE a small to medium size                    reliable and articulate employee. Contact Jean Krieger at
  practice in southern Orange County or north San Diego         (949) 677-8301. 01/12
  County. Prefer practice with mixed clients in taxes and
  financial services (not a must). Call Edward Daoud, EA        IMMEDIATE PART TIME JOB OPPORTUNITY for EA
  PhD MBA at (949) 310-3261 (cell) or (949) 630-2298            or CPA to prepare tax returns for financial office in Irvine
  (office). 06/12                                               during tax season. Please email resume to Brad Fries at
  ARATION WORK: Did you have to let your seasonal               LARGE CORNER OFFICE AVAILABLE. $800
  staff go, but still have a stack of returns on extension to   per month includes shared reception area, conference room,
                                                                file room, kitchen and parking. Culver & Barranca in Irvine.
  prepare? I am an EA with experience in individual and         Large corner office 16x13 ft with view in a private suite.
  business entity tax returns such as S-Corp, Partnership,      Large enough for several workstations. Call Kevin Winter
  and LLCs. My schedule is flexible and can vary from           or e-mail for additional information. Available now. (949)
  week to week on an as needed basis. Compensation is           551-9566 or email 01/12
  negotiable based on your location and services needed.
  I have also been doing bookkeeping, payroll and sales         EA & CFP seeking a professional to share furnished office
  taxes for more than 20 years and would be willing to          space (with windows) in nice office building in Belmont
  assist in these areas if needed. (I am not looking for a      Heights, Long Beach. Office space is approximately 600
                                                                square feet. Share rent, DSL, Telephone. Expenses run
  permanent position, I have an annual tax season job.)
                                                                about $1,000 per month. Each of us will pay $500 per
  Please contact Kristen Jones, EA at (310) 365-7700.           month. We would coordinate days using office. I use office
  05/12                                                         to interview clients only. Need office about 2-3 days a week
                                                                and sometimes on Saturdays & Sundays during tax season.
  TAX PRACTICE WANTED: Looking to purchase a                    Call Sallie Allen (562) 900-0319 or email sallieeacfp9@
  small to medium tax book of business. Currently prac- 11/11
  tice in Tustin serving individual, corporate, partnership
  and trust clients. Please contact John Rumbold, EA,           Classifieds available for OCEA Members & associates to
  CFP® at 714-425-7202 or 03/12               advertise items for sale or rent, want ads & employment
                                                                opportunities. Ads run for 2 consecutive months free of
                                                                charge (longer based on space available. Let us know when
  EA POSITION AVAILABLE IN LA MIRADA. Seek-                     your ad is no longer needed). Email to
  ing an Enrolled Agent that has extensive experience with      Include your nameOct 2007 number or email.
                                                                                    & phone
  preparing multi-state individual tax returns, partnership
  tax returns, trust tax returns, and corporate tax returns.
  Applicant must possess exceptional organizational and
  customer service skills. Please contact Sonya Scott at
  Philip L.Liberatore CPA (714) 522-3337. 03/12

  Position in a CPA firm or EA office for NAEA experi-
  ence. I was an executive secretary for 10 years but left
  the workforce to raise my children. I will obtain an As-
  sociate’s Degree in Accounting by 2012. Last year, I                                  Spidell’s Analysis & Explanation of California Taxes®
  spent four days per week preparing tax returns for both                               2012 Edition (For preparing 2011 tax returns) $99 plus sales tax and shipping

  OC Legal Aid Society (VITA) and the AARP (TCE)                                        • All meat, no filler — we concentrate on California law, not

  utilizing CCH Tax-Wise. I am familiar with Intuit’s
                                                                                          federal.Other so-called “California handbooks” are almost
                                                                                          half federal!
  Lacerte, QuickBooks and certified/bonded with CTEC                                    • Examples, flowcharts, worksheets, and contact information
  and registered with an IRS-PTIN. If your firm is work-                                  that the other handbooks don’t give you! And the A&E is
                                                                                          easy to understand and extensively cited!
  ing toward a paperless office, I could assist you with                                • Written by California tax professionals for California tax
  PDF/OCR scanning plus creating blogs, tweets and                                        professionals.

                                                                   Order online:      Order by phone: (714) 776-7850       Order by fax: (714) 776-9906

                                                                                         Visit our Web site

                                                                                  The Tax Professionals

                                                                                 Westminster, CA 92683-4868
                                                                                  14340 Bolsa Chica Rd. #A
                                                                                      Dale Quelle, EA
                                                                                   OCEA Newsletter Editor

  Enrolled Agent to be Included in
  Merriam-Webster’s Dictionary!
  The power of membership! In a stunning example of what individual EA’s can do to promote the designa-
  tion, the requests to Merriam-Webster that enrolled agent be included in the dictionary have resulted in this
  response: “I am happy to tell you that we agree with you and that enrolled agent is on a list of entries to be
  included as part of our work on a new Merriam-Webster’s Unabridged Dictionary.”

  Thanks to all the NAEA members who answered the call in E@lert and wrote to Webster’s requesting the in-
  clusion, and special thanks to NAEA President Frank Degen, EA for focusing attention on this issue.

  This is just another step forward in our quest to make enrolled agent a household term. It’s an exciting time!
  Working together, we’re going to make 2012 the Year of the EA!

DATE            PRogRAm / EVEnT        CPE        SUbjECT                                  LoCATIon
June 19, 2012     Meeting               1          Tax Court Cases of Interest             Phoenix Club

Shared By: