This file contains a correction/clarification to yesterday's KETRA update. As is pointed out in this program, Section 303 of the Act does limit these higher rates to provision of Katrina relief. As well, there is a short period where the rate is lower than the rate noted--the new business rate took effect on September 1, but the 70% rule goes into effect on August 25, 2005

Thanks to Michael Wing, CPA on Yahoo Groups' Taxprofessionals group for pointing out these issues.

This quick update summarizes the items contained in the Katrina Emergency Tax Relief Act of 2005 (KETRA), concentrating on those items that have impact across the country, as well as summarizing provisions that are targeted directly at the Katrina disaster area.

I recorded this file this morning using the Samsung portable player, so audio quality is a bit lower than normal. I'm getting ready to fly back to Phoenix later today and am uploading this before I leave.

An outline can be downloaded via this link. If you are reading this in iTunes, come to the main website (noted below) to see that link and get the outline.

Please post any comments you may have at the home page for the podcast at http://ezollars.libsyn.com.

This week's podcast deals with arbitration awards and IRA accounts. What happens when a taxpayer is awarded an amount in arbitration regarding the management of an IRA account, but the award is paid to the taxpayer? Can these funds be put back into the IRA? This week we look at three IRS private letter rulings on the subject to show both what has worked and what has not, at least in the IRS's view.

We also look at the case of a taxpayer who tries to invoke the Cohan case, only to have the Tax Court explain the limits of the use of that case. As well, the court points out that merely because the IRS settled a similar case in a certain manner doesn't entitle the taxpayer to the same settlement. The case is Stewart v. Commissioner, TC Memo 2005-212.

Be sure to download the related materials for this podcast from this link.

No, we're not talking about reconsidering your vote from last November. Rather, this week's podcast deals with both the automatic and discretionary extensions the IRS grants to make elections for which a due date is specified. This topic was brought up a while back on the California Society's TaxTalk list and it was mentioned that these were important regulations to keep in the back of your mind.

Please download the materials before listening to the podcast. Note that this week's podcast is a bit longer than normal.

I recorded this podcast last week while down in Tucson at the University Marriott next to the University of Arizona. My wife was down there attending a conference at the Tucson Convention Center, so I had time available while she was away at conference.

If you read this before Tuesday and will be in Phoenix, you can still sign up for the Circular 230 Update I will be giving at the Hilton Garden Inn at Central & Thomas in Phoenix. Along with the talk, you get lunch and CPE, though of course for a fee.

Today's podcast reports on the Arizona Society of CPAs' Arizona Department of Revenue Liaison luncheon today. Speaking at the lunch was Christie Comanita, Manager in the Tax Policy & Research at the ADOR who oversees rulings on taxes other than income taxes at the Department of Revenue. She discussed the system for obtaining and issuing various rulings, as well as an update on the Streamlined Sales Tax Project and Arizona's position on that program.

The program also details Arizona Individual Income Tax Ruling ITR 05-2 on claiming the exemption for your child if you did not claim the child on the federal return so the child could claim one of the education credits.

This week’s podcast deals with two recent cases, one a win for taxpayers and one a loss. You can download the material (which consists of the two cases) from this link.

In the first case, Davis v. Commissioner, TC Memo 2005-202, a taxpayer had to foot the bill for over nearly $7,900 in fees to contest an IRS assessment because of a mix-up over his address that caused notices of the pending exam, as well as the notices prior to assessment when the case could have gone to appeals, to be sent to the address the taxpayer shared with his ex-spouse. The Tax Court held that while the IRS apparently misdirected one notice that should have gone to a different address per its own files, later notices that would have enabled the taxpayer to contest matters earlier went to the wrong address because the taxpayer continued to list his old address on the 1040s he filed.

In the second case, Allemeier v. Commissioner, TC Memo 2005-207, a taxpayer proves that what many tax preparers “know” is not necessarily the case—that obtaining an advanced degree will automatically cause education expenses to fail the test on whether the taxpayer has qualified for a new position and thus lose the deduction. Mr. Allemeier succeeded, representing himself, in having the court allow him to claim the costs of his MBA educational program over the objections of the IRS.

I’m uploading this show before I head to Tucson for a day, so it’s going up a little early this week. I’ll likely be taping the podcast for next week while in Tucson (I usually try and get them ready in advance so there’s less pressure to meet a schedule.

This week we look at a recent decision (Brooks v. Commissioner, TC Memo 2005-204) involving the impact of repaying S corporation debt during the year when, at the beginning of the year, the shareholder’s basis was less than the face amount of the note. In the case in question, the shareholders repaid such a debt in its entirety at the beginning of the year, the corporation sustained a loss during the year, and then the taxpayer loan back enough money to both return the entire repayment and then advance enough additional to give basis to take the loss. The court analyzed this case and how it differed from the case of Corneilus v. Commissioner, 58 TC 417, affd CA-5, 74-1 USTC ¶9446, 494 F2d 465, 33 AFTR 2d ¶74-1331).

As we normally do, the podcast materials can be downloaded here on the ezollars.libsyn.com website—to get them click this link (if you are reading notes attached to the podcast in iTunes you’ll need to actually go to the site first to do that clicking).

The Phoenix Tax Workshop will start its new year’s programs this month. I won’t be able to attend the first meeting (I’m going to be speaking at the Virginia Accounting & Auditing Conference in Roanoke, Virginia sponsored by the Virginia Society of CPAs and Virginia Tech University at that time), but I would suggest those in Phoenix consider signing up for the program.

Of course, if you're close to Roanoke go ahead and sign up for that conference. My topic is on technology in the local accounting practice, but there are lots of other issues covered in those two days. The conference will be repeated in November in Virginia Beach, and I'll be there as well, so that's another option for anyone in Virginia or nearby.

As well, continuing from the midweek podcast earlier this week, remember to consider the needs of the agencies serving those affected by Hurricane Katrina. The Red Cross, along with Yahoo, have established a website that makes it very easy to donate a standard amount to hurricane relief using your credit card. Please take the time to make a donation to help the relief effort, either via that site or through another relief agency.

Remember that, unfortunately, these types of tragedies spawn their own scams—so be sure to check out any charity you aren’t familiar with before parting with your check. The crooks are going to be calling, sending out emails and and setting up their own websites. On the latter issue—the safest way to be sure you are at the website for the real charity is to be sure and type the address into your browser’s address bar or click only on links where you trust that those responsible for the website are both trying to send you to the proper site and have done their homework to assure that they have linked to the real charity. I expect “phishing” emails to start to hit mailboxes soon taking advantage of this situation.

On an administrative aside: the text below allows me to “claim” this podcast on Odeo (an online podcast listening service).

My Odeo Channel (odeo/4410b05381cc2d63)

Given the disaster that has taken place on the Gulf Coast with Hurricane Katrina and its aftermath, I’ve put together a quick and dirty summary of some of the tax issues involved in casualty losses and federally declared disaster areas that may be of use for those of us who have clients that are located in the affected areas. Note that since this was put together rather quickly, you should confirm all of these details. I also added brief consideration of the issues to be considered with off-site backups due to the risk of a common disaster hitting both the original files and the backup—a situation that, unfortunately, has likely happened to some businesses in New Orleans.

A list of the federally declared disaster areas can be found at the FEMA website, so that you can determine the counties in Louisiana, Mississippi and Alabama that are subject to these rules.

In related matters, the AICPA has posted a set of resources for CPAs related to disaster recovery, as well as a link to the document Disaster Recovery: A Guide to Financial Issues that was written jointly by the National Endowment for Financial Education, the American Red Cross, and the AICPA, . As well, the AICPA has posted a page linking to various organizations to which contributions can be made to support relief efforts.