Shareholder debt to S corporations has proven to be a minefield for shareholders and their advisers, and the taxpayer and their adviser in the case of Ruckriegel v. Commissioner managed to step on a shareholder debt/basis mine twice in two consecutive IRS exams.  In this case, the shareholders attempted to argue that loans from a partnership they controlled were actually loans to them from the partnership, followed by loans to the corporation.

Or, to put it more correctly, their CPA attempted to argue that.  One of the problems in this case, beyond the simple fact that the form of the transaction (which the taxpayers had control over) did not agree with what they were arguing was the true substance, was the fact that neither the taxpayers nor their inside accountant were treating these loans as if they had traveled that indirect route.  The case points up the dangers of attempting to "after the fact" correct client missteps--and especially continuing to do it for multiple years.

The materials for this podcast are found at http://edzollars.com/2006-04-29_Debt.pdf.

This podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com.

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Much of the information that taxpayers need to deal with their tax obligation arrives via the U.S. mail.  But what happens when that mail is delivered to the wrong address and either never makes it to the taxpayer or arrives late?  While we've previously considered what happens when the taxpayer attempts to send documents to the IRS that the IRS claims never arrived, this week we look at a case and a letter ruling involving mail that was sent to an address the taxpayer did not currently live at when the mail arrived.

Since those of us who do compliance work now have a real need to relax, the podcast also has a brief off-topic discussion of an additional internet audio option--internet radio with discussions about four different stations.

The materials for this podcast can be found at

http://edzollars.com/2006-04-22_Lost_in_Transit.pdf

This podcast is sponsored by Leimberg Information Services, on the web at http://www.leimbergservices.com.

Can adopting a child, an apparently voluntary endeavor, qualify as an unforseen circumstance for purposes of obtaining an early exclusion of gain from the sale of a home under Section 121?  A taxpayer asked that question of the IRS and got a favorable response which we consider this week.  The letter ruling, which applies only to this taxpayer, is useful in helping us determine where the IRS may see the boundaries of an "unforseen" circumstance that qualifies a taxpayer for early use of Section 121's gain exclusion at a reduced level.

We look at Letter Ruling 200613009's specific facts, noting that many factors were considered than just the fact the taxpayers decided to adopt a child--so the ruling does not support the conclusion that all adoptions will trigger the ability to make early use of a reduced 121 exclusion.

The materials for the podcast can be found at http://edzollars.com/2006-04-15_Adoption.pdf.

This podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com.

The case of Benson v. Commissioner, TC Memorandum 2006-55, provides a look at the issue of what constitutes adequate disclosure under Section 6501(e)(1)(A)(ii) for purposes of avoiding the otherwise mechanical application of an extended six year statute on substantial underpayments.  In this case, which the taxpayer ends up losing, the Court considers to what extent disclosures on other returns can "make up" for items not disclosed directly on the individual return.

The text file for this podcast can be downloaded from http://www.edzollars.com/2006-04-08_Adequate_Disclosure.pdf.

This podcast is sponsored by Leimberg Information Services, found on the web at http://www.leimbergservices.com.

We look at the exclusion for personal injuries under Section 104 this week, as well as the nature of a reasonable cause for purposes of escaping the imposition of a penalty.  We use the case of Goode v. Commissioner, TC Memo 2006-48, to illustrate these issues. 
As well, we look at another attempt at getting reasonable cause to take a position--ask the President (as in George W. Bush), or at least have someone else do it and then claim to rely on the answer received when the question is delegated to an individual at the IRS.  This was the attempt of teh taxpayer in Smith v. Commissioner, TC Memo 2006-51.
The materials can be downloaded from http://edzollars.com/2006-04-01_Injury.pdf.
This podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com.