For Memorial Day, the podcast will take a break from tax related topics and consider rather some issues that arise when you, like many this weekend, are traveling and take your laptop with you to "stay connected" with your office and clients.  There are a number of risks that have been discussed in recent weeks on Steve Gibson and Leo Laporte's Security Now podcast that I wanted to discuss in the context of a tax professional.

We look at how your system may be compromised and your data exposed rather easily by any other machine on a network you are connected to (incluidng a hotel high speed network or a wifi hotspot at your local coffee shop).  And by this I mean a machine of any other guest or patron of the shop, or just someone in distance of the hotspot.   As well, we discuss why wifi encryption does not address this problem, and why additional steps are necessary.  We also discuss the steps you can take to make your transmissions truly secure.

The materials for this podcast can be downloaded from http://edzollars.com/2006-05-20_Secure_Data.pdf.

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

We finally have a 2005 extender bill, albiet missing a few extenders and with a few surprises (some good, some not so great).  The President signed the bill into law this week, so it's time to look at the details that were in the bill.

The materials for this podcast can be found at http://edzollars.com/2006-05-20_TIPRA.pdf.

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

Taxpayers who take distributions from retirement plans prior to attaining age 59 1/2 have to deal with a confusing set of rules of which distributions are and are not eligible to escape the 10% addition to tax under §72(t).  Two recent cases illustrate both the traps that exist for the unwary and how a taxpayer managed to convince the Tax Court he qualified for an exception from the penalty despite IRS arguments to the contrary.

The materials for the podcast can be downloaded from http://edzollars.com/2006-05-13_Premature.pdf.

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

The Tax Court looked at the interaction of the $3,000 capital loss limitation and the alternative minimum tax basis adjustment on the sale of shares originally obtained via the exercise of incentive stock options in a prior year.  The case in question is Merlo v. Commissioner, 126 TC No. 10.

In the case at hand, a taxpayer had exercised stock options at the end of $2,000 and obtained his stock at a price that was more than $1,000,000 less than the market price at the time.  Under the rules for ISOs, that fair market value spread was not taxable for regular income tax purposes, but was taxable for AMT purposes, generating a substantial AMT liability.

However, things did not go well for the stock in 2001 and, by year end, Mr. Merlo's stock was worthless.  The Tax Court considered whether, when Mr. Merlo disposed of his stock, he could take the full basis differential against alternative minimum taxable income in 2001 and generate an AMT net operating loss to carry back to 2000 to recoup much or all of his AMT liability in that year.  Their answer was not the one Mr. Merlo wanted.

The materials can be downloaded at http://edzollars.com/2006-05-06_AMT_Capital_Loss.pdf.

This week we're adding some theme music, music licensed from www.podcastthemes.com.

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