Paying your children to work in your business can make sense both for the business and from a family tax planning standpoint, but you have to take care to justify that the children are truly being paid for actual business work.  This was the little item that caused the taxpayer problems in the case of Alexander v. Commissioner, TC Summary 2006-127. 

While the case may mainly demonstrate the truth of the old "pigs/hogs" tax saying, the opinion also helps illustrate issues that need to be considered when a close relative is placed on the payroll.  You can download the materials for this podcast at http://edzollars.com/2006-08-26_But_My_Kids_Are_Worth_It.pdf

I'll be heading to Bismarck, North Dakota next week for a vacation that will stretch over two weekends.  There may or may not be podcasts for those weeks (depends on if I get them recorded and uploaded), but I expect to have up the following week if nothing else.

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

We look at a case this week that deals with the continuing problems of employee related options that were exercised when the stock was at a high price, but whose price collapsed before the tax was due.  The case involved was the case of Racine v. Commissioner, TC Memo 2006-162.

The materials can be downloaded at http://edzollars.com/2006-08-19_Margins_and_Options.pdf .

The podcast is sponsored by Leimberg Information Services at http://www.leimbergservices.com .

This week we look at a provision buried in the Pension Protection Act of 2006 that involves "employer" owned life insurnace.  The provision in question renders the death benefit taxable to the extent it is greater than the premiums paid unless the policy both falls into certain excepted categories and the policy owner takes specific steps before the policy is issued to assure that the insured both gets proper notice and gives a proper consent.

The materials are found at http://edzollars.com/2006-08-12_Life_Insurance.pdf .

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

Taxpayers get their advice from a lot of sources, and we often end up having to defend our own advice against other sources.  This week we have two cases that show that all advice is not created equal.  In the case of Lehrer v. Commissioner (TC Memo 2006-156) a taxpayer learned the hard way that selecting a preparer predominantly on which one computes the lowest tax is not necessarily the best way to end up well advised.

And the case of Diem v. Commissioner (TC Summary 2006-121) is useful for those clients that will try and check your advice by calling the IRS for an answer and then reporting the IRS's answer to you (so, you know, you don't have to do any work on that one).  Mr. Diem was clobbered when it turned out an IRS employee's assurance that the program offered by his employer would be treated just like the workers compensation style claim he was giving up for tax purposes turned out not to be so.

The materials for this week's presentation are found at http://edzollars.com/2006-08-03_Trust.pdf .

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