Duly Noted

January 6, 2012

Employer-provided cell phones nontaxable, IRS says. Employees who make personal use of employer-provided cell phones do not owe income tax on the cost of the phones or the service, as long as the phones are provided primarily for “noncompensatory” reasons, the IRS announced. Noncompensatory reasons include an employer’s need to reach employees after hours for emergencies, making employees available to customers at all times, and making it easier for employees …

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Duly Noted

October 10, 2011

Dwelling Used By Parents Is Taxpayer’s ‘Abode.’ In an apparent change of longstanding practice, a New Jersey businessman became subject to tax as a New York resident because he maintained a Staten Island apartment for his elderly parents. New York’s Tax Appeals Tribunal reversed its own earlier decision in favor of John Gaied after granting the state a rare re-argument. The tribunal found, after it reconsidered, that the dwelling Gaied …

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Duly Noted

June 17, 2011

Iowa Claims Tax Due On Consulting For In-State Client. An out-of-state consultant owes Iowa income tax on all the fees the consultant received from the Iowa Association of School Boards, the state’s Department of Revenue has ruled. Hilary LaMonte, who lived in Virginia, received more than $82,000 per year from the association in the years 2003 through 2005. The department said she performed 15 percent to 18 percent of her …

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Duly Noted

March 29, 2011

No First-Time Homebuyer Credit For Purchase From Parents. A Wisconsin man who purchased a home from his parents could not claim the $8,000 tax credit for first-time home buyers, which was in effect in 2008 and 2009, the Tax Court ruled. Cary Nievinski purchased the Milwaukee house for $115,725, and claimed the credit on his 2008 tax return. Neither the Internal Revenue Service Form 5405 that his accountant prepared to …

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Duly Noted

January 18, 2011

Here Is Why You Might Need A Prescription For Aspirin. Effective this year, taxpayers cannot be reimbursed for over-the-counter medications through certain tax-favored arrangements, unless the patient has a doctor’s prescription for the non-prescription meds. The new rules were imposed by the Affordable Care Act that President Obama signed into law last March. The reimbursement restrictions apply to employer-sponsored Flexible Spending Arrangements and Health Reimbursement Arrangements, as well as to …

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Duly Noted

October 7, 2010

Auditors Can Go Straight To Partner’s Return. The Internal Revenue Service says it need not audit a small partnership’s return before asserting that an individual partner owes more tax. In e-mail guidance that apparently was directed to a field auditor, the agency’s chief counsel said the IRS can issue a notice of deficiency based solely on information it receives from a third party. However, “the Service must be prepared to …

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Duly Noted

June 4, 2010

New York Steps Up Search For Residents To Tax. Already one of the most aggressive states when it comes to classifying people with multiple homes as residents subject to its taxes, New York has issued new audit guidelines promising even tougher enforcement. Agents were told to consider the location of close relatives outside the taxpayer’s household, such as grandchildren or elderly parents, as one of the primary factors in determining …

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Duly Noted

April 5, 2010

Team Wins As IRS Changes Its Mind. Perseverance is one of the keys to success on the playing field, and in the front office, too. An unidentified professional sports team recently persuaded the Internal Revenue Service to change its mind, allowing the team to deduct salary payments to a disabled player even though the team collected tax-free disability insurance proceeds on account of the player’s injury. The Chief Counsel’s office …

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Duly Noted

February 1, 2010

IRS Wins, But Charity Collects. The Internal Revenue Service successfully challenged the value that a Washington state woman assigned to property she transferred to trusts for two of her children, but the Service did not succeed in collecting any additional gift tax. Anne Petter, a retired schoolteacher whose uncle was one of the first investors in UPS, placed $22 million in UPS shares she inherited in a limited liability company. …

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Duly Noted

October 1, 2009

Rejected Again: Nonresident’s Stock Options Not Taxable In New York. Thomas Hopkins stopped working in New York when he retired in 2002. He paid New York income tax when he exercised stock options in 2003 and 2004, but asked for a refund after the New York Tax Appeals Tribunal held in another case that the state lacked authority, under pre-2006 regulations, to tax options exercised in years when the nonresident …

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