Boston Tax Alert 2011-37, 2011-38, 2011-39, 2011-40
Lu Gauthier of The Boston Tax Institute has given me permission to republish his newsletter. The BTI newsletter is a regular feature of this blog now going up every Tuesday. Be sure to check out the BTI catalog for great CPE value.
My apologies for falling behind in posting these. I won't get into the reasons. Excuses are like a particular body part. Everybody has one and they all stink. Actually the pace of Lu's emails slowed down a bit so there is not as much here as you might expect.
Our thanks to Paul Plourde, Esq. for calling our attention to the change on Draft Forms 1120S, 1065 and 1120. Line 1a reads "Merchant card and third-party payments (see instructions)." Presumably there will be a similar change on Schedule C of Form 1040. You may want to consider how this will impact your clients reporting of gross receipts and start thinking about how your clients' books and records are going to tie into this number.
Terry Creeden has written the following email.
Stoughton, MA CPA firm has offices available to sublet. Space includes use of conference room, kitchen, photo copier/fax. Excellent opportunity for someone starting a practice or as a satellite location for a downtown firm. Ample off street parking available. Email email@example.com or call Shelley at (781)344.0850.
On 07/06/2011, in Richard Kay, Jr. v. Comm., (TCM 2011-159), the Tax Court held that even though the taxpayer had made a section 475(f) election to be a trader in securities, he could not deduct his losses on stocks as ordinary (including an NOL carryover from tax year 2000) because his purchases and sales were not frequent, regular, and continuous enough to constitute a trade or business. Taxpayer effected 313 transactions on 73 trading days in 2000, 72 on 18 trading days in 2001, and 84 on 21 trading days in 2002. Query whether attaching a Form 8275 could have avoided the 20% taxpayer accuracy-related penalty which applied in this case. Obviously, as the result in this case clearly indicates, merely making a section 475(f) election is necessary, but it is NOT enough! If your client has made a section 475(f) election, you might want to review the case law in this area to determine whether your client's transactions are sufficiently frequent, regular, and continuous to constitute a trade or business and/or whether to attach a Form 8275 if there is a reasonable basis for concluding that they are. This and other recent cases will be discussed in detail in our seminars on Current Tax Developments/New Tax Legislation on 08/17 in Waltham and on 09/01 in Portland.
I also found the Kay case interesting. I put up the source material here and commented on it in a Forbes post.