Los Angeles California Tax Attorney Blog

California Tax Attorney:

Internal Revenue Service IRS catches another tax evader.

Another UBS client pleaded guilty today in a criminal IRS tax case concerning FBAR and Offshore Bank Accounts. According to the Wall Street Journal, US Taxpayer Barouh operated a watch business since 1976 and hid some of his unreported income in various UBS offshore accounts.

A Florida man pleaded guilty to filing a false tax return by failing to report income on money held in UBS AG (UBS) Swiss bank accounts.

In addition to any jail sentence, Barouh has agreed to pay some $5 million, half the estimated amount he owned or controlled offshore, as well as any additional taxes, interest and penalties.

In all likelihood, this taxpayer probably could not have participated in the preferred voluntary disclosure program which ended last year. Before any criminal tax case comes to an indictment or reaches guilty plea stage, there would have been an ongoing tax investigation into this taxpayer before the tax amnesty program became available.

Based on the IRS FBAR-Voluntary Disclosure program, any taxpayer(s) under any tax investigation would not have qualified for the tax amnesty program which existed last year.

If you did not disclose your foreign bank account(s) to the IRS yet, there are several options that are availabe to avoid criminal exposure so you can avoid sleepless nights.

Los Angeles Tax Attorney:

Here is a quick summary of a recent US TAX COURT case against the Internal Revenue Service . The ruling on this case may apply to other documents filed with the tax court or the IRS including late filed FBAR Voluntary Disclosure Program.

Tax Court Petitioners MADDOX v.
COMMISSIONER OF Internal Revenue Service

TAX PROBLEM:

This case seems to reflect the current trend by IRS Attorneys when dealing with tax court petitions that they receive 90 days after issuance of Notice of Determination arising from IRS Tax Audit or Collection Due Process hearing.

IRS TAX CODE

Internal Revenue Code §6213(a) provides that a petition for redetermination of a deficiency determined by the Commissioner is timely filed if it is filed within 90 days after a notice of deficiency is mailed. Internal Revenue Code §7502 - If a petition is received by the Court after the 90-day period, then the postmark date can be deemed the date of delivery.

IRS MAY CHALLENGE TAX COURT PETITION IF RECEIVED 90 DAYS AFTER MAILING NOTICE OF DEFICIENCY

The IRS moved to dismiss this case on the ground that the petition was not filed within 90 days of the mailing of the notice of deficiency. Taxpayers state the petition was timely mailed even though not received by the Court within the 90-day period. IRS mailed on October 7, 2008, a notice of deficiency to taxpayers. A petition signed by taxpayers’ attorney, dated December 17, 2008, was received and filed by the Court on January 23, 2009, which was 108 days after the mailing of the notice of deficiency. The U.S. Postal Service (USPS) cancellation stamps appeared on the envelope, but the exact date of cancellation was illegible. January 5, 2009, was the 90th day after the mailing of the notice of deficiency. On March 11, 2009, the IRS filed a motion to dismiss for lack of IRS tax court jurisdiction.

TAXPAYER'S TESTIMONY MAY BE SUFFICIENT TO SHOW THAT TAX COURT PETITION WAS MAILED

Taxpayers’ attorney mailed the petition by placing it in the mailroom in his office building before 4 p.m. on Friday, January 2, 2009. The mailroom was locked, and only building tenants and the USPS had access. The outgoing mail was placed in a USPS basket.

Usually, the postmark placed on the envelope in which the petition has been mailed is accepted as evidence of timely mailing and timely filing. In this case, however, the postmark is illegible. Because taxpayer’s petition was received and filed outside the prescribed period, bearing an illegible USPS postmark, it will be considered timely filed only if petitioners can show the date that the postmark was made and that the date was within the 90-day period.

Taxpayers have shown that the envelope was postage prepaid and had a USPS cancellation. Taxpayers also testified that the petition was timely placed in the USPS mail before the expiration of the 90-day period and timely postmarked (illegibly). The envelope was received by the Court and the petition was filed.

The decision was entered against the Internal Revenue Service . The tax court denied the IRS' motion to dismiss tax court case and concluded that the tax court petition was timely postmarked, timely mailed and timely filed.

Note that some documents filed with the IRS may be deemed filed upon receipt while others are deemed filed upon mailing of the document. Check with your tax attorney on the filing variations.

Torrance Tax Attorney:

Here is a quick summary of a recent US TAX COURT case against the Internal Revenue Service to challenge the taxability of lawsuit settlement funds. The case involves money settlement received by a taxpayer from a class action against the US Air Force.

KEVIN HENNESSEY v.
COMMISSIONER OF Internal Revenue Service
Docket No. 20484-07.

Tax Problem
The issue is whether a lump-sum amount of money the petitioner received pursuant to a class action settlement agreement is excludable from gross income under section Internal Revenue Code 104(a)(2).

Internal Revenue Code

Internal Revenue Code §61 (a) includes in gross income “all income from whatever source derived” unless excluded by a specific provision of the Code.

Internal Revenue Code §104 (a)(2) excludes from gross “amount of any damages received (whether by suit or agreement and whether as lump sum or as periodic payments) on account of personal physical injuries or physical sickness”.

IS MONEY FROM LAWSUIT SETTLEMENT TAXABLE?
Mr. Hennessey and other officers, whom the U.S. Air Force selected for involuntary separation because of congressionally mandated personnel reductions in the Armed Forces, filed a complaint in the U.S. Court of Federal Claims. The plaintiffs claimed that the Board in charge violated their equal protection rights under the Fifth Amendment to the U.S. Constitution because it improperly considered race and gender in selecting officers for involuntary separation. The class action case was settled and each member received a lump-sum payment. When petitioners filed their tax return, they did not include in income the lump-sum payment.

IRS TAXES ALL COMPENSATION UNLESS EXCLUDED BY SECTION 104(a)(2)

The lump-sum payment was not compensation for physical injuries or physical sickness that Mr. Hennessey might have suffered as a consequence of any actions taken by the U.S. Air Force. Therefore, the exception of Internal Revenue Code §104 (a) (2) is not applicable. The decision was entered for the Internal Revenue Service .

Los Angeles Tax Attorney:

Congratulations Los Angeles Lakers #15

Los Angeles Lakers 2009 World Champions Game Highlights

Los Angeles Tax Attorney:

President Barack Obama filed his 2008 Internal Revenue Service IRS TAX Form 1040 Income Tax Return today.

Some of the highlights to his returns are listed here:

President Obama's Donation List

United States Tax Court US TAX COURT

Los Angeles Tax Attorney:

Internal Revenue Service IRS criminal tax evasion charges against Helio Castroneves came to a conclusion today. Federal Jury acquitted former Los Angeles Dancing with the Stars and Indy Race Car Driver on six counts of IRS Tax Evasion. Criminal tax evasion cases are processed throug the Federal District and not through the US TAX COURT system.

IRS criminal tax evasion charges against Helio Castronoves which alleged that IRS tax evasion mechanism involving Panamanian bearer share corporation called Seven Promotions to avoid and evade IRS taxes. Asset protection attorneys view these corporations as a planning device to evade taxes and protect certain class of assets from creditors.

According to SI.com,

these Panamanian bearer share corporations can be created without producing a public record of the incorporating party's name, their shares omit any identifying information about shareholders, and a person with a controlling interest can direct corporate assets to purchase various property and goods, such as real estate and cars, with minimal risk of personal detection.

California Tax Attorney: With the declining tax revenues and no budget in place, California Franchise Tax Board announced today that the state will suspend tax refunds, welfare checks, student grants and other payments owed to Californians starting Feb. 1,

According to Los Angeles Times Tax News California Controller John Chiang said he had no choice but to stop making some $3.7 billion in payments in the absence of action by the governor and lawmakers to close the state's nearly $42-billion budget deficit. More than half of those payments are tax refunds.

Is California going bankrupt?

IRS Tax Lawyer

Internal Revenue Service IRS TAX and United States Tax Court US TAX COURT released information regarding tax fraud related scams using the name of the IRS and US Tax Court.

“Taxpayers should take steps to keep their personal information out of the hands of identity thieves,” said IRS Commissioner Doug Shulman. “That includes not falling for any of the phony e-mails or faxes now in circulation pretending to come from the IRS.”

Although most of these scams consist of e-mails requesting detailed personal information, the IRS generally does not send e-mails to taxpayers, does not discuss tax account matters with taxpayers in e-mails, and does not request security-related personal information, such as PIN numbers, from taxpayers.

Refund e-Mail Scam

There are several variations of the refund scam, in which an e-mail claiming to come from the IRS falsely informs the recipient that he or she is eligible for a tax refund for a specific amount. The bogus e-mail instructs the recipient to click on a link to access a refund claim form. The form requests personal information that the scammers can use to access the e-mail recipient’s bank or credit card account.

This notification is phony. The IRS does not send unsolicited e-mail about tax account matters to taxpayers.

Filing a tax return is the only way to apply for a tax refund; there is no separate application form. Taxpayers who wish to find out if they are due a refund from their last annual tax return filing may use the Where’s My Refund? interactive application on this Web site. IRS.gov is the only official IRS Web site.

Los Angeles Tax Attorney:

The Internal Revenue Service IRS TAX has released for public comment draft revisions to Form 1065, U.S. Return of Partnership Income, Form 1120, U.S. Corporation Income Tax Return, and certain related schedules. Included in the release are new Schedule B for Form 1120 and Schedule C for Form 1065. These forms will be for use for tax years ending on or after Dec. 31, 2008.

“The draft revisions and new forms will increase transparency about the ownership and relationships between entities that make up complex enterprise business structures,” said Frank Y. Ng, Commissioner of the Large and Mid-Size Business Division of IRS. “This will enable IRS to better assess compliance risk.”

For those attorneys who render asset protection services these changes may affect past and future asset protection strategies. "The major change to Form 1120 is to Schedule K and involves reporting direct and indirect ownership. When ownership meets certain percentage thresholds, it must be reported on Schedule K. Certain questions on Schedule K have been revised for this reporting."

The new Schedule B (Form 1120) is required of corporations that file Form 1120 Schedule M-3. Schedule B (Form 1120) will provide IRS information about allocations, transfers of interest, cost sharing arrangements, and changes in methods of accounting.

>
The major changes to the Form 1065 also involve ownership issues. When ownership meets certain percentage thresholds, it must be reported on Schedule B (Form 1065). The revised Schedule B (Form 1065) will also be used to provide information about cancelled debt, and like-kind exchanges that the partnership may have participated in at any time during the tax year. For small partnerships, the asset threshold for filing Schedules L, M-1 and M-2 with Form 1065 has been increased from $600,000 to $1,000,000.

The new Schedule C (Form 1065) will be required of Form 1065 filers that file Schedule M-3. Schedule C (Form 1065) will be used to report information about related party transactions, allocations, transfers of interest, cost sharing arrangements and changes in methods of accounting.

New instructions for Item J of Schedule K-1 (Form 1065) clarify how partnerships determine partners’ percentage share in the profit, loss, and capital at beginning and end of the partnership’s tax year.

For information concerning IRS tax problems or tax matters contact us Tax Attorney:

Los Angeles Tax Attorney: Internal Revenue Service IRS Tax Audit case.

In a recent IRS Tax Court case, DOUGLAS K. AND GAYLE L. BARRETT, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE SERVICE, Respondent, July 21, 2008,
California taxpayers filed a US Tax Court US TAX COURT Complaint against the IRS for tax increases resulting from IRS Tax Audit. Taxes at issue are not for IRS payroll tax.

In the tax court, taxpayers claimed certain deductions including tools and automobiles used for the taxpayer's contractor business. However, IRS disallowed these deductions in the tax audit. IRS also charged an accuracy-related penalty-20 percent pursuant to IRS Tax Code section 6662(a).

IRS taxpayer did not provided any documentation to substantiate the cost of goods sold reported on their tax return. IRS tax auditor denied most of the business related expenses.

> US Tax Courts have held that where taxpayers’ testimony is general, conclusory, or uncorroborated, the Court is not required to accept such testimony as sustaining taxpayers’ burden of proof. See Lerch v. Commissioner, T.C. Memo. 1987-295, affd. 877 F.2d 624 (7th Cir. 1989); Geiger v. Commissioner, T.C. Memo. 1969-159, affd. 440 F.2d 688 (9th Cir. 1971).

Tax Practice Note:
Taxpayers bear the burden of proving the Commissioner’s determinations are erroneous. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).

IRC Section 162(a) allows deductions for ordinary and necessary expenses of carrying on a trade or business. Section 7491 regarding the burden of proof is not applicable in this case because petitioners have failed to meet the requirements of section 7491(a)(1) and (2).

IRS tax deductions are strictly a matter of legislative grace, and taxpayers bear the burden of proving they are entitled to any claimed deductions. INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992).

Section 6001 requires taxpayers to maintain adequate books and records sufficient to substantiate all costs of goods sold and all deductions claimed on tax returns.

Section 274(d) requires taxpayers to substantiate any claimed deductions of listed property by adequate records or sufficient evidence and bars any deduction for an expenditure governed by section 274 on the basis of unsupported testimony of the taxpayers or on the basis of the taxpayers’ approximation.

IRS must prove penalty assessments under Section 6662(a) and (b)(1). This section imposes a 20-percent penalty on the portion of an underpayment attributable to negligence. Negligence includes any failure to keep adequate books and records or to substantiate items properly.

Sec. 1.6662-3(b)(1), Income Tax Regs. The Commissioner has the burden of production with respect to accuracy-related penalties. Sec. 7491(c). To meet that burden, the Commissioner must produce sufficient evidence indicating that it is appropriate to impose the penalty. See
Higbee v. Commissioner, 116 T.C. 438, 446 (2001). Once the Commissioner meets his burden of production, the taxpayer must come forward with persuasive evidence that the ommissioner’s
determination is incorrect. Rule 142(a); Higbee v. Commissioner, supra at 446-447.

The taxpayer may meet this burden by proving that he or she acted with reasonable cause and in good faith. See sec. 6664(c)(1); sec. 1.6664-4(a) and (b)(1), Income Tax Regs.

Los Angeles, California - IRS will be improving IRS tax procedures to protect victims of tax-related identity theft and expanding outreach and education to individuals who have lost their homes to foreclosure concerning the “cancellation of debt” tax consequences they face.

IRS Taxpayer Advocate's office stated that IRS tax procedures concerning the following areas will be reviewed and updated:

1. IRS Collection Practices. IRS collection practices including tax levies, allowable living expense standards, tax installment agreements, IRS offers in compromise, and early intervention techniques have been the recent focus of various tax attorneys who have been concerned with IRS tax collection procedures. There have been many cases in which IRS has resorted to tax levies and seizures before all viable collection alternatives have been exhausted, under-utilization of partial-pay installment agreements, and excessive delays in collection that increase IRS taxpayer delinquency tax problems because of the increase tax interest and tax penalties.

1. Tax-Related Identity Theft. IRS is in the process of creating a centralized unit to handle identity theft cases and the development of a centralized set of procedures that cuts across IRS functions. The IRS has taken a number of steps to improve its procedures; notably, it has developed a Service-wide identity theft indicator and is studying the creation of a centralized unit to assist identity theft victims.

3. Cancellation of Debt Income. When an individual or business borrows money and the debt is cancelled, the borrower generally must include the amount of the cancelled debt in gross income. This requirement generally affects borrowers who lose their homes to foreclosure or who default on car loans or credit card debts. Taxpayers may exclude the amount of a cancelled debt from gross income under certain circumstances, but to do so, they must take the affirmative act of filing Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment), with their tax returns. Very few taxpayers file Form 982, and the Office of the Taxpayer Advocate has focused and will continue to focus on increasing public awareness of the rules and exceptions.

Los Angeles Tax Attorney — Economic stimulus payments directly deposited into IRAs and other tax-favored accounts may be withdrawn tax-free and penalty-free, the Internal Revenue Service announced today.
This relief is designed to help taxpayers who may have been unaware that by choosing direct deposit for their entire regular tax refund, they were also choosing to have their stimulus payment directly deposited as well. If a taxpayer elected a split refund, however, their stimulus payment will be paid by a paper check.

This relief is available for amounts withdrawn from these tax-favored accounts that are less than or equal to a taxpayer’s directly deposited stimulus payment.
To qualify for this relief, funds must be taken out by April 15, 2009, in most cases. Without this relief, taxes, penalties and other special rules would apply to amounts removed from these accounts. Regular refunds are not eligible for this relief.

Eligible tax-favored accounts include traditional and Roth IRAs, health savings accounts (HSAs), Archer MSAs, Coverdell education savings accounts (ESAs) and qualified tuition programs, also known as QTPs or 529 plans. Thus, for example, a taxpayer whose $1,200 stimulus payment is directly deposited into his or her IRA can take out anywhere up to $1,200 from the IRA, tax-free and penalty-free.

In general, the deadline for these withdrawals is the due date or extended due date for filing a 2008 return. This means April 15, 2009, for most taxpayers, or Oct. 15, 2009, for those who obtain tax-filing extensions.

IRS Selects Tax Attorney From Los Angeles California

Los Angeles Tax Attorney – Internal Revenue Service Tax Attorney Donald L. Korb has selected David Hasen as the 2008-2009 Professor in Residence.

The IRS professor in residence reports directly to the IRS chief counsel and provides tax advice and assistance on a wide array of tax related legal issues within the scope of his or her legal expertise.

Hasen has been an assistant professor at the University of Michigan Law School since 2002. Also during the spring 2008 term, he has been a visiting faculty member at the University of Southern California - Los Angeles, Gould School of Law. Previously, he taught as a visitor at Hastings College of the Law in California concerning IRS tax problems.

Hasen has written about the taxation of financial instruments, the tax consequences of unwinding transactions and the taxation of advance payments. Hasen worked as an associate in the tax law groups of national tax law firms based in San Francisco. He holds a J.D. from Yale Law School, a Ph.D. from Harvard University and a B.A. from Reed College.

The IRS Office of Chief Counsel revived its Tax Professor in Residence program in 2006 after being dormant since the late 1980s. The program provides some of the nation's top tax legal academicians the opportunity to contribute to the development of IRS' legal tax policy and IRS tax administration.

Los Angeles Tax Attorney — The Internal Revenue Service is requesting membership nominations from Los Angeles, San Francisco, San Diego, San Jose and Oakland area tax attorneys and tax advisors for the Information Reporting Program Advisory Committee. The deadline for submitting applications to the IRS is May 30, 2008.
Established in 1991, IRS’ Adivsory Committee provides recommendations to IRS leadership on a wide range of information reporting and administration issues. The committee presents a report to the IRS commissioner each year at a public meeting in the fall.

In order to effectively advise the IRS commissioner and executives, members are drawn from substantially diverse backgrounds. Members include representatives of the taxpaying public, the tax professional community, small and large businesses, colleges and universities, state tax administrations, banks, insurance, foreign financial institutions and the payroll community.
"IRPAC plays an important role in the nation's tax system," said IRS Commissioner Doug Shulman. "The group's broad knowledge of information reporting is invaluable to our tax administration efforts."

IRPAC is comprised of up to 35 members who are appointed to three-year terms by the commissioner. Each year, approximately one-third of the membership terms expire. Nominations are currently being accepted for up to six appointments that begin January 2009.
Interested parties may nominate themselves or a qualified person for membership. All nominees must complete an application and federal tax check waiver form. In addition, FBI background checks using fingerprints and, if applicable, practitioner checks are required of all nominees.

Orange County Tax Attorney — National Taxpayer Advocate Nina E. Olson announced today that the IRS will accept applications for a part-year Low Income Taxpayer Clinic (LITC) matching grant from qualified organizations that will provide IRS tax services to qualified taxpayers in the following areas: Los Angeles, California; Central Oregon; Boise, Idaho; Minneapolis, Minnesota; Reno and Las Vegas, Nevada; St. Louis, Missouri; Brownsville and Laredo, Texas; Southwest Florida; New Mexico; Colorado; Mississippi; and Northeast Pennsylvania.

The supplemental application period for this grant will run from March 24, 2008, until April 24, 2008. The grant will cover the balance of the 2008 grant cycle (the 2008 grant cycle runs January 1, 2008, through December 31, 2008), and successful applicants may be eligible for a regular full-year grant for the 2009 grant cycle.

LITCs are qualifying organizations that provide representation for free or for a nominal charge to low income taxpayers involved in tax disputes with the IRS. They also provide education on taxpayer rights and responsibilities to taxpayers for whom English is a second language.

The LITC grant program is a federal program that is administered by the Taxpayer Advocate Service. The Taxpayer Advocate Service is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should.

The program is now in its tenth year and continues to expand. To date in 2008, the LITC Program Office has awarded LITC grants to 154 organizations in all 50 states, the District of Columbia, Puerto Rico, and Guam.

To be considered for a supplemental 2008 LITC grant, a qualifying organization must be in a position to provide qualified services to taxpayers in the aforementioned areas. Qualifying organizations can apply for matching grants for the remainder of the 2008 grant cycle if they either provide representation for free or for a nominal fee to low income taxpayers involved in tax disputes with the IRS or provide education on taxpayer rights and responsibilities to taxpayers for whom English is a second language.

Examples of qualifying organizations include: (1) clinical programs at accredited law, business or accounting schools, whose students may represent low income taxpayers in tax disputes with the IRS, and (2) organizations exempt from tax under I.R.C. § 501(a) which represent low income taxpayers in tax disputes with the IRS or refer those taxpayers to qualified representatives.

As noted, the supplemental application period will begin March 24, 2008.

Applications for grants must be electronically submitted or postmarked by April 24, 2008. Grant decisions will be made by June 1, 2008, and funds awarded can only be used for the remainder of the 2008 grant cycle. Grant funds may be awarded for start-up expenditures incurred by new clinics during the grant cycle.

Taxpayers with IRS tax problems in the following communities may contact tax attorney here.: Aliso Viejo Anaheim Brea Buena Park Costa Mesa Cypress Dana Point East Irvine El Toro Foothill Ranch Fountain Valley Fullerton Garden Grove Huntington Beach Irvine La Habra Ladera Ranch Laguna Beach Laguna Hills Laguna Niguel Laguna Woods Mission Viejo Monarch Beach Newport Beach Newport Coast Orange Placentia Rancho Santa Margarita San Juan Capistrano SantaAna Seal Beach Tustin Westminster Yorba Linda

Los Angeles Tax Attorney - Senator Barack Obama has released his Internal Revenue Service (IRS) 1040 Tax Return for taxyears 2000-2006. You can view 2006 IRS Tax Return filed by Obama here.

He filed his IRS tax return jointly with his wife Michelle Obama. Based on cursory review of his IRS tax returns for 2000-2004, Senator Obama's tax returns looks super clean and would survive any scrutiny from IRS tax audit. There are few items on 2005 and 2006 which could have been treated differently but would have had a negligible tax impact.

It would be interesting to review Clinton's tax returns.

Tax Attorney Analysis of Potential IRS Tax Court Ruling-Tax Audit or Tax Problem From Plastic Surgery Expense Deductions.

Los Angeles - San Franciso Tax Attorney - The rate of plastic surgery in California especially in Los Angeles, Beverly Hills, Malibu, Pacific Palisades, Manhattan Beach, Palos Verdes, Newport Beach, Orange County, San Jose, San Franciso have seen dramatic increases over the last decade.

As tax attorneys, we are often asked by our clients in the entertainment industry whether certain surgical enhancements may be claimed as a deduction or expense.

Most tax lawyers are aware of the IRS Tax Court case involving “Chesty Love.” To generate more revenue from her profession as a stripper, Chesty Love decided to get breast implants to make her a size 56-FF and expensed the cost of the surgery. IRS tax court judge allowed Chesty to write off the cost of her operation equating her breast enhancement as a necessary expense alas “stage prop” to generate revenue.

However, can ordinary IRS taxpayers deduct breast implants or eye surgery and not run into tax problems in the event of a tax audit?

According to the IRS Attorney Tax Revenue Ruling #200357 issued by the IRS ,amounts paid by individuals for breast surgery, breast implants, vision correction surgery, and teeth whitening medical care expenses within the meaning of IRS Code § 213(d) may be deductible under § 213 of the Internal Revenue Code?

Hypothetical IRS Tax Court Case Scenario 1- Breast Implants and Tax:
Taxpayer A undergoes mastectomy surgery that removes a breast as part of treatment for cancer and pays a surgeon to reconstruct the breast.

Hypothetical IRS Tax Court Case Scenario 2 - Lasik and Tax:
Taxpayer B wears glasses to correct myopia and pays a doctor to perform laser eye surgery to correct the myopia.

Hypothetical IRS Tax Court Case Scenario 3 - Teeth Whitening and Tax:
Taxpayer C’s teeth are discolored as a result of age. C pays a dentist to perform a teeth-whitening procedure. A, B, and C are not compensated for their expenses by insurance or otherwise.

IRS Tax Court Rulings:
General IRS Tax Law or Tax Code Applicable to Medical Expenses:
Section 213(a) allows a deduction for expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer, spouse, or dependent, to the extent the expenses exceed 7.5 percent of adjusted gross income. Under § 213(d)(1)(A), medical care includes amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.

Medical care does not include cosmetic surgery or other similar procedures, unless the surgery or procedure is necessary to ameliorate a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease. Section 213(d)(9)(A). Cosmetic surgery means any procedure that is directed at improving the patient’s appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease. Section 213(d)(9)(B).

Tax attorney would argue that A’s cancer is a disfiguring disease because the treatment results in the loss of A’s breast. Accordingly, the breast reconstruction surgery ameliorates a deformity directly related to a disease and the cost is an expense for medical care within the meaning of § 213(d) that A may deduct under § 213 (subject to the limitations of that section).

Tax Attorney would argue that cost of B’s laser eye surgery is allowed under § 213(d)(9) because the surgery is a procedure that meaningfully promotes the proper function of the body. Vision correction with eyeglasses or contact lenses qualifies as medical care. See Rev. Rul. 74-429, 1974-2 C.B. 83. Eye surgery to correct defective vision, including laser procedures such as LASIK and radial keratotomy, corrects a dysfunction of the body. Accordingly, the cost of the laser eye surgery is an expense for medical care within the meaning of § 213(d) that B may deduct under § 213 (subject to the limitations of that section).

In contrast, IRS tax attorney would argue that the teeth-whitening procedure does not treat a physical or mental disease or promote the proper function of the body, but is directed at improving C’s appearance. The discoloration is not a deformity and is not caused by a disfiguring disease or treatment. Accordingly, C may not deduct the cost of whitening teeth as an expense for medical care.

Los Angeles Tax Attorney — The Internal Revenue Service announced today that Hawaii and California taxpayers in Los Angeles, Long Beach, Honolulu, El Monte, Torrance, Pasadena, Santa Monica, Redondo Beach, Irvine, Santa Ana who normally do not file a tax return but must do so this year in order to receive their 2008 IRS tax economic stimulus payment.

IRS Taxpayers who haven’t filed tax returns in the past must have at least $3,000 of income from any combination of earned income, Social Security retirement or disability benefits, certain Railroad retirement benefits, or disability compensation, disability pension, or survivor benefits paid by the Veterans Affairs. The minimum economic stimulus payment is $300 for individuals and $600 for married couples. Contact your IRS tax attorney to verify your tax status.

To obtain a payment, all people who are eligible for payments of up to $600 for individuals ($1,200 for married couples) must file a tax return in order for the IRS to know their name, address and eligibility. Parents also may qualify for a $300 payment for each eligible child younger than 17. Valid Social Security numbers are required.

Continue reading "IRS Tax Refund-Hawaii and California Taxpayers Must File IRS Tax Return to Receive Tax Stimulus Payment or Tax Refund" »

Los Angeles Tax Attorney - According to Concurring Opinions US News & World Report has a list of top 20 US Law Schools. These rankings may be a spoof but the list stays pretty much the same year to year with few shuffles here and there.

For those interested in the Los Angeles area law schools- UCLA, USC, Loyola, Southwestern, Pepperdine and Whittier, the the complete rankings will list all the nationally accredited law schools.

The rankings will also post information on LLM programs for specialist areas inclduing tax and bankruptcy law.

Los Angeles Tax Attorney — The Internal Revenue Service is seeking candidates for membership on the Electronic Tax Administration Advisory Committee (ETAAC). Tax Attorneys, Lawyers and tax problem specialists in the Los Angeles and California area are encouraged to apply.

The IRS will require a federal IRS tax check waiver and criminal or fraud investigation clearance by the IRS and Federal Bureau of Investigation (FBI).

IRS provides an organized public forum for discussion of electronic IRS tax administration issues in support of the overriding goal that paperless filing should be the preferred and most convenient method of filing tax and information returns. ETAAC provides an annual report to Congress on IRS’s progress in increasing electronic transactions. Los Angeles, Orange, Riverside, San Diego, San Jose and San Francisco based IRS taxpayers have one of the nations highest rate of electronic filers.

IRS Tax Savings for Los Angeles and California Taxpayers

Los Angeles Tax Attorney — Internal Revenue Service allows tax savings to businesses located in Los Angeles, Orange, Riverside, San Diego and San Francisco area businesses. IRS tax savings and incentives include a special 50-percent depreciation tax allowance for 2008 purchases and an increase in the small business expensing limitation for tax years beginning in 2008. For specific details relevant to your business, please contact your Los Angles Tax Attorney.

Continue reading "IRS Tax Savings for Los Angeles and California Taxpayers" »