Ed Zollars, CPA wrote:

- quote -

Sorry about that one--that was an accidental email as I was
trying to save the current edition. Disregard the post
<grin> .

--
Ed Zollars, CPA
Phoenix, Arizona

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Current Edition for Monday, April 26, 2004

News Stories

Kerry, Bush Supporters Dissect Competing Tax Plans
The tax plans of the Bush and Kerry presidential campaigns were put
to the test April 23 as two prominent tax scholars met to discuss
both proposals' merits.

House to Vote to Make 'Marriage Penalty' Relief Permanent
The House the week of April 26 is expected to consider H.R. 4181, a
bill to make the "marriage penalty" relief scheduled to expire at
the end of the year a permanent fixture of the tax code.

Internal Revenue Bulletin

IRS Lists Would-Be Public Charities Now Classified as Private
Foundations
The Service has published a list of organizations that have failed
to establish, or have been unable to maintain, their status as
public charities or as operating foundations.

Organization Loses Charitable Donee Status
The Service has announced that American Legacy Foundation no longer
qualifies as a charitable donee.

IRS Corrects Regs on Compensatory Stock Options Under Qualified
Cost- Sharing Arrangements
The Service has corrected the final regulations on the treatment of
stock-based compensation under the rules governing qualified cost-
sharing arrangements.

IRS Corrects Proposed Regs on Accounting Methods for Contingent
Nonperiodic Payments
The Service has corrected the proposed regs on accounting methods
for the inclusion into income or deduction of contingent nonperiodic
payments made under notional principal contracts.

IRS Revises New Rules on Claiming Nonconventional Source Fuel Credit
The Service has announced that Rev. Proc. 2004-27 as published in
the IRB differs from the version that was released earlier in that
all references to the cash method of accounting have been removed.

IRS Issues Inflation Factor, Reference Prices for Renewable
Electricity Credit
The Service has issued the 2004 inflation adjustment factor and
reference prices used in determining the availability of the
renewable electricity production credit under section 45(a).

This Week's Internal Revenue Bulletin
The full text of the Table of Contents for Internal Revenue Bulletin
No. 2004-17 is included in this issue of Tax Notes Today.

IRS Final Regulations

IRS Issues Final Regs on Basis Determinations Following Group
Structure Changes
The Service has issued final regulations on determining the basis in
a former common parent's stock following a group structure change.

IRS Proposed Regulations

IRS Corrects Proposed Regs on Treatment of Disregarded Entities as
Separate From Owners
The IRS has corrected proposed regulations that address the
treatment of qualified real estate investment trust subsidiaries,
qualified subchapter S subsidiaries, and single-owner eligible
entities that are disregarded as entities separate from their owners.

IRS Sets Hearing Date for Proposed Regs on Alternate Estate
Valuation Date Elections
The IRS has scheduled a June 3, 2004, public hearing for proposed
regulations on the election to value a decedent's estate on the
alternate valuation date under section 2032.

IRS Publishes Proposed Regs on Partnership Expense Allocations for
Foreign Taxes
The IRS has issued proposed regulations (REG-139792-02) on the
allocation of partnership expenditures for foreign taxes.

IRS Temporary Regulations

IRS Publishes Regs on Partnership Expense Allocations for Foreign Taxes
The IRS has published temporary and proposed regulations (T.D. 9121,
REG-139792-02) on the allocation of partnership expenditures for
foreign taxes.

IRS Revenue Procedures

Guidance on Nonconventional Source Fuel Credit Changed
The IRS has revised guidance allowing certain royalty interest
owners to claim the section 29 nonconventional source fuel credit in
the year income is received rather than in an earlier tax year in
which the owner of the operating interest sold the qualified fuel.

IRS Revenue Rulings

February BLS Price Indexes Accepted
The Service has accepted the Bureau of Labor Statistics price
indexes for February 2004.

Court Opinions

Sanctions Imposed for Frivolous Arguments
The Tax Court has held that a couple was liable for the deficiencies
as determined by the IRS for tax years 1994, 1996, and 1997 and that
they were liable for penalties; the court imposed $5,000 in
sanctions under section 6673 for frivolous arguments.

Recourse Liability Not Allocable to LLC; Related-Partner Exception
Applies
The Tax Court has held that all of the recourse liability for an
aircraft was allocable to Gerald Forsythe and none was allocable to
Indeck Overseas, because Indeck can't be related to Forsythe or
Indeck Energy Services Inc. when determining the allocation of the
recourse liability under section 1.752-4(b)(2)(iii).

Boca Investerings Case Reopened; Parties Ordered to File Briefs
A U.S. district court, having considered Boca Investerings
Partnership's motion for reconsideration of a 2003 order granting
the government summary judgment, has granted Boca's motion, ordered
the case reopened, and ordered the parties to submit an agreed
proposed amended judgment or to file briefs on their positions.

IRS Didn't Abuse Its Discretion in Proceeding With Levy
The Tax Court has held that the IRS didn't abuse its discretion in
determining to proceed with the collection of a couple's unpaid tax
liabilities by levy.

Tax Evader's Conviction Affirmed; Sentence Remanded
The First Circuit, affirming John Mikutowicz's convictions for
conspiring to commit tax fraud, filing materially false tax returns
for 1995-1998, and evading taxes, vacated the judgment and remanded
the case for resentencing; the court concluded that Mikutowicz
wasn't entitled to a four-level downward departure for aberrant
behavior.

Court Orders Tax Scam Promoter Jailed for Contempt
A U.S. district court, noting that it previously had entered a
permanent injunction against Daniel Fisher, Brenda Meyers-Fisher,
and their entities, has held that Fisher is in contempt of court for
not complying with the injunction and has ordered him jailed until
he is purged of the contempt by complying with the permanent injunction.

IRS Technical Advice Memorandums

Sweepstakes Winnings Are Not Gains From Wagering Transaction
In technical advice, the Service has determined that an individual's
winnings are not gains from a wagering transaction under section
165(d) because the individual didn't provide consideration for the
chance to win the prize.

Coal Sold to Domestic Broker Was in Stream of Export
In technical advice, the Service has concluded that coal was in the
stream of export when sold by a producer to a domestic broker.

IRS Legal Memorandums

Service Addresses Reimbursement of Third-Party Summons Compliance Costs
In a partially redacted legal memorandum, the Service has addressed
whether a third-party witness may recover compliance costs for a
third-party summons beyond that allowed under section 7610 when the
third party uses an independent storage facility to search,
reproduce, and transport the summoned records.

IRS Letter Rulings

Proposed Employee Reimbursement Program Will Be Accountable Plan
The Service has ruled that a manufacturer's proposed employee travel
and entertainment expense reimbursement reporting system satisfies
the accountable plan requirements of section 62(c) and the
substantiation requirements of section 274(d).

Amended Transaction Has no Effect on Prior Ruling
The Service has ruled that changes to proposed transactions part of
a section 368 reorganization that were the subject of a prior letter
ruling have no effect on the outcome, leaving the prior ruling with
full force and effect.

Corporate Spin-Off Is Tax-Free
The Service has ruled that a corporation can spin-off the assets and
liabilities of one of its business lines to a controlled subsidiary
in exchange for all of the subsidiary's stock tax-free under section
368(a)(1)(D).

Spin-Off to Separate Businesses Is Tax-Free
The Service has ruled that a corporation may separate its two
businesses for liability reasons in a tax-free reorganization under
sections 368(a)(1)(D) and 355(a)(1).

Spin-Off to Separate Businesses Is Tax-Free
The Service has ruled that a corporation may separate its two
businesses for liability reasons in a tax-free reorganization under
sections 368(a)(1)(D) and 355(a)(1).

Spin-Off to Separate Businesses Is Tax-Free
The Service has ruled that a corporation may separate its two
businesses for liability reasons in a tax-free reorganization under
sections 368(a)(1)(D) and 355(a)(1).

Spin-Off to Separate Businesses Is Tax-Free
The Service has ruled that a corporation may separate its two
businesses for liability reasons in a tax-free reorganization under
sections 368(a)(1)(D) and 355(a)(1).

Spin-Off to Separate Businesses Is Tax-Free
The Service has ruled that a corporation may separate its two
businesses for liability reasons in a tax-free reorganization under
sections 368(a)(1)(D) and 355(a)(1).

Spin-Off to Separate Businesses Is Tax-Free
The Service has ruled that a corporation may separate its two
businesses for liability reasons in a tax-free reorganization under
sections 368(a)(1)(D) and 355(a)(1).

Waiver of IRA Distribution Rollover Requirement Denied
The Service has denied a request to waive the section 408(d)(3)
60-day rollover requirement for a distribution from an individual
retirement account.

IRA Distribution Rollover Requirement Waived
The Service has waived the section 408(d)(3) 60-day rollover
requirement for distributions from an individual retirement account.

Extension Granted to Elect to Pay Into Nuclear Decommissioning Fund
The Service has granted an extension to elect application of section
468A to an electric wholesaler's interest in a nuclear generating
power plant and its related nuclear decommissioning reserve fund.

Extension Granted to Elect to Pay Into Nuclear Decommissioning Fund
The Service has granted an extension to elect application of section
468A to an electric wholesaler's interest in a nuclear generating
power plant and its related nuclear decommissioning reserve fund.

Extension Granted to Elect to Pay Into Nuclear Decommissioning Fund
The Service has granted an extension to elect application of section
468A to an electric wholesaler's interest in a nuclear generating
power plant and its related nuclear decommissioning reserve fund.

Extension Granted to Elect to Pay Into Nuclear Decommissioning Fund
The Service has granted an extension to elect application of section
468A to an electric wholesaler's interest in a nuclear generating
power plant and its related nuclear decommissioning reserve fund.

Restated Agreement Won't Affect Exempt Status of Healthcare System
Parent
The Service has ruled that a restated system affiliation agreement
between the tax-exempt parent of an integrated healthcare delivery
system and various tax-exempt organizations will not adversely
affect the exempt status or public charity classification of the
parent and the tax-exempt affiliates.

Corporation's S Status Recognized
The Service has ruled that an S corporation's status will be
effective as of a certain date.

Extension Granted to Make Association, S Corp Elections
The Service has granted a limited liability company an extension to
elect to be treated as an association taxable as a corporation as
well as an S corporation.

Corporation's S Status Recognized
The Service has ruled that an S corporation's status will be
effective as of its incorporation.

Corporation's S Status Recognized
The Service has ruled that an S corporation's status will be
effective as of its incorporation.

Corporation's S Status Recognized
The Service has ruled that an S corporation's status will be
effective as of its incorporation.

Corporation's S Status Recognized
The Service has ruled that an S corporation's status will be
effective as of its incorporation.

Extension Granted to Relinquish CNOL Carryback Period
The Service has granted the common parent of a consolidated group an
extension to elect to relinquish the carryback period in connection
with a consolidated net operating loss.

Settlement Distribution Qualifies for Marital Deduction
The Service has ruled that an estate is entitled to a marital
deduction under section 2056 for property passing to a surviving
spouse under a settlement agreement.

Trust Division Won't Affect GSTT Exempt Status
The Service has ruled that the partition of a trust into three
trusts will not cause the resulting trusts to lose their generation-
skipping transfer tax-exempt status, and allocation of assets won't
cause the trusts or beneficiaries to recognize gain or loss.

Trust Division Won't Affect GSTT Exempt Status
The Service has ruled that the partition of a trust into three
trusts will not cause the resulting trusts to lose their generation-
skipping transfer tax-exempt status, and allocation of assets won't
cause the trusts or beneficiaries to recognize gain or loss.

Trust Division Won't Affect GSTT Exempt Status
The Service has ruled that the partition of a trust into three
trusts will not cause the resulting trusts to lose their generation-
skipping transfer tax-exempt status, and allocation of assets won't
cause the trusts or beneficiaries to recognize gain or loss.

Trust Modifications Won't Affect Trusts Zero Inclusion Ratio for GSTT
The Service has ruled that the modifications to two trusts, won't
adversely affect a trust's zero inclusion ratio, that the proposed
modification won't be a gift, the conversion of the use assets isn't
a sale under section 1001, and that the section 1361 election to be
an electing small business trust will be qualified.

Funds May Revoke Elections
The Service has granted several funds permission to revoke their
respective section 4982(e)(4)(A) elections and compute their capital
gain net incomes for the 10-month period ending on October 31.

LLC Granted Extension to Elect Association Status
The Service has granted an entity an extension to elect to be an
association taxable as a corporation for federal tax purposes.

Extension Granted to Elect Disregarded Entity Tax Treatment
The Service has granted a foreign entity an extension to elect to be
treated as a disregarded entity for federal tax purposes.

Extension Granted to Elect Disregarded Entity Tax Treatment
The Service has granted a foreign entity an extension to elect to be
treated as a disregarded entity for federal tax purposes.

Treasury News Releases

Treasury Releases Third Quarterly Update of 2003-2004 Guidance Plan
The Treasury Department on April 23 released the third quarterly
update of the 2003-2004 priority guidance plan, including 36 items
of additional guidance.

Other IRS Documents

Ozone-Depleting Chemical Regs Submitted for Comment
The IRS has requested public comment, as required by the Paperwork
Reduction Act of 1995, on information collections under final
regulations (T.D. 8370) under sections 4681 and 4682 relating to the
tax on ozone-depleting chemicals and on products containing those
chemicals.

Court News Releases

Report on Tax Court Cases on Appeal for the Period March 22 Through
March 31, 2004
The United States Tax Court has released its "Report on Tax Court
Cases on Appeal in Courts of Appeals" for the period March 22
through March 31, 2004.

Proposed Legislation

Gerlach Bill Would Permanently Extend Increased Standard Deduction
Rep. Jim Gerlach, R-Pa., on April 21 introduced H.R. 4181, which
would permanently extend the 15 percent individual income tax rate
bracket expansion and the increased standard deduction for married
taxpayers filing joint returns.

Congressional News Releases

Thomas Credits Tax Cuts for Positive Census Bureau Report
House Ways and Means Committee Chair William M. Thomas, R- Calif.,
in an April 23 reaction to a Census Bureau report that said new
orders for durable goods and shipments have risen since February,
gave credit to tax cuts on capital, saying "strategic tax relief has
positively influenced capital investment and economic growth."

IRS Publications

IRS Releases Interium Guidance While Publication 686 Revised
The Service has released interium guidance while Publication 686
(Rev. December 2001), "Certification for Reduced Tax Rates in Tax
Treaty Countries," is being revised to reflect the new U.S.
Residency Certification requirements and procedures.

Washington Roundup

CBPP Reviews Bush Administration's Tax Cuts
The Center on Budget and Policy Priorities in a report released
April 23 examined the costs, short- and long-term economic effects,
and benefits to different income groups of the 2001, 2002, and 2003
tax cuts.

Heritage Objects to Applying Pay-Go Rules to Tax Cuts
The Heritage Foundation in an April 22 release said that if "pay as
you go" rules were applied to tax cuts, the result would most likely
be large tax increases as the 2001 and 2003 tax cuts expire; the
foundation said Senate and House budget conferees should reject
pay-go on taxes.

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