Albin | Harrison | Roach | Adds New Tax Law Practice
By Anish Patel
Anish Patel has joined Albin | Harrison | Roach establishing a practice in Tax Law. He focuses his expertise in the areas of Taxation, Estate Planning, Probate, and Business Transaction. Mr. Patel can provide you with the professional planning and advice to help you minimize the amount of taxes that you pay. And if you find yourself in the middle of a tax controversy with the I.R.S. or other taxing authority, Albin | Harrison | Roach has the team and the resources you need to successfully fend off the challenge.
IRS disallowing charitable deductions due to language commonly omitted on charitable receipts.
By Anish Patel
Charitable receipts your clients are receiving may be inadequate to properly claim a charitable deduction on their tax returns. The income tax regulations specify that a charitable contribution of $250 or more must be substantiated by a receipt from a charity that contains the following information:
- The amount of cash contributed,
- Whether the qualified organization provided any goods or services as a result of the contribution, and
- A description and good faith estimate of the value of any goods or services described (per the last bullet) other than intangible religious benefits.
Many churches and charities are inadvertently omitting from their receipts language stating that "no goods or services were provided in exchange for the contribution" causing charitable deduction to be denied. In addition the IRS is intolerant to the correction of the error with an amended receipt since the regulations require the taxpayer to receive the charitable receipts or an amended receipt on or before the earlier of the date the taxpayer files his or her return for the year the contribution was made, or the due date, including extensions, for filing the return.
Losses From Investment Scams like Madoff treated as Theft Loss not subject to limitations.
By Anish Patel
The IRS has published two new rulings on losses from criminally fraudulent investment arrangements. Such rulings were provided in response to requests by victims of the Madoff Ponzi scheme about the treatment of their losses. The approximate amount of loss allowed as a theft loss shall include not only the original investment but also any "fictitious" income reported by the taxpayer on previous tax returns. The specific formula to determine the loss is the amount invested less the amount returned plus all fictitious income multiplied by 95%. The IRS has discounted the amount by 5% for potential recoveries not determined.
The rulings also provide taxpayers the incentive to take the loss as a deduction on their 2008 tax return as opposed amending previous years' tax returns and filing for refunds. By treating the loss as a theft loss deduction a taxpayer is not required to establish that the fictitious income previously reported was not income "actually or constructively" received, a fact which taxpayer would have to establish if he filed amended returns. In addition, the rulings allows for a present theft loss deduction for income reported in previous years that are barred by the statute of limitation from being amended. Although such rulings were issued in response to requests from victims of the Madoff Ponzi scheme, the facts of such ruling should allow of application of such treatment to victims of other criminally fraudulent investment arrangements like Stanford.
