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Archive for David Randall Jenkins, Ph.D.

Tax Paper Publication Announcement: Why Section 530 of The Revenue Act of 1978 Applies To The States

My paper, “Why Section 530 of the Revenue Act of 1978 Applies to the States,” is now published in the San Jose State University’s online MST peer-reviewed The Contemporary Tax Journal:

The paper is found online here:

The paper is also now posted in my TaxConnections Tax Library. Read more

Bonus Depreciation Allowance Legislation And The CRS Report: Labor Resource Allocation And Tax Policy Issues


Controversies surrounding depreciation allowance legislation pending in the 113th Congress involve labor resource allocation control decentralization tax policy issues. The Obama administration’s current section 530 attacks, vindicated through state unemployment agencies, manifest its policy focus on the labor resource reallocation control centralization controversy. Those states that have entered into a “Memorandum of Understanding” involving worker misclassification with the IRS and Department of Labor have inherently sided with the Obama administration in favoring labor resource allocation control centralization. Such control centralization, which now turns its focus to depreciation allowances, coalesces important factors underpinning success of the Affordable Care Act. Read more

Self-Directed ERISA Plan Prohibited Transaction Chinese Walls

Two 2013 United States Tax Court decisions, Peek[1]and Ellis,[2] evince a clear mandate for taxpayers seeking protection from the plan asset look-through rule’s operating company exception: STOP THE CONSTRUCTIVE OWNERSHIP DISQUALIFIED PERSON ENTITY CHAIN!!!!! In Peek, the self-directed Peek IRA and the self-directed Fleck IRA each owned 50% capital equity interest of the fire extinguisher sales operating company. In Ellis, the taxpayer’s self-directed IRA owned 98% of the used car sales operating company.

In both cases, the Tax Court’s holdings distill the proposition operating company section 4975(e)(2)(G) disqualified person status preempts the operating company exception to the plan asset look-through rule.[3] My paper, “Changes in Form 5498 Reporting And Read more

Why Section 530 of the Revenue Act of 1978 Applies to the States

Section 530 of the Revenue Act of 1978 may already apply to the states, the Affordable Care Act, and title 29 issues. Don’t be surprised if state unemployment agencies and DOL are rabid in pursuing independent contractor misclassification issues in your business or your clients’ businesses. But don’t give up the section 530 issue when those agencies claim it is limited to subtitle C employment taxes.

The Department of Labor and the Internal Revenue Service entered into a Memorandum of Understanding (MOU) on September 19, 2011. The next day, six states joined the MOU melee. Now, a few years later, the tale of the tape is in.

The Obama administration undertook a strategy to attack Section 530 of Revenue Act of Read more

Changes In Form 5498 Reporting And Foreseeable IRS Correction of Self-Directed ERISA Plan Fiduciary Abuses

Recent events lead to a conclusion the IRS is on the cusp of launching a nationwide assault on self-directed ERISA plan fiduciary abuses.  Changes in Form 5498 reporting requirements incrementally require non-traditional asset and valuation disclosures.  The IRS commenced a 1-year Form 5500 amnesty program this past June, targeting small business ERISA plan reporting noncompliance. And, in 2013, the United States Tax Court issued decisions in Peek and Ellis substantively holding disqualified person weak-form fiduciary abuses preempt the otherwise taxpayer favorable operating exception to the plan asset look-through rule.

Catching abusive self-directed account holder fiduciaries should net the government a minimum of $10 to $20 billion in unreported UBTI tax, penalties, and interest from the Read more

Avoiding Securities Law Liability Exposure When Authoring A Business Plan

When authoring a new venture’s business plan, transaction startup, management control system, or capitalization structure, the business consultant needs to be cognizant of federal and state securities laws considerations. It is important not to discount the study of whether federal or state securities laws apply to each and every venture participant. Securities laws may protect one investor in the same venture where others are not so protected.

The freelance websites are awash in people seeking business plans for one venture or another.[1] Most are compiling a business plan on a shoestring budget for the purpose of raising funds for the venture of their dreams. Unfortunately, awareness of whether envisioned transactions involve the issuance of securities for federal or state purposes Read more

It’s IRS Amnesty Time Again: The Non-Title I ERISA Plan Form 5500 Pilot Penalty Relief Program Is In Full Swing

On May 22, 2014, the Internal Revenue Service announced it will begin a one-year pilot program to help small businesses which have not filed reporting documents for Non-Title I ERISA plans.[1] The program is nearly two months old now, having commenced this past June.   According to the news bulletin, the Service is reaching out to certain small businesses that maintain retirement plans and that may have been unaware of the Form 5500 filing requirement.

According to Tucson-based retired CPA, Dennis N. Melin of Grumpy Old Men Management Services LLC, “The instant amnesty program resonates the 2009 Offshore Voluntary Disclosure Program and 2011 Offshore Voluntary Disclosure Initiative. The OVDP and OVDI amnesties abated foreseeable penalties as the Service sought to bring those with Read more

How To Write A Tax Advisory Opinion Letter

Circular 230 tenets certainly should be admonished when you undertake writing a tax advisory opinion letter. But the IRS guidelines does not explicitly detail the elements of such an undertaking. Allow me to share my approach.

First, I do not write tax advisory opinion letters to promote ventures or where I may be found to have a conflict of interest. The courts take a dim view of the independence of such opinions as well.[1] That being said, allow me to share my format. Chime in with your two cents so this issue may be publicly vetted.

I am a tax planner. I do not prepare the tax returns of taxpayers who benefit from my tax advisory opinion letters.[2] The purpose of the tax advisory opinion letter is to provide Read more

Weighing In On Section 179 And The SUV Deduction

Year in and year out, many tax clients rely on purchasing a new vehicle used in their trade or business as a last minute tax planning strategy. Tax professionals surely encourage tax planning one or more years in advance. But we all know our clients, more often than not, realize the pain they are about to face each year somewhere in the third quarter or certainly by Thanksgiving.

Fortunately and especially for those who have professional or operating business clients, section 179 100% depreciation offers some last-minute saving grace. For example, a new 2015 Cadillac Escalade could easily carry an $80,000 purchase price. Assuming 100% business use, the 2014 tax deduction for a third quarter purchase would amount to—

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