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When is an innocent spouse really innocent?

Article Abstract:

Case law that has arisen under the innocent spouse doctrine and IRC section 6013(e) has enumerated seven factors in determining whether a spouse is liable for tax penalties relating to the other spouse's excess deductions or credits or underreporting of income. The factors include education and financial sophistication, participation in the other spouse's business, increased family expenditures and whether the spouse knew or should have known of the underreporting. The innocent spouse's knowledge or reason to have known is the most debated issue. Deceit or duress on the part of the wrongdoing spouse is also grounds for equitable relief.

Analysis, Tax penalties, Innocent spouse (Taxation), Joint tax returns

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Partnership distributions - the Treasury issues final regulations

Article Abstract:

The IRS has issued final regulations under IRC sections 737 and 704(c) that clarify when and how gain must be recognized by partnerships when distributions are made within five years of the contribution of appreciated property to the partnership. The section 737 regulations apply when the distribution is to a partner that contributed other appreciated property to the partnership. Distribution to a non-contributing partner is addressed under the section 704(c) regulations.

Partnerships, United States, Recognition of gain or loss (Taxation), Recognized gain or loss (Taxation), Partnership distributions

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Non-cash payments to farm workers to avoid FICA taxes - is the IRS cracking down?

Article Abstract:

The exemption from social security tax for non-cash payments to farm workers was not allowed in a 1991 IRS letter ruling (LTR 9136001), which may indicate an intention to tighten application of Section 3121(a)(8)(A). In this case, the taxpayer's wife received monthly compensation in the form of hogs which were almost immediately sold at market. The IRS ruled that, due to the nearly simultaneous delivery and sale, the transaction was equivalent to compensation in cash.

Compensation and benefits, Practice, Agricultural laborers, United States. Internal Revenue Service, Social security taxes, Payment-in-kind program

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