Extension of privilege to accountants clouded, inter alia, by exclusion of advice relating to corporate tax shelters

Article Abstract:

The extension of the lawyer-client confidentiality privilege to certain communications between tax advisers and taxpayers in IRC section 7525, enacted by the IRS Restructuring and Reform Act of 1998, was limited by the Conference Committee's excluding communications which concern corporate tax shelters. The tax shelter and other limitations can cause traps if the law is not carefully reviewed and applied. The law likely will result in confusion regarding when it is safe to employ nonlawyer tax advisers and what can safely be discussed.

United States, Tax Law, Financial Personnel, Tax consultants, Accountants, Confidential communications, Tax shelters, Financial occupations, Privileges and immunities

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Section 1033 ruled applicable on destruction of principal residence and subsequent sale of land; mortgage interest remains deductible during a reasonable period until reconstruction complete

Article Abstract:

IRS Revenue Ruling 96-32 is pro-taxpayer decision holding that IRC Section 1033 rule governing gain nonrecognition is applicable to a property sale following destruction of a principal residence by a natural disaster. Nonrecognition of gain following disaster-related involuntary conversion requires the property to be replaced in four years. The ruling also holds mortgage interest remains deductible if the home is rebuilt within a reasonable time period.

Tax Deductions & Exemptions, Housing, Interest deductions, Dwellings, Tax deductions, Maintenance and repair

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Spouse vacating marital home pursuant to divorce cannot defer recognition of gain on sale under Section 1034

Article Abstract:

A 1996 Ninth Circuit decision holds that a Section 1034 deferral of gain is unavailable to a divorced spouse who has vacated and subsequently sold the marital residence. A spouse who moves out of the house pursuant to a divorce agreement cannot later designate that house as a principal residence for tax purposes, according to the Circuit court's decision in Perry v. Commissioner.

Interpretation and construction, Taxation, Divorce settlements, Divorced people

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