Will That Be One Debt or Two? S Corporations, Shareholder Debt and Basis Detailed in Recent Tax Court Case - a podcast by edzollarstaxupdate@gmail.com

This week we look at a
recent decision (Brooks v. Commissioner, TC Memo 2005-204)
involving the impact of repaying S corporation debt during the year
when, at the beginning of the year, the shareholder’s basis was
less than the face amount of the note. In the case in question, the
shareholders repaid such a debt in its entirety at the beginning of
the year, the corporation sustained a loss during the year, and then
the taxpayer loan back enough money to both return the entire
repayment and then advance enough additional to give basis to take
the loss. The court analyzed this case and how it differed from the
case of Corneilus v. Commissioner, 58 TC 417, affd
CA-5, 74-1 USTC ¶9446, 494 F2d
465, 33 AFTR 2d ¶74-1331).

As
we normally do, the podcast materials can be downloaded here on the
ezollars.libsyn.com website—to get them click this
link (if you are reading notes attached to the podcast in iTunes
you’ll need to actually go to the site first to do that
clicking).

The
Phoenix Tax Workshop will start
its new year’s programs this month. I won’t be able to
attend the first meeting (I’m going to be speaking at the
Virginia Accounting & Auditing Conference in Roanoke, Virginia sponsored by the Virginia Society of CPAs and Virginia Tech University at
that time), but I would suggest those in Phoenix consider signing up
for the program.

Of course, if you're close to Roanoke go ahead and sign up for that conference. My topic is on technology in the local accounting practice, but there are lots of other issues covered in those two days. The conference will be repeated in November in Virginia Beach, and I'll be there as well, so that's another option for anyone in Virginia or nearby.

As
well, continuing from the midweek podcast earlier this week, remember
to consider the needs of the agencies serving those affected by
Hurricane Katrina. The Red Cross,
along with Yahoo, have
established a website that makes it very easy to donate
a standard amount to hurricane relief using your credit card.
Please take the time to make a donation to help the relief effort,
either via that site or through another relief agency.

Remember
that, unfortunately, these types of tragedies spawn their own
scams—so be sure to check out any charity you aren’t
familiar with before parting with your check. The crooks are going
to be calling, sending out emails and and setting up their own
websites. On the latter issue—the safest way to be sure you
are at the website for the real charity is to be sure and type the
address into your browser’s address bar or click only on links
where you trust that those responsible for the website are both
trying to send you to the proper site and have done their homework to
assure that they have linked to the real charity. I expect
“phishing” emails to start to hit mailboxes soon taking
advantage of this situation.

On
an administrative aside: the text below allows me to “claim”
this podcast on Odeo (an online podcast listening service).

My Odeo
Channel (odeo/4410b05381cc2d63)

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