Corporations vs. LLCs – A look at the basics from Nolo Press.  Not intended to substitute for the expertise of a professional tax advisor.

I just received an email from the CPE provider ClientWhys announcing that they are offering a free download of their course materials on tax law changes affecting 2006 and later years.  I downloaded it and checked it out. It’s a 39 page pdf file, including their test questions; but it is a handy concise reference of newly effective changes.  

Here is a link to the historical table of the bottom and top federal income tax rates from 1913 through 2000, as discussed on today’s Rush Limbaugh show.  Interesting to see that the original top rate (7%) is lower than today’s bottom rate (10%).

Q:

Subject: Pregnancy and Section 121

Dear Kerry,
 I was just wondering if you had posted any opinion about the decision of the IRS to treat Pregnancy as “Unforeseen Circumstance,” Permitting Exclusion of Gain on Sale of Home Owned Less than Two Years Under § 121. I would be interested in reading your opinion on-line or on your blog. Please let me know where / when you post.

Thanks,

A:

I didn’t comment on that particular ruling because it was covered in several other tax blogs, as well as the fact that it was not in the least unexpected.  I don’t have time to search for the postings, but I can recall having posted at least a few Q & As where I had advised that a pregnancy would qualify a homeowner to use the pro-rated tax free exclusion. 

You have a good point that in these rare occasions when IRS actually demonstrates uncharacteristic common sense, it is something to be pointed out. 

This ruling does also add a new strategy to the tax saving repertoire that desperate people may decide to use; intentional pregnancies to justify selling a home before the two year time period.  That would be interesting to see an IRS auditor accuse a taxpayer of “tax motivated baby making.”

Thanks for writing.

Kerry Kerstetter

 

Be careful. A parent’s definition of a dependent may be different than the IRS’s.

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How to Make the Most Of 2007’s Tax Breaks – From the free WSJ.