CUMULATIVE INDEX Lottery winners typically have one $30,000 a year would pay about $5,000 giveaway will have more “bounce” in year to turn in their tickets and claim to $6,000 in federal taxes, and several future Shop Talk columns. We invite their prizes, and undoubtedly their hundred dollars in state taxes (the Illi- our readers’ comments. 1099 forms are dated as of the time of nois income tax rate is a flat 3%). payment, on the assumption that each Many winners (whether they file as individual is on the cash method of ac- single or a joint return) may be in the counting. Nevertheless, the individual top (35%) federal income tax bracket, MORE ON CAPTIVE INSURANCE has dominion and control over the however, and along with their 3% state COMPAANND ITHEE SAJC A ticket and clearly could claim her prize tax bracket, would be facing a 38% In our last issue, we stated that the (and receive cash) earlier rather than combined top tax rate (disregarding “American Jobs Creation Act of 2004 later. Query whether the constructive the deductibility of the state taxes ({P.L. 108-357,] 10/22/04) increases, receipt doctrine should be applicable, available to certain winners who item- effective for tax years beginning after as there appear to be no meaningful ize their deductions). As Shop Talk has 2003, the limit to $1.89 million, in- substantive requirements (merely previously pointed out, the actual mar- dexed for inflation, of annual net writ- ministerial aspects and travel to the ginal tax rate for some taxpayers, de- ten premiums that a non-life company lottery prize office) for claiming and pending on their brackets, phase-outs can have, on a controlled group basis, receiving one’s lottery winnings. The of exemptions, deductions, and tax and still elect under Section 831(b) to same analysis should apply to Oprah’s credits, as well as other factors, can be be taxed only on its investment in- autos, once the audience members are substantially higher than 35%. See, come.” See Shop Talk, “Update on Cap- informed of the procedure to obtain e.g., Shop Talk, “TRA ’97 is Confiscato- tive Insurance Companies,’ 101 JTAX their cars from the specific dealers ry: Here’s Proof!,”8 8 JTAX 59 (January 318 (November 2004). participating in the giveaway. Admin- 1998), and “So You Think Your Taxes L. Andrew Immerman, a member istrative convenience, however, may are Too High?,” 95 JTAX 256 (October of the law firm of Alston & Bird LLP, support the deferral of reporting Form 2001). in its Atlanta office, wrote to us that he 1099s until lottery winnings (and The Guerrero article quotes one was unable to verify the statement Oprah's cars) are actually delivered. winner as saying, “it’s not really a free quoted above, and suspected, based Rates. Additional tax issues relating to car, its more of a 75%-off car. Of on the Managers’ Statement that ac- the prize giveaway relate to the mar- course, that’s still not such a bad deal.” companied the legislation, that the ginal income tax rate applicable to the For certain taxpayers in high marginal proposed increase was eliminated in individuals who win the cars. The tax brackets, it may be more like a conference. This is exactly what hap- Roeper article notes that some winners 60%-off car. Perhaps the audience’s pened—the authors of the update sim- will suddenly go from the 15% tax delirium should only have been 60% of ply jumped the gun. The limit remains bracket to the 25% tax bracket. Ac- what it appeared to be on our TV at $1.2 million. knowledging that every tax situation is screen. THE JOURNAL thanks Mr. Immer- different, Roeper assumes that a mar- As was true of the Bartman base- man for spotting this error and regrets ried mother of two who makes about ball, we have a feeling that Oprah’s any inconvenience to our readers. CUMULATIVE INDEX This index covers material in THE JOURNAL OF TAXATION, Volume 101, July-December 2004. Indexes are published twice annually, in June and December. ACCOUNTING COMPENSATION & BENEFITS Consolidated attribute reduction and COD income- Advance payments: Rev. Proc. 2004-34 expands Rev. Proc Compensation was unreasonable: The independent investor fewer tricks and definitely no treat, by Art Requenez. 71-21 and provides needed clarity, by Dennis J. Gaffney test was rebutted by the comparability test, 101 JTAX 201 101 JTAX 204, Oct04 Richard O. Davis, Richard P. Weber, and Maureen H. Smith Oct04 Corporate tax developments, 101 JTAX 13 Gaffney, 101 JTAX 84, Aug04 Final Regs. on ISOs make changes from the 2003 proposals lhe device test and the business purpose r Comparing the “matching” rules of Sections 267 and 404 101 JTAX 138, Sep04 in a spinoff—an uneasy relationship, by Robert \ and their impact on accrual-method payors, by Larry IRS proposes to adopt a staggered remedial amendment pe lens, 101 JTAX 79, Aug04 Maples and Mark A. Turner, 101 JTAX 16, July04 riod for qualified retirement plans, 101 JTAX 198, Oct04 Sub-to-sub sale followed by liquidation can qualify as D IRS tweaks the rules for making or revoking the Section 179 New rules for qualified plan deemed IRAs, 101 JTAX 70, reorg., 101 JTAX 67, Aug04 expense election, 101 JTAX 134, Sep04 Aug04 Three new sets of Prop. Regs. should make planning for Ne4w8 1 aaccdojuunsttimnegn tsg,u idaanncde crefoart icveh anpgreo-pienr-tuisese, de1p01r ecJiTaAtiXo n,3 , Qutailoinsf,i eda ndp lparn esguumipdatnicoen:s , T1a0x1- dJefTeArXr ed3 26,a nnDueict0i4e s, assump reorganizations much easier, by Jasper L. Cummings, ]1 July04 Qualified plan developments IRS giveth, IRS taketh away 101 JTAX 271, Nov04 New Proposed Regulations for contingent swaps add layers 101 JTAX 4, July04 ESTATES. TRUSTS, & GIFTS of complexity,b y Stevie D. Conlon, 101 JTAX 5, July04 Recent guidance on health savings accounts fails to ensure Fifth Circuit's remand in Kimbell does not provide carte Personal property like-kind exchanges: Impact of the new broader utilization, by Dennis R. Lassila, 101 JTAX 158, blanche for all FLPs,b y LouisA . Mezzullo, 101 JTAX 41 NAICS product classes, by Kelly E. Alton, 101 JTAX 288, Sep04 Nov04 July04 Some taxpayers will have extra time to change accounting CORPORATIONS, SHAREHOLDERS Heirs or next of kin presumed to have material interest method to capitalize intangibles, 101 JTAX 199, Oct04 Boise Cascade’s excellent (divestiture) adventure—a in intestate decedent’s last income tax return, I{0 1 Transfers related to contested liabilities, 101 JTAX 67, Aug04 case study, by Robert Willens, 101 JTAX 151, Sep04 JTAX 136, Sep04 JOURNAL OF TAXATION #@ DECEMBER 2004 @ 383 CUMULATIVE INDEX The impact of the decoupling of state estate taxes on a IRS prohibits corporation from retroactively changing to Identity theft for K-1 partners—are there potential solu- taxpayer's choice of domicile, by Dean L. Surkin, 101 cash method despite Notice 2001-76, 101 JTAX 119, Aug04 tions?, 101 JTAX 62, July04 JTAX 49, July04 IRS rejects taxpayer’s third-tier allocation of partnership's If IRS agents glare, the trial isn’t fair, 101 JTAX 254, Oct04 IRS finally wins a FLP case on appeal where the taxpayer excess nonrecourse liabilities, 101 JTAX 315, Nov04 IRS causes emotional stress, must pay taxpayer, 101 JTAX 1 business purpose, by Louis A. Mezzullo, LLC could not be used to avoid three-year rule of Section 191, Sep04 TAX 217, Oct04 2035 for transfero f life insurance, 101 JTAX 250, Oct04 Microsoft's huge dividend may be extraordinary, 101 JTAX IRS simplifies procedures for some late GST allocations and Notes to parent were reclassified as preferred when sub 186, Sep04 rSechvneerisdee r, QTI10P1 eJlTeAcXt io2n9s4,, Nbyo v04Ll oyd Leva Plaine and Pam H cNhoevc0k4e d the box as a disregarded entity, 101 JTAX 314, More identity theft issues—watch out for bogus tax fraud Restricted art donation qualified for estate tax charitable investigations and other schemes, 101 JTAX 63, July04 donation, 101 JTAX 57, July04 More on captive insurance companies and the AJCA, 101 IRS announces increased scrutiny of exempt orgs. 1n two Section 83 does not apply to swap of warrants for options in JTAX 383, Dec04 areas, 101 JTAX 137, Sep04 merger, 101 JTAX 120, Aug04 New Ruling on consequences when grantor is taxed on Using exempt organizations as tax shelter accommodation Settlement payments to preserve revenue flow of acquired trust’s income, 101 JTAX 253, Oct04 parties Is NOt exe! ipt tror oblems, by Frances R. Hill and sub were ordinary income, 101 JTAX 180, Sep04 Oprah’s car giveaway: A taxing experience, 101 JTAX 382, Douglas M. Mancino, 101J AX 110, Aug04 Split-dollar plan did not create second class of S corp. stock, Dec04 INTERNATIONAL 101 JTAX 380, Dec04 Solvent partners of bankrupt partnerships may be thankful IRS issues new final Regulations regarding foreign tax cred Subordinated loan agreements were treated as equity, 101 for Gracia, 101 JTAX 126, Aug04 it limitations,b y David L Andrew J. Kim, 101 JTAX JTAX 122, Aug04 Stating the obvious: A partnership requires at least two Oct04 Sub’s assets treated as those of parent-bank for interest dis partners, 101 JTAX 185, Sep04 New rules for contingent payment debt instruments using allowance purposes, 101 JTAX 179, Sep04 Taxing Sheryl as the crow flies?, 101 JTAX 128, Aug04 Nenwo nfruunlecst ioonn alt he cutrarx entcrye,a tm1e01n t JoTf AXs ta1p99l,e d Ocfto0r4e ign corpora Tagxepraiynegr 'ts rasnwseaectpisotna,k es1 01 wiJnTnAiXn gs1 21w,e reA ugn0o4t gains from a wa Update on captive insurance companies, 101 JTAX 318, Nov04 NReetpumvwbil,ei o ansnnse1T,tnd0 ei— 1mn 1Ipgp0.RJ 1r ToSoAcR JpeXeTpg dcoAsuo.rX9rd t5 ei,uf 2noi0niAe 2ft,ousari g le0lOse4oc,xc t pa0etub4riye iosentR niicncoeghf, a rfadonbr eyi ag\nHd evnarntyca ex ].c prBreidiricntiik snr Tgao pdndrat eg srGeeaoennl td PAAJACJtmRAhCe TeAn N tESs cRi ehSmlauHpenncIodtgPsieeeSorss,n , StSnoeb eyc C wtSO iJuoRobbhnPcunsOh r RadBAp.7e t3Tn4TeIs rrO u aNsnfSkSodo,r w bs7rpk&4ioa3 ,ra,L td LneCb1enys0 r1 sJethfhifJerpT e AyaX v baaI3i.s 2liR7aso,b s ielaDnidebtjcyeu0 rs4tgo , f VUWIphNsTdycoAahv t e0em4iP es rsoo?nIg, Rr SaT 1am0xg 1 o CsiocJnuoTgrrA etXs a fdat1e e8“cr9zi ,es ritSoohe,nep s 0 14t0a a1n xdp JaTyiAnetXre -rev3s2it0,c, t i1Nm0o1sv 04oJ fT AXP o3n1z8i, Robert T. Cole, 101 JTAX 301, Nov04 Al1l01o caJtTiAnXg r3e3c4,o urDseec0 4p artnership debt when a partner or Will IRS reconsider elections out of Subchapter K by part Subpart F Prop. Regs. target new abuses involving struc member is a disregarded entity, by Roger F. Pillow, 101 nerships and LLCs?, 101 JTAX 188, Sep04 tured investments in CFCs, by Abraham Leitner, 101 JTAX 307, Nov04 JTAX 263, Nov04 SPECIAL INDUSTRIES Tapaxr t CFou rit ncupohmoeld,bs y “Jecfhfreecyk L. anRudb inseglelr” , st1r0a1 tegJyT AXt o 2a0v, oiJdu lyS0u4 b Cotnrtirbouvteirosnisa lf roRmu limnegr greedq uipraerst ngearisnh ipto, bbey rKeacroegn niGzaerdre oLno hdniess EnSeercgtyi onsi nv2e9s tamnedn t4 5 peanretrngeyr shtaixp sc readnidts ,t hbey aNlolaohc atS.i oBna ero,f t10h1e and John G. Schmalz, 101 JTAX 71, Aug04 S corporation developments, 101 JTAX 67, Aug04 JTAX 364, Dec0'4 Congress enacts the American Jobs Creation Act of 2004 Tiered partnerships under Subchapter K: Selected issues 101 JTAX 259, Nov04 and the aggregate vs. entity theory, by Peter C. Mahoney and Sixth Circuit bans Ohio tax credit under the Commerce Congress enacts the Working Families Tax Relief Act of Elizabeth S. Williams, 101 JTAX 172, Sep04 Clause, casting a pall on incentives, by Timothy H. Gillis, 2004, 101 JTAX 195, Oct04 PERSONAL 101 JTAX 359, Dec04 LETTER RULINGS Alimony deduction denied where court found agreement AUTHOR INDEX Acquired patents and trademarks were not subject to 15 created a post-death obligation, 101 JTAX 200, Oct04 year amortization, 101 JTAX 61, July04 Charitable contributions of preservation easements—a Kelly E. Alton Aggregate approach applied to greater-than-10% corporate primer,b y Martha W. Jordan, 101 JTAX 236, Oct04 Noah S. Baer partner in apportioning interest expense, 101 JTAX 380 Election to treat qualified dividend income as investment Henry J. Birnkrant Dec4 income—new Temporary Regulations, 101 JTAX 137, Robert T. Cole Anti-dumping subsidy was not excludable as a contribution Sep04 Stevie D. Conlon to capital, 101 JTAX 314, Nov04 Obtaining the reduced exciusion of gain from the sale or ex Daniel F. Cullen “Cascading” disclaimers were found to be qualified dis change of a principal residence, 101 JTAX 136, Sep04 Jasper L. Cummings, Jr laimers—but what was the taxpayer doing?, 101 JTAX Recent corporate scandals focus attention on tax treatment Richard O. Davis 8, Dec04 of stock losses, by Susan L. Megaard, 101 JTAX 101, Aug04 David L. Forst Chief Counsel weighs impact of penalties in settlement of lax consequences of renting out a second home may turn Dennis J. Gaffney docketed cases, 101 JTAX 374, Dec04 on how often the taxpayer makes use of it, by John B Timothy H. Gillis Clients of employee leasing organization may be liable for Truskowski, 101 JTAX 26, July04 odd Golub uncollected employment taxes, 101 JTAX 58, July04 Conting litigation proceeds decedent assignedt o PROCEDURE Frances R. Hill others were not includable in estate’s gross income, 101 Common law mailbox rule and Section 7502 the contro Philip N. Jones JTAX 178, Sep04 versy continues, 101 JTAX 201, Oct04 Martha W. Jordan Digital receipts can satisfy T&E substantiation require How Revenue Rulings are made, and the implications of Andrew J. Kim ments, 101 JTAX 246, Oct04 that process for judicial deference, by Peter A. Lowy and Dennis R. Lassila Disability payments tied to years of service excludable from Juan F. Vasquez, Jr, 101 JTAX 230, Oct04 Abraham Leitner gross income, 101 JTAX 245, Oct04 Interest netting for pre-1998 years was not available where Richard M. Lipton Exchange by related partnerships qualified for nonrecogni only one limitations period was open, Sep04 Karen Garre Lohnes Fobuu7ns5d,ia nteDiseoscn 0’4s c haelrmi pcepuansrs tiyn gw a“soc fa snihtoest d n a souetl” f-dtioet sa a/i indnviges,sq tum 1e0n1t ,i eJdT 1A0p1Xe rsJoT3n7A'7Xs, RfeaT1xl0 ei1raC mno JcueTrC tAa pXoi ndt ea3lc4t i4as,xH iooDlondepsiic nn0gi4aos nn ds a:n idn teTtrhheees t:w AoJrCAl Adn, e wcb yh aoRnpiigcnehisao rndd ufeMr. otmLo ipLat oodnnig, PPDeeottueegr rl aACs. .M MaL.o hwyoM naenyci no Dec04 vided court raises more issues, by Philip N. Jones, 101 JTAX Larry Maples Full QTIP electionasr e revocable but partial QTIPs are not, 166, Sep04 Susan L. Megaard 101 JTAX 118, Aug04 lax shelters get a lot of attention from both the Service and Louis A. Mezzullo Hard luck was not sufficient reason to grant IRA rollover the courts, 101 JTAX 323, Dec04 Roger F. Pillow waiver, 101 JTAX 117, Aug04 REAL ESTATE Lloyd Leva Plaine How to revalue non-inventory property after a change in Delaware statutory trusts and 1031: A marriage made in Art Requenez method under 263A, 101 JTAX 244, Oct04 heaven or just a pipe dream?, by Richard M. Lipton, Todd Jeffrey | Rosenberg Investment LLC created by related CRUTs was not an act of Golub, and Daniel F. Cullen, 101 JTAX 140, Sep04 Jeffrey L.R ubinger self-dealir 101 JTAX 182, Sep04 IRS bars taxpayers from building replacement property on John G. Schmalz IRS allows revocation of nintended 108(b)(5) election to their own land—or does it?, by Richard M. Lipton, 101 Pam H. Schneider reduce basiso f depreciable property, 101 JTAX 316, Nov04 JTAX 222, Oct04 Maureen H. Smith-Gaffney IRS approves amendment of option plan giving employees Dean L. Surkin one-time ption, 101 JTAX 60, July04 SHOP TALK IRS decides excise tax on reciprocal frequent Courts agree: The Code is incomprehensible!, 101 JTAX 64 John B. Truskowski ss July04 Mark A. Turner ys foundations payment ft user fee and receipt of Dixon update—IRS attorneys sanctioned for the “fraud on Juan F. Vasquez, Jr. 101 JTAX 249, Oct04 the court,” 101 JTAX 127, Aug04 Richard P. Weber taxpayers in bank Guidance for tax professionals in training, 101 JTAX 190, Robert Willens Sep04 Elizabeth S. Williams DECEMBER 2004 + es