EO Tax Journal

1 – Oversight Committee Announces Next IRS Targeting Hearing

4 – California Bar Proposal Looks at Section 170(b)(1)(A)(vi) and 509(a)(2) Requirements Continue…

1 – The EOTJ Mailbag

4 – EO Excerpts from Recommendations of the Tax Section of the New York State Bar Association for 2012-2013 Tax Guidance Priority List Continue…

1 – The New York State Bar Association Tax Section has submitted its Report No. 1217 to the Congress, to the Treasury, and to the IRS. (Have there really been 1,217 reports?) The latest report concerns section 514 of the Code, Unrelated Debt-Financed Income.

For those who are only vaguely familiar with section 514, the report gives a good rehash of section 514 and its history. For those interested in reforming or eliminating section 514, the report provides a detailed “reexamination,” which may set the tone for future debates. All in all, a good effort by the NYSBA.

2 – In regard to last week’s cubicle discussion, I’ve been told all cubicles are not created equal. Unfortunately, most cubicles are designed with the purpose of fitting the maximum number of people in the least amount of space. Think flying coach. However, well-designed cubicles — think flying first class — are designed to maximize efficiency and productivity. Still, most workers, if given a choice, will take four walls and a door, even if it’s a tiny office.

The tragedy of the EO Division is that it is worse off than before the reorganization and its move to 1750 Pennsylvania Avenue. While no one claims the office space — the bull pens — of 1111 Constitution Avenue are great, the building does have a certain charm, and it is where the action is. 1750 Pennsylvania Avenue may as well be in the middle of Alaska. Being near the White House has no cachet, unless you like staring through the fence.

The reorganization was supposed to bring greater prominence to the EO function. Well, they lied. If you just look at its space, the EO Division remains the sad sack of the IRS. Return it to 1111 ASAP. Continue…

We conclude our week of California Dreamin’ with another California State Bar Association proposal (“Withholding and International Grantmaking: Proposed Revisions to the Targeted Grant Exception of Treasury Regulations 1.863-1(d)).

But first, I can’t resist nominating a former Chicago Bears’ player, Chris Zorich, for philanthropist of the year. Seems Chris forgot to distribute hundreds of thousands of dollars his foundation raised, and now the IRS and the Illinois Attorney General are after him. But not to worry. Zorich told theChicago Tribune he forgot about the $864,645 in assets the charity said it had when it last filed a tax return in 2002, and that he assumes the money is still in the bank but he can’t produce a bank statement to prove it. “I was kind of concentrating on other things, not necessarily that the foundation was up to par,” Zorich said. “To find out things weren’t in order is kind of shocking to me.” Lest we dismiss Chris as a football player who played too often without his helmet, he did graduate from Notre Dame Law School. I think Lloyd Mayer has some explaining to do. Or maybe we should ask Ellen Aprill if this has anything to do with grade inflation. (I can’t resist needling our beloved law professors.)

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1 – Old Business

In regard to Monday and Tuesday’s email updates that discussed a proposed revenue ruling on the treatment of the discharge of indebtedness under the unrelated business income rules, it has been pointed out to me that this topic was also covered in a Viewpoint article that appeared in Monday’s Tax Notes magazine. See “Cancellation of Indebtedness Income and Tax-Exempt Entities,” by Emily Cauble.

Former IRSer Conrad Rosenberg supports a section 170 analysis over a UBI analysis: “I think Dave Jones’ and Sarah Harlan’s analysis of the supposed UBI issue on forgiveness of debt to an EO is pretty clear and obvious. Besides, how is passively receiving forgiven debt either a business or regularly carried on? Is this really an ‘issue’?” But another former IRSer asks, “Where’s the intent to make a gift?” For that answer, I turn to the inestimable Bruce Hopkins.
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