Lone Accountant wins upset over IRS regarding Demutualization

This is good news. Can people file amended returns for 20 years back? Seems they should be able to in this case.

snipped-for-privacy@yahoo.com posted:

I don't know what the consequences will be, nor do I have any idea what mechanics might be worked out to achieve equity for those many people who were taxed unfairly, over the years.

That's part of what I was hoping would show up, when some more learned students of the trade took up this subject. And that's why I raised the question. The link I provided was to an American Bar Association site, which gave the raw facts ... but it will be up to the IRS to propose mechanisms, and tax professionals to work them out.

As a volunteer tax preparer, those things are way above my competence .. but I'm sure some of my TP "clients" will hear about this, and show up next winter at my site, hoping that I'll have some answers. That's one big reason for my participation in this forum -- because I feel an obligation to those folks, to learn more and be equipped to assist them with complex (and sometimes arcane) questions, such as those which are raised by this court ruling.

I hope this thread will invite participation by those members of this forum who in the past have provided authoritative comment and information regarding IRS policies when such issues are "settled" by a precedent-setting legal ruling, as is the case here.

My friends, your knowledge and insider views will be welcomed by we ordinary folk (pun intended :-).

Bill

If history is any guide, there will be no exceptions for the statute of limitations. Any one of those earlier tax filers could have contested, but they chose not to.

fair? no. The likely outcome? yes.

In article , Gil Faver >>>yet, on the triumph of that lonely accountant

If the IRS appeals, which is likely, it will be quite some time before this issue is settled.

Many tax professionals will be advising clients to file protective claims to lock in their position before the statute runs out.

or AARP (TaxAide) or other TCE or clinics folks will be teaching protective claims. Quite the opposite: I suspect they will teach:

Don't get involved.

Whether or not the IRS appeals, the three year statute still holds.

Just a minute now. "File amended returns for 20 years back?" What on earth for?

This case involved the basis of the demutualized stock award people at one time, and their subsequent sale of it.

In all the cases I know, clients got a very small amount of stock, and when sold got almost nothing out of it, less of course tax on the gain.

ChEAr$, Harlan Lunsford, EA n LA

Or, as in the case of my late mother, never sold it at all, which makes the whole discussion irrelevant since it became inherited property.

Some folks may have received more than a "very small amount", in the above case it was 47 shares of Prudential, which has varied from $55 to $101 per share over the last year, so depending on overall taxable income and date of sale, the tax on the gain could have been well over $1,000 under the zero-basis rule, not including state taxes.

-Mark Bole

Oops, bad math. Make that last sentence, "[...] as much as $1,000 [...] including state taxes".

-Mark Bole

C'mon Harlan... The only taxpayer that I know personally who filed an amended return to claim the refund, got a federal income tax refund, including interest, of almost twenty thousand dollars. And the tax part wasn't taxable, since it was federal income tax...