E. Lynn Nichols, CPA, and John L. Norman, Jr., JD, team up to bring us up-to-date on recent court decisions, Treasury regulations, and IRS guidance. The topics in this program include:

• The new rules for claiming equitable innocent spouse relief after the Service's withdrawal of the two-year statute of limitations

• The benefits of an IRC §86(e) election to minimize tax where an individual receives a lump-sum payment of Social Security benefits that is attributable to prior years

• Whether a shareholder gets basis for certain nonqualifying contributions to capital of an S corporation

• New rules that permit the IRS to obtain customer information from certain cable providers in order to identify taxpayers with undisclosed offshore accounts

• Two tax shelter promoters, one involved with historic easements and the other purported loans on appreciated stock

• An update on Larry Zarrella's battle with Pacific Life Insurance

• A guardian's failed attempt to claim the first-time homebuyer credit for a disabled child

• New filing locations for certain credit and refund claims

• A discussion of how to determine the class life of a multi-purpose building complex

• Whether an arbitration award for emotional distress and lost profits was nontaxable

• Reporting requirements under IRC §6038D and IRC §1298(f) and the release of draft forms Form 8621, Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund, and Form 8938, Statement of Specified Foreign Financial Assets

Chapter 1 considers a variety of interesting and entertaining developments in tax. These include:

• In Ira Nathel et ux. et al. v. United States, Sup. Ct. Docket No. 10-928 (2011), the U.S. Supreme Court denied the taxpayers' request for certiorari on their claim that they were entitled to basis for certain nonqualifying contributions to capital of their S corporation

• Huda Scheidelman [Scheidelman and Perry v. Commissioner, TC Memo. 2010-151] is one case involving a promoter of historic easement contributions that has been the subject of a recent Department of Justice injunction.

• Larry Zarrella v. Pacific Life Insurance Co., No. 10-cv-60754 (SD FL 2011), involves a successful lawsuit by a customer of an IRC §412(i) plan who was seeking access to the company's marketing materials for the plan. Lynn warns practitioners to continue to be cautious, because some life insurance companies are now trying to do the same types of deals in different packaging.

• In Wilfredo Emilio Rodriguez, TC Memo. 2011-122, the Tax Court addressed a guardian's well-intentioned attempt to claim the first-time homebuyer credit for his disabled eight-year-old ward. Jack points out several ethical concerns and how practitioners can avoid them.

• REG-137128-08 contains proposed regulations that change the filing locations for credit and refund claims. Jack reminds practitioners when Form 843, Claim for Refund and Request for Abatement, can be used.

• Internal Legal Memorandum 201123001 addresses the determination of the class life of a building complex that provided gas pumps and service bays, as well as office and warehouse space. Revenue Procedure 87-56 provides the class lives for depreciable property.

• Information Release 2011-80, Chief Counsel Memo 2011-017, and Notice 2011-70 announce the Service's agreement to withdraw the two-year statute of limitations on equitable innocent spouse relief and explain the new rules. The discussion also references the following cases: Octavia C. Jones v. Commissioner, 107 AFTR2d 2475 (4th Cir. 2011); Cathy Lantz v. Commissioner, 607 F3d 479 (7th Cir. 2010); Mannella v. Commissioner, 631 F3d 115 (3d Cir. 2011). Jack commends Taxpayer Advocate Nina Olsen for her work on this issue.

• Paul Edward Pollard, TC Memo 2011-132, involves the question of the taxability of disability payments. Lynn explains the benefits of an IRC §86(e) election to minimize tax where an individual receives a lump-sum payment of Social Security benefits that is attributable to prior years.

• Fannie Martin v. Commissioner, 107 AFTR2d ¶2480 (9th Cir. 2011) involves an arbitration award for emotional distress ($50,000) and lost profits ($568,000) that the taxpayers claimed was nontaxable.

• Internal Legal Memorandum 201124019 explains the rules that permit the IRS to obtain personal customer information from a taxpayer's cable provider. The action sought to identify cable customers with undisclosed offshore accounts.

• Notice 2011-55 announces the suspension of the reporting requirements under IRC §6038D and IRC §1298(f), two new provisions, until Form 8621, Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund, and Form 8938, Statement of Specified Foreign Financial Assets, are released. Draft forms are provided in the supplemental materials and on the IRS website.

Chapter 2 contains supplementary materials, including: (1) Supreme Court Denies Certiorari of Nathel Case on S Corporation Basis (2) DOJ Announces Court Order That Bars Company From Promoting Alleged Tax Scheme Involving Improper Easements on Historic Buildings (3) DOJ Announces Court Order That Bars Firm With Offices in Pennsylvania and Virginia From Promoting Scheme Where Taxable Stock Sales Were Disguised as Loans (4) Larry Zarrella et al. v. Pacific Life Insurance Co. (5) Wilfredo Emilio Rodriguez et al. v. Commissioner (6) REG-137128-08 (7) Internal Legal Memorandum 201123001 (8) Octavia C. Jones v. Commissioner (9) Heather L. Coulter v. Commissioner (10) Information Release 2011-80 (11) Chief Counsel Notice 2011-017 (12) Notice 2011-70 (13) Taxpayer Advocate Commends IRS for Policy Change on Equitable Innocent Spouse Relief (14) Paul Edward Pollard et ux. v. Commissioner (15) Fannie Martin v. Commissioner (16) Internal Legal Memorandum 201124019 (17) Notice 2011-55.

Chapter 3 contains a case study and review problem.

• The proper return to file for amended returns

• Reporting Social Security benefits

• How to avoid certain ethical concerns for tax practitioners who are very involved in a client's affairs

• Eligibility for the first-time homebuyer credit

• The impact of the Service's withdrawal of the two-year limitation on equitable innocent spouse relief

• The classification of a multi-use building complex

• The tax treatment of an arbitration award

• The circumstances in which the Service can obtain personal and credit card information from an individual taxpayer's cable company

E. Lynn Nichols, CPA (PA), a practicing CPA for more than 45 years, is the founder of Nichols Patrick CPE, Inc., a developer of continuing education programs and practice aids for CPAs. He is a regular contributor to CPE Network^®. Mr. Nichols was twice honored by the Ohio Society of CPAs for service to the accounting profession. Mr. Nichols serves as an advisor to CPA firms across the U.S. on matters of federal income taxation, litigation services, and IRS procedures.

John L. Norman, Jr., JD, is an attorney in private practice in Washington, D.C., where he specializes in closely held business organizations, as well as estate and financial planning. He is the former National Director of Taxation for the accounting firm Pannell Kerr Forster. Previously, he was the Director of Tax Policy for Potomac Electric Power Company. He also taught at the College of William and Mary and George Washington University. He is a regular contributor to CPE Network^®.