Recent court battles show the IRS is determined to limit the use of attorney-client privilege — a position that extends even to CPAs and other tax advisors.  The IRS has been able to get courts to consistently find that return preparation is not legal advice protected by privilege.  Now the Service is turning to arguing that “tax planning” in the form of recommended strategies for prospective transactions is really advice to be used for the tax treatment of an item or group of items on a return.  That would essentially remove such advice from the realm of privileged communications between advisors and clients, and would make opinions, memoranda, strategy memoranda and other items available to the IRS when it moves toward litigation.

 

Financial planners and business owners must look at 11 areas when planning for the closely held business.  These are:

 

Order the CCH Financial and Estate Planning Guide.

• Business Valuation Guide
• Wealth Management: Financial Planning and Investment Management for Wealthy Clients
• Executive Compensation

---

Many practitioners are looking at NOLs this year, as 2003 returns are prepared and filed.  As businesses hurt by the economic downturn in past years are now beginning to return to profitability, they are seeking to minimize the tax bite created by those profits through the use of NOLs generated over the past few years.  Code Sec. 172 provides definitions to use in calculating actual NOLs that can be applied on either a carryback or carryforward basis.  Making the choice to carry back NOLs or carry them forward to future years requires a close look at previous year’s returns and, perhaps, some “crystal ball” work on a client’s future years.

Was this article useful?
Send us your comments: CCH-FocusOnTax@cch.com

---

When a sales and use tax auditor hands over you audit results, the work has only just begun.  Auditors can — and do — make mistakes.  Some turn a blind eye toward areas that can yield refunds; others can simply miss things that would reduce or even reverse some assessments.  That is where being organized and ready to carefully look at the results can pay off.  And, most importantly, you have to make sure the same mistakes don’t reoccur on the next audit.  Julia Bragg of International Paper has developed a record-keeping system that makes sure she can maximize her post-audit results in terms of disputing particular items on the current audit, while making sure the ball doesn’t get dropped on fixing problems before the next audit.  She notes that such records can also help with Sarbanes-Oxley compliance to boot!

---

Click here to access last month’s issue of Focus on Tax, including 101 Ways You Can Be a Hero to Your Clients or your Boss.