TAX    NEWS

                IRS ‘LOST' RECORDS EXCEPTION DEPENDS ON CIRCUMSTANCES

                SOMETIMES, THE IRS WINS YOUR JUDGMENT

  Does Long-Term Care Coverage Pay?

Domestic Partnership Law Seen as Glass Half-Full, Half-Empty

 NJIT Makes "Smart" Gun

            IRS ‘LOST' RECORDS EXCEPTION DEPENDS ON CIRCUMSTANCES

The IRS generally OKs deductions for business travel and entertainment expenses if substantiated by "adequate records," but will waive that requirement when records are lost "due to circumstances beyond the taxpayer's control." Whether an event meets that requirement depends on the circumstances, say agency regulations. For example, when a man claimed write-offs for entertainment expenses, but said the records stored in his home "somehow vanished" after he moved due to marital difficulties, the IRS refused to treat that loss as beyond his control. But the Tax Court ruled differently in the case of another man whose wife obtained a court order requiring him to move and then destroyed the records.

SOMETIMES, THE IRS WINS YOUR JUDGMENT

Chicago resident Cindy Spina spent six years fighting in court to win her sexual harassment lawsuit against her employer, ultimately gaining a $1.5 million jury award. After settling her legal expenses, she was left with $375,000. Then the IRS came along and told her she owed the federal government $475,000. Such are the implications of the alternative minimum tax, originally designed to ensure the wealthy couldn't avoid income taxes but it is increasingly snaring middle-class earners, most of whom don't realize the AMT allows fewer deductions - attorney fees and expenses are not deductible - and results in a higher tax liability. Some attorneys speculate that if the rules aren't changed, fewer people will bring certain civil rights claims for fear of losing out in the long run.

Does Long-Term Care Coverage Pay?

The average tab for a private room in a nursing home recently jumped 8% to $180.00 a day, bringing the average 2.5 year stay to about $160,000.00. We asked William Browning, president of the National Academy of Elder Law Attorneys, when it makes sense to buy long-term care insurance:

Who should skip it?

People with less than $100,000.00 in cash reserves may qualify for Medicaid if long-term care is needed. People with more than $2 million probably can afford to pay for care out-of-pocket.

What about those in-between?

People age 70 or older, who are in good health and whose family members tend to live long, should consider coverage.

Any exceptions?

Yes. Even good candidates must have at least $3,000 a month in fixed income to comfortably afford the policy premiums. If the policy lapses, it was a waste.

What’s an ideal policy?

One that provides at least three years of coverage, lets you lower premiums by offering a deductible of 120 days, and comes with an in-home care provision.  GECapital.com has a free calculator to estimate what each policy would cost.

Excerpt from Reader Digest 2004

DOMESTIC PARTNERSHIP LAW SEEN AS GLASS HALF-FULL, HALF-EMPTY

New Jersey's domestic partnership law, which takes effect in July, is more limited than those in other states, say experts. But it's still a huge step forward, placing the state among the few to enact any kind of law recognizing same-sex couples. In addition to providing a registry that formally documents such relationships, the law gives same-sex partners and heterosexual couples age 62 and older, a variety of rights pertaining to health care, income taxes, inheritance taxes and retirement benefits.

The law provides:

• State income tax deduction for a dependent partner.
• Ability to serve as next of kin and gain medical information about a partner.
• Official certificate of domestic partnership, obtainable in any town.
• Health care and retirement benefits to domestic partners of state workers. Private employers may also elect to provide benefits. 

The law falls short in :

• No homestead protection similar to that provided to married couples.
• Domestic partner of someone who dies without a Will still has no automatic inheritance rights.
• Gay marriage is still illegal.

The New Jersey Institute of Technology  has made ground-breaking progress toward developing so-called "smart-gun" technology and members of New Jersey's congressional delegation secured $1.1 million for NJIT to continue its work. NJIT said its technology would allow the grip of a firearm to recognize the hand of only an authorized user before it could be fired; otherwise the weapon would remain inert. New Jersey has a smart-gun law on the books that requires sales of all new weapons to be smart guns once there are at least two commercially viable models on the market. Dr. Michael Recce (a colleague whom we have advised) has obtained a patent for his work.