Recent Developments

■ RMD: You won’t have to take a distribution from
your IRA for 2009 because the Required Minimum Distributions (RMDs) have been
suspended for this year only. In Notice 2009-82, 2009-41 I.R.B. 491 the IRS
addressed a number of issues created by the waiver of 2009 RMDs. Because these
rule changes were enacted so late in the year, the IRS has provided some
leniency to taxpayers. The IRS won’t consider a plan to have failed to be
operated according to its terms merely because, between 1/1/2009 and 11/30/2009,
2009 RMDs were or were not made, beneficiaries weren’t given option of not
receiving distributions that included 2009 RMDs, or direct rollover option was
or wasn’t offered for 2009 RMDs. For taxpayers who have already received 2009
RMDs, the IRS extended the normal 60-day rollover period so that it doesn’t end
before 11/30/2009. Thanks to Charles C. Shulman, Esq. Teaneck, NJ.

■ Innocent Spouse Relief: When spouses file a joint income tax return
they are both jointly and severally on the hook for any tax.  If certain requirements are met one spouse
might qualify for relief from the tax attributable to the other spouse under IRC Sec.
6015: ◙ H&W filed a joint return; ◙ There was
an understatement of tax due to an erroneous item of H; ◙ W didn’t know, and had no reason to know, of H’s
understatement; ◙ It’s inequitable to hold W liable for the tax based
on all the facts and circumstances; and ◙ W
elects innocent spouse relief within two years of the IRS beginning collection.
Linda Bruen , TC Memo 2009-249 (Tax Ct.)

■ Expatriates: Benjamin
Franklin uttered the famous phrase in 1817: “In this world nothing can be said
to be certain, except death and taxes.” Well expatriating to avoid the
taxes probably won’t work either. In Notice 2009-85 the IRS explained the new
Code Sec. 877A mark-to-market exit tax enacted as part of the “Heroes Earnings
Assistance and Relief Tax Act” (HEART) in 2008. The tax can be on the
unrealized appreciation of those assets over $600,000 (inflation indexed). If
you receive a gift or bequest from an expatriate on or after June 17, 2008 you
may face a tax under Code Sec. 2801 at the highest marginal gift or estate tax
rate on the fair value of the property. But since the Notice was only 65 pages
long it only addressed the 877A provisions, you’ll have to wait guidance on the
2801 rules.