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Tax Blawg

Tax Talk for Tax Pros

Introduction

Welcome to TaxBlawg, a resource for news and analysis of current legal issues facing tax practitioners. Although blawg.com identifies nearly 1,400 active “blawgs,” including 20+ blawgs related to taxation and estate planning, the needs of tax professionals have received surprisingly little attention. The Wall Street Journal's Tax Blog gives “tips and advice for filers,” and Paul Caron’s legendary TaxProf Blog is an excellent clearinghouse for academic and policy-oriented news. Yet, tax practitioners still lack a dedicated resource to call their own. For those intrepid souls, we offer TaxBlawg, a forum of tax talk for tax pros.

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If You're On Call, You're Out of Luck in Passive Activity Cases

Back in the era of beepers, being "on call" evoked imagery of importance.  Indeed, those people required by their job to carry a beeper, along with those who did so voluntary, displayed the devices with a noticeable degree of smugness.  The positive aspects of this status symbol aside, anyone who has been obligated to carry a beeper or its modern equivalent (e.g., BlackBerry, iPhone, PalmPilot, etc.) understands that being constantly reachable is often more of a curse than a blessing.

Many jobs mandate that a person respond to messages within a certain period of time, minimize travel so that one can be at the office quickly if necessary, avoid alcohol at all times to ensure constant preparedness to work, etc.  Given this reality, it is understandable that many people who are perpetually "on call" feel that they are always working, continuously performing.

This concept is at the core of a recent Tax Court case, Moss v. Commissioner, 135 T.C. No. 18 (Sept. 20, 2010), where the taxpayer claimed that all the time he spent "on call" with respect to his rental real estate business should be counted in determining whether he met the necessary participation standards.  The attached article, called "If You're On Call, You're Out of Luck in Passive Activity Cases,” analyzes Moss v. Commissioner and the three important rulings this case contains:  (i) in determining whether a taxpayer "materially participates" in an activity, only time the taxpayer actually spends performing services can be counted; (ii) the fact that a taxpayer is "on call" and thus available to field inquiries, take actions, etc. does not constitute performing services; and (iii)  the regulations permit a taxpayer to establish participation by "any reasonable means," but simply allocating an arbitrary portion of the total "on call" time is not reasonable.  The article was published in Practical Tax Strategies.

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    Hale is a partner in the Tax Controversy Section, Chair of the International Tax Group, and Member of the Executive Committee. He helps individuals and businesses with tax disputes and compliance projects ...