July 2012 - National Association of Tax Professionals

July 2012
CHAPTER OFFICERS
PRESIDENT
Christine Miarecki
413-283-9407
cmiarecki@comcast.net
VICE PRESIDENT
June Massee
413-562-9676
jmassee@ajpcpa.com
SECRETARY
Jeffrey Schweitzer
781-440-6655
jeff@nfsnet.com
TREASURER
William Delaney
781-551-9252
billdelaneyEA@verizon.net
Happy New Year! It might sound strange but it seems like we don’t move into
the new year until we have finished the major filings for the previous year. We
all still have extensions and amendments but can finally acknowledge this is
2012 not 2011. Perhaps it is just myself but it takes awhile to recognize the year
has changed, anyhow hope that everyone survived the filing season.
As spring turns into summer and hopefully we have all taken time to relax and
reacquaint ourselves with family, we also need to look forward and prepare
ourselves for the next season. The NATP National Conference is being held in
Baltimore this year and is a great opportunity for education and meeting other
associates. I am hoping that with the Conference being closer we will have more
members attending from our Chapter.
Please if you are attending National, make it a point to come to the Chapter
Showcase and introduce yourself, I look forward to meeting members of our
Chapter.
Our annual meeting in Mansfield, Ma. will be on a Tuesday this year which is a
change so please mark your calendar and save the date, October 30 th . Watch
the newsletter for information on speakers and subjects at this meeting.
We are always looking for your input to make our Chapter work for you, please
don’t hesitate to contact myself or a board member with any ideas you have for
the Chapter.
Wishing all a safe and happy 4 th of July, hope to see many in Baltimore.
Chris Miarecki, EA
President,
The Newsletter of the Massachusetts/Rhode Island Chapter of the
President’s Message
MA/RI Chapter NATP
National Association of Tax Professionals
July 2012

TRANSFERS WITH RETAINED LIFE ESTATE A NEW LOOK AT CODE SECTION 2036
When an owner transfers real property to another, while retaining the
“…..possession or enjoyment of, or the right to income from, the property…..”, the
general rule of Code Sec. 2036(a) provides that the property be included in the gross
estate of the transferee and be valued at his/her death, with a resulting adjustment
in basis (usually a step-up) to the heir or heirs. It is widely believed (your editor in-
cluded) that the retained life estate must be included in the deed of transfer. Absent
such writing, there is no retained life estate and the transfer becomes ineligible for
valuation at death and the (usual) resulting step-up in value.
Now comes the U.S. Tax Court to the rescue! In T.C. Memo 2000-193 (Estate of Wineman v. Comm.), the Tax Court
agreed that the transferee, Rebecca Wineman, had not retained a written life estate. However, the Court went on to
say that “A decedent’s reservation of a life interest need not be provided for expressly in the instrument of transfer or
enforceable under local law to be includable under Section 2036…An implied agreement at the time of transfer for the
decedent to continue possession and enjoyment of the property is sufficient and may be inferred from all (of) the cir-
cumstances surrounding the transfer.”
The Court looked at Mrs. Wineman’s continued exclusive possession and the fact that she continued to pay taxes and
other expenses after the transfer as evidence of an implied agreement. So, if Mom did it, but didn’t put it in writing,
she still did it and an agreement to that effect need not be in writing to fall under the provisions of Sec. 2036(a).
RHODE ISLAND TEMPORARY DISABILITY INSURANCE (TDI) IT’S MORE THAN
If a RI taxpayer worked for more than one employer last year, it may be that the combined
withholding exceeded the maximum tax of $759.20. Use RI Form TX-16 to claim a refund
of the excess. While some tax preparation software will flag this situation as part of the
diagnostics, others may not, so it is up to us to be diligent and act on behalf of the tax-
payer.
Now comes MA, which has reinterpreted its definition of taxes paid to another jurisdiction
to include RI TDI up to the maximum amount each year. See Directive 12-1 (3/15/2012) for
more information and the electronic or paper filing options for amending MA state returns to claim this as a credit for
income tax paid to RI.
WHAT MEETS THE EYE!
As explained in our January 2012 newsletter, the general rule that a claim for abatement (refund) of personal income
tax must be filed within three years of the due date of the return (without regard to extensions) has been changed to
allow abatements requests within three years of the due date of the return, including extensions. This means that the
2008 tax year may still be open for abatement claims if the original return was filed after April 15 th but while under extension.
July 2012

MEDICAL EXPENSES AND REAL ESTATE TAXES WHO
Issue: Mrs. Field paid $24,559 of her daughter’s medical expenses during the year 2006. She also paid
$5,508 of real estate taxes owed by her daughter. May her daughter, Judith Lang, claim these as itemized
deductions on her federal income tax return for 2006?
Problem: Mrs. Field was not an obligor on the mortgage, nor did she have an ownership interest in her
daughter’s home. As for the medical expenses, they were not guaranteed or otherwise an obligation of the
payer, nor was the daughter a dependent of Mrs. Field.
Code Section 213(a) allows a deduction for the unreimbursed medical expenses of the taxpayer, her spouse,
or her dependent. Mrs. Lang did not qualify as any of the above and was denied the deduction since she had
not made the payments.
Code Section 164(a)(1) allows a deduction for real estate tax paid during the tax year. Since Mrs. Lang had
not made the payments, she was also denied this deduction.
The Tax Court concluded that Mrs. Field “…made the medical expense payments for her daughter with dona-
tive intent…Applying substance over form, we treat petitioner (Mrs. Lang) as having received from her
mother a gift of $24,559 with which petitioner paid her own medical expenses. Petitioner should be credited
with having made the payments for purposes of the income tax deduction in question.”
As for the real estate tax payments, the Tax Court concluded that “…applying substance over form, we treat
petitioner as having received from her mother a gift of the $5,508 with which petitioner paid the city in satis-
faction of her own real estate tax. Thus petitioner is entitled to a deduction…for that amount.”
The Tax Court also noted that, although these transfers are considered to be gifts subject to tax under Code
Section 2501, the transfer for real estate tax payments was less than the (then) $12,000 annual exclusion and
the transfer for medical expense payments meets the definition of a qualified transfer under Code Section
2503(e)(2)(B) and thus meets an exception to the gift tax.
A win all around. See Judith F. Lang. v Comm., T.C. Memo 2010-296
(12/30/2010).
MAY DEDUCT?
July 2012

WHAT IS THE MASS CORPORATION INCOME TAX RATE??
DID YOU MISS THE RATE CHANGE??
As you prepare MA corporation income tax returns, you may note
that the old 9.5% tax rate on net income no longer appears on your
screen or on the paper copy of the return. So, what happened?
See MGL, Chapter 63, Section 39(a)(2). The rate has changed and,
unlike some states, this means that the rate has been decreased (in
steps). Effective for tax years beginning on or after January 1, 2010 but before January 1,
2011, the tax rate is 8.75%; for tax years beginning on or after January 1, 2011 but before
January 1, 2012, the tax rate is 8.25%; and, for years beginning on or after January 1, 2012,
the tax rate is 8.0%. Who says that we live in Taxachusetts---that’s a bum rap!
And, did you notice that the MA individual income tax rate for the year 2012 is 5.25% and not
5.3%. Big acorns from little trees grow!
HOW LONG IS TOO LONG WHEN IT COMES TO FILING A REFUND
RETURN??
A Rhode Island couple awakened one morning and decided that it
might be a good idea to prepare and file their 2008 income tax return
(due April 15, 2009), especially since it had a refund on it---good thinking.
However, this was November 28, 2011, but they should be OK.
After all, you can amend your return within three years of April 15 th
and claim a refund, can’t you? Well, the answer to both is yes and no.
In the case of an original return, the refund claim which will be paid is limited to the amount
of tax (if any) paid within two years of the date of filing. RI law (as does MA law) provides that
withholding tax is deemed paid as of the due date of the original return (usually April 15 th ), so
that meant April 15, 2009, but the taxpayers did not file their original return until November
28, 2011, so they missed the two year window of opportunity. In the case of an amended return,
RI limits the refund claim which will be honored to the tax paid within that three year
period. So, if a return filed on April 15, 2009 is amended on May 1, 2011, that’s within the
three year period for filing a refund claim, and also within the three year payment period (i.e.
April 15, 2009), so it is a valid refund claim which will be honored. Problem here is that there
was no timely filed return to amend, and the original return was out of statute for receiving a
refund check. Not good thinking. See RI Decision 2012-07.
July 2012

ANNUAL MEETING & EDUCATIONAL SESSION
Save the date! Our Fall Annual meeting and Education Semi-
nar will be held at the Holiday Inn in Mansfield, MA on Tues-
day October, 30, 2012 from 8:00am – 4:45 pm. We have the
nationally know speaker C. Dale Boushley for the whole day.
He will speak on several timely tax topics: Qualifying Child,
Recapture vs. Un-recapture, Self Employment Retirement
Plans, and Schedule E Rental Real Estate and Vacation
Homes. His presentations will include easy to follow handouts which you can re-
fer to again later. Several of our board members heard Dale’s presentation at the
NATP Summer Ta x Conference in 2011, and were quite impressed. We will offer 8
Continuing Education Credits for this seminar and a hot buffet lunch. The cost is
still the same as last year, $115.00 for early member registration. We look for-
ward to seeing you at the Fall Annual Meeting and Seminar. And when you come
to the seminar in October there will be a special offer for the January 2013 state
update seminar in Sturbridge, MA.
SPEAKER BIO - October 30, 2012 Mansfield - C. Dale Boushley, CFP, EA
Dale has been in the income tax and financial planning business since 1976. He and his wife
Sharon own Financial Resource Management, Inc. which provides income tax preparation and
planning services to over 500 clients. He graduated from the College of Financial Planning in
1988 and earned the Certified Financial Planner® (CFP®) designation at that time. Dale is an
Enrolled Agent (EA) with the Internal Revenue Service. Dale provides financial planning and
asset management services through Securities America Advisors, Inc.,
and is licensed as a registered investment advisor representative in AZ.
He is a registered representative of and offers securities through Securi-
ties America Inc. member FINRA/SIPC, holding series 7, 24 and 63 li-
censes. State licenses are held in AZ, CA, CO, MD, MT, NC, NY, OH, OK,
SD, and UT. Mr. Boushley also has life insurance licenses in AZ & NC.
July 2012

Current Assets
MASS/RI CHAPTER of NATP
Assets, Liabilities and Net Assets
April 30, 2012
Cash - Checking Account 9,147
Cash - ING Savings Account 22,642
A/R - NATP National Office 1,963
Total Current Assets 33,752
Total Assets 33,752
Current Liabilities -
Fund Balances
Unrestricted Funds - Beginning 29,033
Increase (Decrease) in
Unrestricted Net Assets 4,719
Total Fund Balances 33,752
Total Liabilities and Fund Balances 33,752
July 2012

MASS/RI CHAPTER of NATP
Statement of Receipts and Disbursements
January 1 - April 30, 2012
Current Prior Increase
Year Year (Decrease)
Revenue
Membership Dues 4,683 3,660 1,023
January Seminar Income 6,185 9,360 (3,175)
October Seminar Income - - -
Quickfinder/Taxbook Income - - -
Interest Income - 50 (50)
Other Income 378 98 280
Total Revenue 11,246 13,168 (1,922)
Program Services
Jan. Seminar Expense 5,943 5,911 32
Oct. Seminar Expense - - -
Sub-Totals 5,943 5,911 32
Supporting Services
Directors' Meetings Expense 259 940 (681)
Newsletter and Mailing Expense - - -
President's Stipend 250 250 -
Office Supplies - - -
State Net Quarterly Fee - 77 (77)
National Convention Expense - - -
Education Chair Stipend 75 75 -
Special Event Expense - - -
Annual Report Filing Fee - - -
Miscellaneous Expense - - -
Contributions - - -
Sub-Totals 584 1,342 (758)
Total Functional Expense 6,527 7,253 (726)
Increase (Decrease) in
Unrestricted Net Assets 4,719 5,915 (1,196)
July 2012

Board of Directors
Region 1 (Berkshire, Franklin
Hampshire and Hampden)
June H. Massee, EA, Vice President
413-562-9676
jmassee@ajpcpa.com
Christine M. Miarecki, EA, President
413-283-9407
cmiarecki@comcast.net
Walter Drenen, EA
413-569-0015
wdrenen@drenenfs.com
Region 2 (Worcester and Middlesex)
Dorothy Dimo
413-436-5249
dimund@comcast.net
Pamela Marcinowski, EA
978-355-2210
nmarcinowski@yahoo.com
YOUR Chapter needs YOUR help!!! This is YOUR Chapter and we could use your help. Are you willing to serve
on any of the following Committees? If you excel in any of these areas or just want to try something new,
please contact Chapter Secretary Jeffrey Schweitzer at 800-560-4637 or jeff@nfsnet.com
Education Committee
Newsletter Committee
Nominating Committee
Financial Review Committee
Gov’t Relations Committee
By Laws Committee
David L. Johnson, EA, ATA
508-853-9638
dejayEA@aol.com
Welcoming/Membership Committee
Region 3 (Essex, Suffolk and Norfolk)
Jeffrey N. Schweitzer, CEP, ATP, Secretary
781-440-6655ext.14
jeff@nfsnet.com
William F. Delaney, EA, ATA, Treasurer
781-551-9252
billdelaneyEA@verizon.net
Joseph F. Serrecchia, EA
339-203-4808
joeserr@jmstax.comcastbiz.net
Region 4 (Bristol, Plymouth, Dukes,
Barnstable and Nantucket)
Joseph F. Gniadek, EA
508-747-1456
jgniadek@msn.com
Kenneth P. Maloof, EA, ATA
508-238-2538
P.ken52@yahoo.com
July 2012
Stephen J. Garvey, CPA
781-878-4381
huma252@juno.com
Region 3 (Rhode Island—All)
Paul Malone
401-333-1118
paul@malonebusinessassociates.com
Walter Matisewski
401-726-2727
walterm@cox.net
At Large Region
Virginia Lee Arlington DeLuca
508-985-0045
tl2office@comcast.net

MA/RI CHAPTER EVENTS
October 30th, 2012
MA/RI Annual Meeting & Educational
Seminar
Holiday Inn—Mansfield MA
MA/RI BOARD OF DIRECTOR
MEETINGS
August 23rd, 2012—TBA, Region 5
November 15th, 2012—TBA, Region 2
There are many other educational opportunities
available through NATP’s
website including Live Workshops,
Self-Study Courses and Webinars On-
Demand. Visit www.natptax.com for
more info or to register.
AREA NATIONAL NATP
1040 UPDATE WORKSHOPS
October 24th & 25th
Sheraton—Warwick, RI
November 12th & 13th
Holiday Inn—Dedham, MA
November 14th & 15th
Hotel & Conf Ctr—Holyoke, MA
November 16th & 17th
Sheraton Four Points– Leominster, MA
November 26th & 27th
Crowne Plaza – Woburn, MA
November 30th & December 1st
Radisson– Plymouth, MA
(Register Online at www.natptax.com)
July 2012
UPCOMING NATP EDUCATON &
NATIONAL CONFERENCE
July 23rd—25th
EA Exam Review Course
Hilton Garden Inn-Windsor, CT
July 9th-12th, 2012
NATP National Conference
Marriott Waterfront—Baltimore, MD
September 18th-20th
S Corporation Workshop
Holiday Inn-Dedham, MA
September 21st
Registered Tax Preparer Review
Holiday Inn-Dedham, MA
November 26th - 28th
TAXPRO Symposium
Sheraton-Atlantic City, NJ
(Register Online at www.natptax.com)