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The Year in Taxes: Sleepwalking Through 2011


In January, the tax world was still reeling from the extension of the Bush-era tax rate cuts signed into law in December.  It also allowed rich people who died in 2010 to go to their rest without paying estate taxes, making George Steinbrenner a happy ghost.  It also allowed living taxpayers to make tax-free lifetime gifts up to $5 million per year, thrilling kids everywhere until they found out their parents didn’t have $5 million.
February saw Ohio TV newscaster Aneitra Hamper learn from the Tax Court that thong underwear purchased for work was not a deductible business expense.  That’s too bad, because that’s a format that could save local journalism.
In March, the Tax Court clarified that the casualty loss deduction is available only for casualties you suffer, not casualties you inflict, disallowing the deduction of a $250,000 payment by a taxpayer-driver to the family of a pedestrian he ran over and killed.  Meanwhile, Wesley Snipes appealed to the Supreme Court to try to get his 3-year tax crime sentence overturned. Audit personnel everywhere went on spring break, while the tax people got into serious tax season personal hygiene neglect.
In April, the tax world lost a giant with the death of James Eustice.  Thousands of tax people blinked at the sight of the sun after weeks of toil in the cubicle galleys.   TV Tax Lady Roni Deutch was sued by the California Attorney General for allegedly fraudulent practices, after the California explained that “pennies on the dollar” was for state bondholders, not taxpayers.
May saw a Florida man learn a valuable lesson: if you finance your girlfriends to the tune of hundreds of thousands of dollars and attempt to deduct the costs, it’s unwise to leave your tax records where your wife can find them.  The IRS might be very interested.  In unrelated news, it came out that the Iowa film credit helped finance a film company owned partially by the third son of the now-late Muammer Gaddafi.  
June saw taxpayers strain to file their foreign account disclosure forms, while the Tax Lady entered a not-guilty plea to California contempt of court charges.  The Supreme Court told Wesley Snipes he had to stay in jail.  Meanwhile, Caleb asked whether Anthony Weiner’s deductions might have been as enhanced as his briefs.
July saw the IRS show it’s compassionate side when by attempting to disallow caregiver deductions for a dementia patient.  Going Concern meanwhile exposed tax enemy Grover Norquist’s secret links with Elmo.
While Congress was mercifully quiet in August, the courts were busy.  An accountant was disallowed deductions for his bathroom, while a real estate developer who shared a home with his wife and his girlfriend was rescued from this terrible situation by a 22-year prison sentence.  Meanwhile, former Enron executive Ken Lay won his Tax Court case, a victory tarnished by his continuing to be dead.
September saw the President propose a new stimulating tax plan, which Congress swiftly ignored.  Meanwhile, Caleb at Going Concern was named one of accounting’s 100 most influential people.  Adrienne is still laughing.
In October, Commissioner Shulman said the IRS needs every dime it has to finance it’s puppy-torturing and preparer regulation initiatives, though it might back off on the preparers.  Come November, the first preparer competency exams were scheduled.  They will be open-book, so they are really preparer literacy tests.  Members of Congress and the Cabinet are obviously exempt.
Like in 2010, December saw a year-end showdown over expiring provisions, this time the 2 percentage-point reduction in employer social security taxes.  The impasse was resolved when Congress agreed to pretend to solve the problem for two months.   That prepares us for next December, when the Bush-era tax cuts pretend to expire again.  And Richard Hatch finally finished his tax sentence for failing to report his “Survivor” income, long after anyone else cared.
I don’t know about you, but this makes me just crave 2012.