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30 September 2008

[forum-pajak] Selamat Hari Raya Lebaran

Dear Milister,

Hari ini pesawat Ramadhan Air dengan nomor penerbangan RM 1429 H mendarat di Bandara Minal Aidin Walfaidzin tepat pada pukul 00:00
WIB, 1 Syawal 1429 H.

Tetaplah duduk tafakur, tegakkan sandaran iman, kencangkan sabuk tawakal sampai jantung anda benar-benar berhenti.

Jangan lupa kemasi bagasi amal soleh dan ibadah anda sebelum meninggalkan pesawat kehidupan yang fana ini.

Terima kasih telah terbang bersama Ramadhan Air.

Selamat melanjuitkan perjalanan anda ke ampunan Allah SWT.

Kapten Alexander Raphael beserta seluruh awak kabin mengucapkan
Selamat Idul Fitri, Mohon Ma'af Lahir dan Bathin .....

Sampai jumpa pada penerbangan Ramadhan Air tahun depan...

  Alexander Raphael

[Non-text portions of this message have been removed]

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Re: [taxchat] Hasn't filed a tax return since 1999

Donna,
 
All you have to do is ask for the 1999 form, with instructions and tax tables, period!  They don't have to know anything else except where to mail the stuff.- Its the forms dept you have to get to and they won't ask you about your client.
 
Arnie
 
 
----- Original Message -----
Sent: 09/30/2008 6:55 PM
Subject: [taxchat] Hasn't filed a tax return since 1999

I have a client who hasn't filed federal or state income tax returns
since 1999. I am going to order the 1999 tax return from the IRS.
However, I would like any tips from anybody as to what to do and what
not to do before I ask the IRS for copies of anything.

He has a notice from that state that they filed a return for him for
2004. They want the taxes they calculated.

I'm in the middle of a sales tax audit for this guy for 2004-2008. So,
it is really hard to get 2004 done without having the previous years
done first.

I know I sound really disorganized. I feel like I am--I have been
inputting into QuickBooks like crazy, just trying to get a grasp on all
of this financial information that he has been giving me. He gives me
it in pieces as he finds it.

--
Donna
Donna L. Loeffler, CPA
936 Church Avenue
St. Charles, MN 55972
(507) 251-8119
dllcpa@hbci.com
The information in this message, and any files transmitted with it, is confidential, may be legally privileged, and intended only for the use of the individual(s) named above. Be aware that the use of any confidential or personal information may be restricted by state and federal privacy laws. If you are not the intended recipient, do not further disseminate this message. If this message was received in error, please notify the sender and delete it.
IRS Circular 230 Disclosure: Unless expressly stated otherwise in this transmission, any tax advice contained herein, forwarded with or attached to this message was not and is not intended to be used, nor may it be relied upon or used, by any taxpayer for the purpose of (1) the avoidance of any tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions, or (2) promoting, marketing or recommending to another party any tax transaction or tax-related matters that may be addressed herein.

__._,_.___
IRS Circular 230 Disclosure: Unless expressly stated otherwise in this transmission, any tax advice contained herein, forwarded with or attached to this message was not and is not intended to be used, nor may it be relied upon or used, by any taxpayer for the purpose of (1) the avoidance of any tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions, or (2) promoting, marketing or recommending to another party any tax transaction or tax-related matters that may be addressed herein.
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[taxchat] Hasn't filed a tax return since 1999

I have a client who hasn't filed federal or state income tax returns
since 1999. I am going to order the 1999 tax return from the IRS.
However, I would like any tips from anybody as to what to do and what
not to do before I ask the IRS for copies of anything.

He has a notice from that state that they filed a return for him for
2004. They want the taxes they calculated.

I'm in the middle of a sales tax audit for this guy for 2004-2008. So,
it is really hard to get 2004 done without having the previous years
done first.

I know I sound really disorganized. I feel like I am--I have been
inputting into QuickBooks like crazy, just trying to get a grasp on all
of this financial information that he has been giving me. He gives me
it in pieces as he finds it.

--
Donna
Donna L. Loeffler, CPA
936 Church Avenue
St. Charles, MN 55972
(507) 251-8119
dllcpa@hbci.com
The information in this message, and any files transmitted with it, is confidential, may be legally privileged, and intended only for the use of the individual(s) named above. Be aware that the use of any confidential or personal information may be restricted by state and federal privacy laws. If you are not the intended recipient, do not further disseminate this message. If this message was received in error, please notify the sender and delete it.
IRS Circular 230 Disclosure: Unless expressly stated otherwise in this transmission, any tax advice contained herein, forwarded with or attached to this message was not and is not intended to be used, nor may it be relied upon or used, by any taxpayer for the purpose of (1) the avoidance of any tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions, or (2) promoting, marketing or recommending to another party any tax transaction or tax-related matters that may be addressed herein.

__._,_.___
IRS Circular 230 Disclosure: Unless expressly stated otherwise in this transmission, any tax advice contained herein, forwarded with or attached to this message was not and is not intended to be used, nor may it be relied upon or used, by any taxpayer for the purpose of (1) the avoidance of any tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions, or (2) promoting, marketing or recommending to another party any tax transaction or tax-related matters that may be addressed herein.
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RE: [taxchat] interest on a loan to S Corp by the shareholders

In my situation the Corp was filed Accrual (I did not file the first return), and the shareholder files cash.

 

Cris

 

From: taxchat@yahoogroups.com [mailto:taxchat@yahoogroups.com] On Behalf Of Colin Cody
Sent: Tuesday, September 30, 2008 11:18 AM
To: taxchat@yahoogroups.com
Subject: Re: [taxchat] interest on a loan to S Corp by the shareholders

 

For a cash basis s-corporation - I would prefer to say it this way:

 

In my practice I always make sure that my s-corp clients physically pay the interest annually, rather than deduct via some hokey journal entry.

My notes here (quickly) say TC Memo 1989-207 and TC Memo 1997-446  might support this position.

 

I should also do 1099-INT each year too, but for a $50 penalty I admit the taxpayer might "forget" to do this, mostly because my clients don't have the data to me in January.

 

I've noticed that with the new 1099-MISC vs. W-2 crackdown, that failure to file a 1099-MISC is being deemed to show that the payee was an employee, not a self-employed sub-contractor.  Who knows if this hard-line position will expand to 1099-INT? in some way or other?

 


Colin Cody, CPA


 

----- Original Message -----

Sent: Tuesday, September 30, 2008 1:17 PM

Subject: Re: [taxchat] interest on a loan to S Corp by the shareholders

 

Colin,

 

So are you saying as a practical matter that you would not deduct the Int until shareholder receives it?  That is what I interpret in your post.

 

Arnie

----- Original Message -----

From: Colin Cody

Sent: 09/30/2008 1:11 PM

Subject: Re: [taxchat] interest on a loan to S Corp by the shareholders

 

Cris,  I do not disagree

 

I'm saying that is not the whole story.

 

issue # 1  IMO,  the constructive receipt rule §1.267(a)-1(b)(1)(iii)  overrides the §267(a)(2) rule you posted below.

 

issue #2  is when the taxpayers are both cash basis.  Then the deduction technically can be denied to the s-corp until such time as they disburse the funds, but the constructive receipt rule, technically could require the income to be reported by the shareholder. and the difference?  probably would adjust basis of the common stock.   Rare, for sure, but as far as I know technically correct.  So I avoid it if at all possible, as I don't want it to be my oversight that caused the taxes to be assessed during an audit..

 


Colin Cody, CPA

----- Original Message -----

From: Cris Kelly

Sent: Tuesday, September 30, 2008 11:59 AM

Subject: RE: [taxchat] interest on a loan to S Corp by the shareholders

 

This is what I found in my Kleinrock master tax guide

See Code Sec. 267(a)(2) -- When different methods of accounting are used by related taxpayers, accrued interest and expenses owed to the related taxpayer may not be deducted until the time that the interest or expense is includible in the gross income of the cash basis payee.  Thus, an accrual-basis payor is placed on the cash basis for the purpose of deducting business expenses and interest owed to a related cash basis taxpayer.

The related taxpayers included in this rule are described in Code Sec. 267(b) and Code Sec. 267(e).

Cris

From: taxchat@yahoogroups.com [mailto:taxchat@yahoogroups.com] On Behalf Of Colin Cody
Sent: Monday, September 29, 2008 11:45 PM
To: taxchat@yahoogroups.com
Subject: Re: [taxchat] interest on a loan to S Corp by the shareholders

Stopping with the general purpose IRS Publications can give incomplete answers.   Per regs §1.267(a)-1(b)(1)(iii)  income is constructively received when it is available so that the related party had the ability to have drawn it -  which then overrides the rule in Pub 542 below .

I believe the problem is when the entity is on the cash basis... since there is no related "constructive disbursement" rule that I know of  ;-)


Colin Cody, CPA



 

----- Original Message -----

Sent: Monday, September 29, 2008 8:06 PM

Subject: Re: [taxchat] interest on a loan to S Corp by the shareholders

Awwww, shucks, Cris.  Since you called me a wonderful person, I just had to look this up for you.  I didn't have much time to spend on it because I'm kinda swamped right now, and I didn't have a cite because this was just one of those things I've always known, and I don't remember where I heard it.  I can give you this info that I found in Pub 542 (Corporations).  As you can see, this is a general rule that applies to most entities, not just corporations.  See Pub 542 for more info....

I hope this helps.

Related Persons

A corporation that uses an accrual method of accounting cannot deduct business expenses and interest owed to a related person who uses the cash method of accounting until the corporation makes the payment and the corresponding amount is includible in the related person's gross income......

Debbie B.

From: Cris Kelly

Sent: Monday, September 29, 2008 3:27 PM

Subject: [taxchat] interest on a loan to S Corp by the shareholders

I put this question up awhile ago, and Debbie B being the wonderful person that she is responded with the below.

“interest on loan to S Corp

An S-Corp cannot deduct accrued interest owed to a cash basis shareholder.  You can record the interest on the S-Corp books, but make an M-1 adjustment on the S-Corp tax return since it cannot be deducted until paid.

Debbie B”

The preparer doing their individual return wants to know why I am not deducting the amount on their return.  She does not think the ABOVE statement is correct.  I would also like to point out that she is the person that did the corp return the prior year and didn’t include any interest calculation!

I am going to start trying to find this written somewhere; however, I thought if anyone knew they could give me some directions to narrow done by research.

Thanks for the help,

Cris

__._,_.___
IRS Circular 230 Disclosure: Unless expressly stated otherwise in this transmission, any tax advice contained herein, forwarded with or attached to this message was not and is not intended to be used, nor may it be relied upon or used, by any taxpayer for the purpose of (1) the avoidance of any tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions, or (2) promoting, marketing or recommending to another party any tax transaction or tax-related matters that may be addressed herein.
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Re: [taxchat] interest on a loan to S Corp by the shareholders

For a cash basis s-corporation - I would prefer to say it this way:
 
In my practice I always make sure that my s-corp clients physically pay the interest annually, rather than deduct via some hokey journal entry.
My notes here (quickly) say TC Memo 1989-207 and TC Memo 1997-446  might support this position.
 
I should also do 1099-INT each year too, but for a $50 penalty I admit the taxpayer might "forget" to do this, mostly because my clients don't have the data to me in January.
 
I've noticed that with the new 1099-MISC vs. W-2 crackdown, that failure to file a 1099-MISC is being deemed to show that the payee was an employee, not a self-employed sub-contractor.  Who knows if this hard-line position will expand to 1099-INT? in some way or other?
 

Colin Cody, CPA

 
----- Original Message -----
Sent: Tuesday, September 30, 2008 1:17 PM
Subject: Re: [taxchat] interest on a loan to S Corp by the shareholders

Colin,
 
So are you saying as a practical matter that you would not deduct the Int until shareholder receives it?  That is what I interpret in your post.
 
Arnie
----- Original Message -----
From: Colin Cody
Sent: 09/30/2008 1:11 PM
Subject: Re: [taxchat] interest on a loan to S Corp by the shareholders

Cris,  I do not disagree
 
I'm saying that is not the whole story.
 
issue # 1  IMO,  the constructive receipt rule §1.267(a)-1(b)(1)(iii)  overrides the §267(a)(2) rule you posted below.
 
issue #2  is when the taxpayers are both cash basis.  Then the deduction technically can be denied to the s-corp until such time as they disburse the funds, but the constructive receipt rule, technically could require the income to be reported by the shareholder. and the difference?  probably would adjust basis of the common stock.   Rare, for sure, but as far as I know technically correct.  So I avoid it if at all possible, as I don't want it to be my oversight that caused the taxes to be assessed during an audit..
 

Colin Cody, CPA

----- Original Message -----
From: Cris Kelly
Sent: Tuesday, September 30, 2008 11:59 AM
Subject: RE: [taxchat] interest on a loan to S Corp by the shareholders

This is what I found in my Kleinrock master tax guide

See Code Sec. 267(a)(2) -- When different methods of accounting are used by related taxpayers, accrued interest and expenses owed to the related taxpayer may not be deducted until the time that the interest or expense is includible in the gross income of the cash basis payee.  Thus, an accrual-basis payor is placed on the cash basis for the purpose of deducting business expenses and interest owed to a related cash basis taxpayer.

The related taxpayers included in this rule are described in Code Sec. 267(b) and Code Sec. 267(e).

Cris

From: taxchat@yahoogroups.com [mailto:taxchat@yahoogroups.com] On Behalf Of Colin Cody
Sent: Monday, September 29, 2008 11:45 PM
To: taxchat@yahoogroups.com
Subject: Re: [taxchat] interest on a loan to S Corp by the shareholders

Stopping with the general purpose IRS Publications can give incomplete answers.   Per regs §1.267(a)-1(b)(1)(iii)  income is constructively received when it is available so that the related party had the ability to have drawn it -  which then overrides the rule in Pub 542 below .

I believe the problem is when the entity is on the cash basis... since there is no related "constructive disbursement" rule that I know of  ;-)


Colin Cody, CPA



 

----- Original Message -----

Sent: Monday, September 29, 2008 8:06 PM

Subject: Re: [taxchat] interest on a loan to S Corp by the shareholders

Awwww, shucks, Cris.  Since you called me a wonderful person, I just had to look this up for you.  I didn't have much time to spend on it because I'm kinda swamped right now, and I didn't have a cite because this was just one of those things I've always known, and I don't remember where I heard it.  I can give you this info that I found in Pub 542 (Corporations).  As you can see, this is a general rule that applies to most entities, not just corporations.  See Pub 542 for more info....

I hope this helps.

Related Persons

A corporation that uses an accrual method of accounting cannot deduct business expenses and interest owed to a related person who uses the cash method of accounting until the corporation makes the payment and the corresponding amount is includible in the related person's gross income......

Debbie B.

From: Cris Kelly

Sent: Monday, September 29, 2008 3:27 PM

Subject: [taxchat] interest on a loan to S Corp by the shareholders

I put this question up awhile ago, and Debbie B being the wonderful person that she is responded with the below.

"interest on loan to S Corp

An S-Corp cannot deduct accrued interest owed to a cash basis shareholder.  You can record the interest on the S-Corp books, but make an M-1 adjustment on the S-Corp tax return since it cannot be deducted until paid.

Debbie B"

The preparer doing their individual return wants to know why I am not deducting the amount on their return.  She does not think the ABOVE statement is correct.  I would also like to point out that she is the person that did the corp return the prior year and didn't include any interest calculation!

I am going to start trying to find this written somewhere; however, I thought if anyone knew they could give me some directions to narrow done by research.

Thanks for the help,

Cris

__._,_.___
IRS Circular 230 Disclosure: Unless expressly stated otherwise in this transmission, any tax advice contained herein, forwarded with or attached to this message was not and is not intended to be used, nor may it be relied upon or used, by any taxpayer for the purpose of (1) the avoidance of any tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions, or (2) promoting, marketing or recommending to another party any tax transaction or tax-related matters that may be addressed herein.
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__,_._,___

Re: [taxchat] interest on a loan to S Corp by the shareholders

Colin,
 
So are you saying as a practical matter that you would not deduct the Int until shareholder receives it?  That is what I interpret in your post.
 
Arnie
----- Original Message -----
From: Colin Cody
Sent: 09/30/2008 1:11 PM
Subject: Re: [taxchat] interest on a loan to S Corp by the shareholders

Cris,  I do not disagree
 
I'm saying that is not the whole story.
 
issue # 1  IMO,  the constructive receipt rule §1.267(a)-1(b)(1)(iii)  overrides the §267(a)(2) rule you posted below.
 
issue #2  is when the taxpayers are both cash basis.  Then the deduction technically can be denied to the s-corp until such time as they disburse the funds, but the constructive receipt rule, technically could require the income to be reported by the shareholder. and the difference?  probably would adjust basis of the common stock.   Rare, for sure, but as far as I know technically correct.  So I avoid it if at all possible, as I don't want it to be my oversight that caused the taxes to be assessed during an audit..
 

Colin Cody, CPA

----- Original Message -----
From: Cris Kelly
Sent: Tuesday, September 30, 2008 11:59 AM
Subject: RE: [taxchat] interest on a loan to S Corp by the shareholders

This is what I found in my Kleinrock master tax guide

See Code Sec. 267(a)(2) -- When different methods of accounting are used by related taxpayers, accrued interest and expenses owed to the related taxpayer may not be deducted until the time that the interest or expense is includible in the gross income of the cash basis payee.  Thus, an accrual-basis payor is placed on the cash basis for the purpose of deducting business expenses and interest owed to a related cash basis taxpayer.

The related taxpayers included in this rule are described in Code Sec. 267(b) and Code Sec. 267(e).

Cris

From: taxchat@yahoogroups.com [mailto:taxchat@yahoogroups.com] On Behalf Of Colin Cody
Sent: Monday, September 29, 2008 11:45 PM
To: taxchat@yahoogroups.com
Subject: Re: [taxchat] interest on a loan to S Corp by the shareholders

Stopping with the general purpose IRS Publications can give incomplete answers.   Per regs §1.267(a)-1(b)(1)(iii)  income is constructively received when it is available so that the related party had the ability to have drawn it -  which then overrides the rule in Pub 542 below .

I believe the problem is when the entity is on the cash basis... since there is no related "constructive disbursement" rule that I know of  ;-)


Colin Cody, CPA



 

----- Original Message -----

Sent: Monday, September 29, 2008 8:06 PM

Subject: Re: [taxchat] interest on a loan to S Corp by the shareholders

Awwww, shucks, Cris.  Since you called me a wonderful person, I just had to look this up for you.  I didn't have much time to spend on it because I'm kinda swamped right now, and I didn't have a cite because this was just one of those things I've always known, and I don't remember where I heard it.  I can give you this info that I found in Pub 542 (Corporations).  As you can see, this is a general rule that applies to most entities, not just corporations.  See Pub 542 for more info....

I hope this helps.

Related Persons

A corporation that uses an accrual method of accounting cannot deduct business expenses and interest owed to a related person who uses the cash method of accounting until the corporation makes the payment and the corresponding amount is includible in the related person's gross income......

Debbie B.

From: Cris Kelly

Sent: Monday, September 29, 2008 3:27 PM

Subject: [taxchat] interest on a loan to S Corp by the shareholders

I put this question up awhile ago, and Debbie B being the wonderful person that she is responded with the below.

"interest on loan to S Corp

An S-Corp cannot deduct accrued interest owed to a cash basis shareholder.  You can record the interest on the S-Corp books, but make an M-1 adjustment on the S-Corp tax return since it cannot be deducted until paid.

Debbie B"

The preparer doing their individual return wants to know why I am not deducting the amount on their return.  She does not think the ABOVE statement is correct.  I would also like to point out that she is the person that did the corp return the prior year and didn't include any interest calculation!

I am going to start trying to find this written somewhere; however, I thought if anyone knew they could give me some directions to narrow done by research.

Thanks for the help,

Cris

__._,_.___
IRS Circular 230 Disclosure: Unless expressly stated otherwise in this transmission, any tax advice contained herein, forwarded with or attached to this message was not and is not intended to be used, nor may it be relied upon or used, by any taxpayer for the purpose of (1) the avoidance of any tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions, or (2) promoting, marketing or recommending to another party any tax transaction or tax-related matters that may be addressed herein.
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__,_._,___

Re: [taxchat] interest on a loan to S Corp by the shareholders

Cris,  I do not disagree
 
I'm saying that is not the whole story.
 
issue # 1  IMO,  the constructive receipt rule §1.267(a)-1(b)(1)(iii)  overrides the §267(a)(2) rule you posted below.
 
issue #2  is when the taxpayers are both cash basis.  Then the deduction technically can be denied to the s-corp until such time as they disburse the funds, but the constructive receipt rule, technically could require the income to be reported by the shareholder. and the difference?  probably would adjust basis of the common stock.   Rare, for sure, but as far as I know technically correct.  So I avoid it if at all possible, as I don't want it to be my oversight that caused the taxes to be assessed during an audit..
 

Colin Cody, CPA

----- Original Message -----
From: Cris Kelly
Sent: Tuesday, September 30, 2008 11:59 AM
Subject: RE: [taxchat] interest on a loan to S Corp by the shareholders

This is what I found in my Kleinrock master tax guide

See Code Sec. 267(a)(2) -- When different methods of accounting are used by related taxpayers, accrued interest and expenses owed to the related taxpayer may not be deducted until the time that the interest or expense is includible in the gross income of the cash basis payee.  Thus, an accrual-basis payor is placed on the cash basis for the purpose of deducting business expenses and interest owed to a related cash basis taxpayer.

The related taxpayers included in this rule are described in Code Sec. 267(b) and Code Sec. 267(e).

Cris

From: taxchat@yahoogroups.com [mailto:taxchat@yahoogroups.com] On Behalf Of Colin Cody
Sent: Monday, September 29, 2008 11:45 PM
To: taxchat@yahoogroups.com
Subject: Re: [taxchat] interest on a loan to S Corp by the shareholders

Stopping with the general purpose IRS Publications can give incomplete answers.   Per regs §1.267(a)-1(b)(1)(iii)  income is constructively received when it is available so that the related party had the ability to have drawn it -  which then overrides the rule in Pub 542 below .

I believe the problem is when the entity is on the cash basis... since there is no related "constructive disbursement" rule that I know of  ;-)


Colin Cody, CPA



 

----- Original Message -----

Sent: Monday, September 29, 2008 8:06 PM

Subject: Re: [taxchat] interest on a loan to S Corp by the shareholders

Awwww, shucks, Cris.  Since you called me a wonderful person, I just had to look this up for you.  I didn't have much time to spend on it because I'm kinda swamped right now, and I didn't have a cite because this was just one of those things I've always known, and I don't remember where I heard it.  I can give you this info that I found in Pub 542 (Corporations).  As you can see, this is a general rule that applies to most entities, not just corporations.  See Pub 542 for more info....

I hope this helps.

Related Persons

A corporation that uses an accrual method of accounting cannot deduct business expenses and interest owed to a related person who uses the cash method of accounting until the corporation makes the payment and the corresponding amount is includible in the related person's gross income......

Debbie B.

From: Cris Kelly

Sent: Monday, September 29, 2008 3:27 PM

Subject: [taxchat] interest on a loan to S Corp by the shareholders

I put this question up awhile ago, and Debbie B being the wonderful person that she is responded with the below.

"interest on loan to S Corp

An S-Corp cannot deduct accrued interest owed to a cash basis shareholder.  You can record the interest on the S-Corp books, but make an M-1 adjustment on the S-Corp tax return since it cannot be deducted until paid.

Debbie B"

The preparer doing their individual return wants to know why I am not deducting the amount on their return.  She does not think the ABOVE statement is correct.  I would also like to point out that she is the person that did the corp return the prior year and didn't include any interest calculation!

I am going to start trying to find this written somewhere; however, I thought if anyone knew they could give me some directions to narrow done by research.

Thanks for the help,

Cris

__._,_.___
IRS Circular 230 Disclosure: Unless expressly stated otherwise in this transmission, any tax advice contained herein, forwarded with or attached to this message was not and is not intended to be used, nor may it be relied upon or used, by any taxpayer for the purpose of (1) the avoidance of any tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions, or (2) promoting, marketing or recommending to another party any tax transaction or tax-related matters that may be addressed herein.
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