Playing 21 Questions

Today TaxMama hears from Roger in Portugal, who got his hands on a super-secret list of questions submitted to IRS by Kris, in the far north.

1.Is any form of bonus depreciation available for a new sleigh purchased before December 25?

2.Is Section 179 available for the purchase of a new sleigh?

3.If elves render services on a part time basis, is there any way to treat them as independent contractors as opposed to employees?

4.Can the acquisition cost and maintenance costs associated with a uniform worn once a year be deducted?

5.Are cookies and milk a gift or income under the “disinterested generosity” test of Duberstein?

6.If the cookies and milk are income, how should they be valued?

7.Are all of the expenses associated with reindeer maintenance deductible?

8.What method of depreciation is proper for a toy factory building?

9.Is the North Pole an Enterprise Zone?

10.Is the North Pole a foreign country for tax purposes?

11.Does the Internal Revenue Service consider a recognized “Citizen of the World” as one of its citizen’s for tax purposes?

12.If the taxpayer asking these questions resides in Florida for more than 183 days each year and there is no Income Tax Treaty with the North Pole, is the taxpayer a resident for tax purposes in the US regardless of his citizenship?

13.Is the Taxpayer engaged in a trade or business in the US?

14.Does the taxpayer owe any type of excise tax for using the airspace of the United States?

15.Does the Taxpayer owe any type of environmental tax or fee due as a result of in flight or roof top reindeer droppings?

16.If the taxpayer is subject to US taxation and wishes to set up a defined benefit plan, what actuarial tables are available to determine the deduction that account for the fact that the taxpayer is immortal?

17.The same question as #16 except in the context of establishing a charitable remainder trust? Is there no current deduction because the taxpayer is immortal?

18.What method of inventory should the taxpayer be using? All toys are delivered in the same year they are made and no cash or charge payments are received but see cookie and milk question above?

19.Is a home office deduction available for the office where the taxpayer answers the letters of children?

20.Is any gift tax due from the Taxpayer for presents left that exceed the annual gift tax exclusion per donee? Assume that the taxpayer used up the unified credit amount.

21.Is the taxpayer at risk of a criminal investigation? He says that there have been many questions about how he obtains his supplies, etc. to make the toys, provides the clothing for, and houses and feeds everyone, at the North Pole. (He heard about SB/SE Commissioner Brown’s “Cost of Goods Sold” comment at the November IRSAC meeting.)

And, remember, you’ll find lots of silliness and answers to questions about all kinds of tax issues, free. Where? Where else? At TaxMama.com

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