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Ricedoll's Issues with US Taxation

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Re: Ricedoll's Issues with US Taxation

Postby sundaymorningstaple » Sun, 28 Feb 2016 3:01 pm

Over the past decade it as amounted to an average of around 1200 a year in Singapore. Which translates to a way bigger percentage than the 4000/ex US/year.

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Re: Ricedoll's Issues with US Taxation

Postby sundaymorningstaple » Sun, 28 Feb 2016 3:09 pm

BBCWatcher wrote:
sundaymorningstaple wrote:Good riddance springs to mind.

I have no problem with any legally competent adult who decides to terminate any citizenship per its democratically decided termination provisions.[/quote

Two things. listening to ricebowl's ranting for the past three days, I question the term 'legally competent adult".

And I still disagree with your contention that the termination provisions are democratically decided. You give far too much credence to your education and not enough credence to what actually happens on the ground. Nothing is democratically decided in the US anymore and hasn't be for quite a long time. I said my piece about that earlier though. Any time the president can circumvent Congress with 'executive orders' says it all.

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Re: Ricedoll's Issues with US Taxation

Postby BBCWatcher » Sun, 28 Feb 2016 5:01 pm

sundaymorningstaple wrote:Any time the president can circumvent Congress with 'executive orders' says it all.

No, you're just factually wrong, entirely. Sorry about that, but let's look at the facts.

Virtually all U.S. presidents issue executive orders. For example, President George Washington, the first U.S. president, issued eight of them. President William Henry Harrison issued zero, but he died of pneumonia on the 32nd day of his presidency, so he didn't have much time to write any.

At President Obama's current pace of issuing executive orders he will issue fewer of them per year of his presidency than any other president has at least in the past century.

All U.S. presidents are democratically elected, although four of them have lost the popular vote: John Quincy Adams (1824), Rutherford B. Hayes (1876), Benjamin Harrison (1888), and George W. Bush (2000). (Oddly enough the only two U.S. presidents who were sons of U.S. presidents both lost the popular vote, although George W. Bush won the popular vote in his election to a second term.) The current president has won majority (not only plurality) popular votes in both his elections.

Congress (also democratically elected) is by no means powerless. If Congress objects to a president's executive order or to any agency rulemaking it has ample power to overturn such actions, either through legislation (with a veto override if necessary) or through impeaching and removing the president from office. The voting public also has the power to overturn executive orders or agency rulemaking through election of a new president.

If all that's not enough, Congress has recently debated tightening U.S. citizenship termination provisions, and Congress and the President explicitly agreed to the current U.S. citizenship termination policies only a few years ago, including the current U.S. Expatriation Tax. That bipartisan cooperation stretches at least as far back as the Foreign Investors Tax Act of 1966 but also includes these expatriation-related tax laws:

Health Insurance Portability and Accountability Act of 1996
American Jobs Creation Act of 2004
Heroes Earnings Assistance and Relief Tax Act of 2008

For example, the House and Senate voted for the "Heroes" Act (H.R. 6081) unanimously, and the bill was signed by President George W. Bush only one month after it was first introduced in the House. The Heroes Act includes the current U.S. Expatriation Tax regime, directly translated into IRC 877A with immediate effect as soon as the President signed the law. That (2008) was even an election year, so if the public was upset with every single incumbent House member the voting public had the chance to vote them all out just five months later. Suffice it to say the voting public is not at all upset about the U.S. Expatriation Tax regime.

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Re: Ricedoll's Issues with US Taxation

Postby x9200 » Sun, 28 Feb 2016 5:50 pm

ricedoll wrote:Our income is not from a US company either. How dare you use the word OWE?

You could exercise your luck and earn money hardworking for the opportunity the country, the past and current generations of the citizens created for you. Yes, it's an old fashion and sounds like a cliche and hard to understand for the generations who never had really to fight for some basic rights, but like it or not, you owe them a lot. Be happy it comes down only to the money.

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Re: Ricedoll's Issues with US Taxation

Postby ricedoll » Sun, 28 Feb 2016 5:59 pm

Oh boy, you sound just like my father-in-law!

We did not get into such a good job and high income from a DIRECT relationship / benefit of a US passport. We got there because of our brains, our hard work and luck. Our high income reflects NO direct relationship or cause-and-effect with the US passport. We don't owe the US anything. In your words, do you mean anyone with American ancestors / American blood should pay taxes no matter where they live today?

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Re: Ricedoll's Issues with US Taxation

Postby x9200 » Sun, 28 Feb 2016 6:39 pm

No, I don't mean having ancestors (as of the family). It's more universal than this. If I become a citizen of Singapore I will also owe this country something, because I will make my life based on the rudiments they created. I have no ancestors in Singapore, but if not the work of many people, this could be a kampong (economically) and then I would unlikely like to be a citizen of it.

Your brains would mean little if you were born in an African jungle and abandoned there to exercise your luck and hardworking, even if you were taken care by your parents (also living there). It's not like everybody hardworking and lucky got their chances. The opportunity has to be created. This is a classical case of the entitlement complex. You simply even don't see that your wealth and fortune was built on somebody's else work and lives. You act like your are living in a self sustaining and completely independent entity just existing for the time of your productive lifespan. Unfortunately this is not true. Even if your husband left the US as an infant, most likely his parents benefited from the opportunity the country created for them. Would he be in the place he is now, with all his brain and luck if he was born in this proverbial jungle? I sincerely doubt it. The old fashion patriotism is actually very pragmatic.

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Re: Ricedoll's Issues with US Taxation

Postby ricedoll » Sun, 28 Feb 2016 6:55 pm

Okay I agree to your reasoning. BUT why is it only the US? Why so exclusive?

Does it work like I'm repaying money for the opportunities the country has created for me? Or does it work like Asian filial piety where I give my parents money for the years the brought me up? This unreasonable taxation has no justifiable reasoning. Your reasoning only makes you feel more comfortable being taxed. But this is not the ultimate reason of the CBT taxation.

As much as you make it sound like "ok, I am paying taxes because I'm successful being born in the US and eventually got a good job." Have you heard of Accidental Americans? They are born in the US, many left as infants, spent decades overseas and now the IRS is after them, treating them as Americans who have used the facilities and systems of the country. In fact many Canadian Americans are filing a lawsuit regarding this matter.

Accidental Americans' U.S. citizenship arises due to their parents' ties to the United States rather than their own choices: they may be born in their own country but to one U.S. citizen parent who emigrated from the United States, or they may be born in the U.S. to parents residing in the country temporarily for work or study and then return to their own country in their early childhood, with few if any memories of the United States. The term may also sometimes be applied to people who definitely are not U.S. citizens but have some other sort of connection with the country, for example green card holders who moved back to their country of origin and let their green cards expire without formally cancelling their U.S. immigration status, or non-U.S. citizens married to Americans abroad. Such tenuous connections to the United States began to become a more salient issue in the late 2000s due to Internal Revenue Service crackdowns which were ostensibly aimed at tax evaders hiding assets in secrecy jurisdictions but ended up having much broader effects on people with U.S. citizenship who resided in other countries, as well as their families.

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Re: Ricedoll's Issues with US Taxation

Postby BBCWatcher » Sun, 28 Feb 2016 8:15 pm

All citizenships come with a mix of evolving rights, privileges, obligations, and responsibilities. Some of these attributes may be intergenerational and/or lifecycle. Like every other country, the U.S. has established and periodically refines its full definition of citizenship (and permanent residence).

It's your husband's decision whether he wants to continue with that deal or wants to exit that deal. About 800,000 individuals each year want in on the deal, and about 5,000 each year want out (including exiting PRs). Obviously in the global marketplace of citizenships the consensus view is that U.S. citizenship is a fantastic deal. (It happens to be the citizenship in highest global demand if Gallup's survey is even remotely indicative.) But if your husband disagrees, no problem, the U.S. Embassy on Napier Road awaits. The embassy accepts major credit cards to pay the $2350 fee, the IRS provides Form 8854 (and all other IRS forms) online, and SingPost will deliver completed forms to the IRS.

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Re: Ricedoll's Issues with US Taxation

Postby ricedoll » Sun, 28 Feb 2016 9:40 pm

People who wants to be in on the deal, are mainly people who would likely be planning on living and working in the US. Paying US taxes would be compulsory and I don't think they would find it unfair. You pay taxes to the country you live and work in.

It could be one of the following IMAGINED scenarios:
Perhaps they have better job opportunities in the US
Perhaps they come from places with less freedom/opportunities of all aspects
Perhaps they pay even higher taxes in the country they are from
Perhaps they want affordable big houses and cars
Perhaps the US, geographically, is one of the better countries in the region / hemisphere they come from
Perhaps they met their wives online and the wives have been wanting to get out of their country
Perhaps... who knows what they are thinking?

But we are in NONE of these categories. Those are people who love uncle Sam and love to live there. They see their future in the system and policies. They don't mind the rate of gun violence / mass shootings. They might prefer to stay. WE, on the other hand, are people who are losing hope in the system, worry about mass shootings, NEVER intend to return; we have better jobs and better pay here.

Or you could say the super rich ditching their blue passports as a wise financial move. How many super rich are migrating into the US vs renouncing their US passports each year? Don't just compare general numbers. Financial reason wise, I quote a friend of an Ex-American saying:

I have a friend who gave up his based on the math alone. What held him back initially was the prospect of his children not enjoying citizenship when he has any and retirement. But he figured the extra money he can pocket for the next 35 years of his professional career will make up for all that.


EXACTLY! And for us, its beyond taxation. Its about never returning to the US, its about us liking the world outside of the US, its about us having better job stability and better International School education for our kids; tax is only one part of it. And thanks for letting me how much the renouncing fees cost.

When the news broke a year ago that the U.S. was hiking the fee to renounce U.S. citizenship by 422% there was a backlash. If anything, the uptick in American expatriations grew rather than declined. The U.S. State Department said raising the fee for renunciation of U.S. citizenship is about demand and paperwork. Perhaps, but a hike from $450 to $2,350 is still steep. That is more than twenty times the average level in other high-income countries.


Now I wonder why Uncle Sam skyrocketed the fees? To firewall rich people from renouncing or... I don't know? Please enlighten me. And thank god its only $2000. Not $20,000 EVERY SINGLE YEAR. We've got our coins all saved up in the piggy bank! :D

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Re: Ricedoll's Issues with US Taxation

Postby x9200 » Mon, 29 Feb 2016 8:55 am

ricedoll wrote:Okay I agree to your reasoning. BUT why is it only the US? Why so exclusive?

Does it work like I'm repaying money for the opportunities the country has created for me? Or does it work like Asian filial piety where I give my parents money for the years the brought me up? This unreasonable taxation has no justifiable reasoning. Your reasoning only makes you feel more comfortable being taxed. But this is not the ultimate reason of the CBT taxation.

I know close to nothing about the US tax system so I can not speculate here but I can try on a more general level.
I believe it is not that unique, it is just manifested differently. If you are a good earning individual in many, if not the most of the countries you are taxed more per your income unit. This means, that if you reside in a country, you pay for yourself and you pay something extra for something you never use (a simplification of course). In other words, you have like 2 components in the taxes you pay and only one is related to your physical residency (the services you use). Based on this, it appears only logical you still need to pay something even if you are not a resident but earn some good money.

I am again not a tax expert so I can not compare in details different countries, but I would expect all this to be reasonably balances among most of the 1st world countries. What I mean, how much and who needs to pay for what and what s/he gets out from this at the end. Likely the countries with the taxes based on the residency time have the "expatriate" tax factored in, in the taxes of the better earning individuals. Is it more or less fair? I would say less.

Besides, the U.S. is a big and proud country and may have it's own ways. Despite of various political and economical troubles I don't foresee any shortage of high quality individuals willing to be the U.S. citizens. So afterall, perhaps what SMS mentioned earlier (not sure if this was his intention though to put it in such wide context) the riddance is the main reason. I mean, not only the tax violators, but wealthy people who are very unhappy to pay something extra for their country. If the country by any chance is in more serous troubles such people will be first to flee or abandon it for their own personal safety and other benefits.

ricedoll wrote:As much as you make it sound like "ok, I am paying taxes because I'm successful being born in the US and eventually got a good job." Have you heard of Accidental Americans? They are born in the US, many left as infants, spent decades overseas and now the IRS is after them, treating them as Americans who have used the facilities and systems of the country. In fact many Canadian Americans are filing a lawsuit regarding this matter.

A collateral damage from the system that perhaps needs a non-oppressive solution in place but I believe in most of such cases it was possible renounce the U.S. citizenships before reaching the productive age. Or not? Is it any worse comparing to the NS system in Singapore? Is it any worse for any other country with compulsory NS?

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Re: Ricedoll's Issues with US Taxation

Postby BBCWatcher » Mon, 29 Feb 2016 11:57 am

x9200 wrote:Is it any worse comparing to the NS system in Singapore? Is it any worse for any other country with compulsory NS?

Easy answer: no. But this is not an argument relatively well-to-do people (or above) like. This reality, that there are about 40 countries with compulsory military service (but not the U.S.), is "inconvenient." ;)

Oddly enough the United States actually tested whether well-to-do people thought money was more or less important than their compulsory military service. During the U.S. Civil War there was a military draft, but the U.S. Army wasn't particularly fussy about which able bodied soldiers it got. It was legal at the time for somebody who was drafted to pay somebody else (who wasn't) to take his place at whatever level of private compensation they agreed to, and with that compensation contractually enforceable. Many well-to-do people did exactly that, directly paying others to take their places as soldiers. So there you go: the well-to-do understand quite well that their money is less valuable than their involuntary servitude, and they willingly part with the former to avoid the latter. Jack Benny might have had a tough time deciding, but he was the rare exception, as his audience well understood. (In subsequent wars, particularly and most notoriously in the Vietnam War, plenty of well-to-do people used their wealth to help their sons avoid military service, but it wasn't as directly transactional as it was during the Civil War.)

Another "inconvenient" truth is that U.S. taxes are substantially lower than OECD norms in part because of the approximately 6% of U.S. persons living overseas who pay some amount of U.S. tax on non-U.S. source income, including Ricedoll's husband, including me. So here's a tough but fair question for those who don't like this "Six Percent Club" arrangement: which U.S. taxes do you propose raising to make up for the revenue losses if you were to eliminate all tax liability on this 6%, including the revenue losses when many well-to-do Americans join them to "reside" in low tax jurisdictions? (Monaco, Andorra, and a few other places are real places where Europe's elite reside or "reside." Let's not kid ourselves. The U.S. would have its own equivalent to Monaco in this event.) Who among remaining U.S. residents will pay those higher taxes? What's the alternative tax plan, and do you have ample political support for your tax proposal? ("No" is the easy answer to the second half of that question.)

Look, I don't like the fact that U.S. citizenship occasionally comes with some obligations and responsibilities. Of course I wish I could enjoy rights and privileges without any obligations or responsibilities -- that'd be lovely. However, I'm an adult not prone to temper tantrums, and I do understand there's more to the world than the numeric representation of my individual net worth -- an accounting construction created and maintained by government also, by the way. Civil society has to take a few other factors into consideration, including in the design of its tax system. There's absolutely nothing wrong with the American deal as offered, obviously. Just look at the numbers of all the people who desperately want in on that deal. As another data point, there are approximately 11 million individuals living (and often working) in the United States without legal permission to do so, and nearly all of them would gladly accept U.S. citizenship if it were offered. The United States has always had a relative trickle of individuals terminate their citizenships -- with a lot of evidence there was a much bigger percentage trickle at other points in U.S. history -- and it always will. You can't please everyone all the time. If an adult doesn't like that deal (or even wants to throw a tantrum), no problem, there's an exit door available. Buh bye.

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Re: Ricedoll's Issues with US Taxation

Postby BBCWatcher » Mon, 29 Feb 2016 12:33 pm

x9200 wrote:....I believe in most of such cases it was possible renounce the U.S. citizenships before reaching the productive age. Or not?

Sorry, I missed this part of your question. Yes, any U.S. citizen adult can renounce his/her own citizenship. That option is available at any time from the individual's 18th birthday onward and occasionally before that (if the individual is legally emancipated).

There's a fee of $2350 to renounce or document relinquishment of U.S. citizenship. The U.S. State Department argues that this is the true, fully burdened, average cost of processing and issuing a Certificate of Loss of Nationality (CLN). The State Department is probably correct. Anything lower would be subsidized, and anything higher would be a penalty. Congress, with the President's agreement, has ordered the State Department to have cost recovery fees for most of its services, including services citizens enjoy such as U.S. passport renewals. I don't actually think that government should operate that way as a general matter, on a strict fee-for-service basis, but if it does operate that way it's only fair that departing U.S. citizens pay their true costs, too. So $2350 it is at the present time.

If a young U.S. citizen is at least somewhat clever he/she will file four annual U.S. tax returns to claim the American Opportunity Tax Credit, worth $1,000 per year in free money from the IRS if that individual is qualified. Then pay the $2350 if desired. In other words, U.S. citizenship is incredibly often highly profitable, even in "corner" cases.

If this hypothetical young adult has a net worth of $2 million or more (or in a couple other narrow instances) he/she might be subject to a U.S. Expatriation Tax. However, one of the exceptions to the Expatriation Tax is if a young adult also possessed another citizenship from birth, lives in that country and paid its taxes, has not been physically present in the U.S. "too much," and renounces. There aren't too many 18 year olds with $2 million or more in global assets (to say the least), but even then an Expatriation Tax waiver often applies.

U.S. citizens are U.S. citizens in legal fact, whether documented or not, from the moment they are born. If they're undocumented then legally they have all the obligations and responsibilities of U.S. citizenship but cannot operationally enjoy the rights and privileges of that citizenship. In my view that's a dumb idea (and not only for that reason), but there are a very few wacky (at least in my view) U.S. citizen parents who seriously consider leaving their U.S. citizen children born overseas undocumented. It costs $100 to document a baby's U.S. citizenship. The tax breaks under current tax law for having a U.S. citizen child are quite significant. So my advice would be to pay the $100, take the tax breaks, then pay the $2350 if/when your young adult child asks. I don't understand parents who would do anything else -- it's truly alien to me and doesn't seem rational, even if all you care about is your personal bank account balance. (But some people aren't rational.)

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Re: Ricedoll's Issues with US Taxation

Postby PNGMK » Mon, 29 Feb 2016 1:50 pm

Can you explain this better?

Wrong. You are obliged to file only if you meet the income filing threshold. However, for the ~94% of Americans living overseas who genuinely owe zero U.S. tax, the penalty for failure to file a U.S. tax return is ZERO. (As a separate matter, they must file a financial account disclosure form if they meet that threshold, and there is a published failure to file penalty, but no tax is ever owed with that form.)
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Re: Apply for PR with different passport? (Dual national)

Postby maneo » Mon, 29 Feb 2016 3:53 pm

ricedoll wrote:If he sells our house where we are living now, the US taxes the profit of this transaction! This is not just filing taxes, but paying taxes on what you make through your own overseas property!(

If you sell your primary residence (i.e. where you are living now) you should be entitled to the homeowners' exclusion (currently $500K for joint filing).
Check with your tax preparer/attorney.

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Re: Ricedoll's Issues with US Taxation

Postby sundaymorningstaple » Mon, 29 Feb 2016 4:01 pm

The income filing requirements for the YE2015 range between 10,300 and 17,850 depending on your marital/filing status. If, depending on your filing status, your income for the years is below those figures, you need not file any tax return (but you better keep records of your income for at least 7 years in any case). However, of the ~94% of Americans living over seas, probably the majority make well above those figures but because of the Income Earned Abroad Exclusion and the various tax credits, do NOT actually own any taxes at all the penalty figure for failure to file is zero. However, I'm not so sure about that.
From Pub 54
3) My entire income qualifies for the foreign earned income exclusion. Must I file a tax return?
Generally, yes. Every U.S. citizen or resident who receives income must file a U.S. income tax return unless total income without regard to the foreign earned income exclusion is below an amount based on filing status. The income levels for filing purposes are discussed under Filing Requirements in Chapter 1.


http://www.lexisnexis.com/legalnewsroom ... pheld.aspx

Foreign Earned Income Exclusion Timely Election Rules Upheld

The Tax Court recently upheld the validity of Treasury Regulations Section 1.911-7(a)(2) in a case where the taxpayer sought application of the foreign earned income exclusion (FEIE) under IRC Section 911, but was denied the exclusion because she had failed to make a timely election pursuant to Section 1.911-7(a)(2). [McDonald v. Commissioner, TC Memo 2015-169]. In the case, the taxpayer worked overseas in 2009 but did not file an income tax return for that year. [Id]. In 2010 the IRS prepared and filed for the taxpayer a substitute for return (SFR) for 2009, and in April 2012 the IRS issued a notice of deficiency (NOD) for 2009. [Id]. The taxpayer did not challenge the NOD, but instead filed a return for the 2009 tax year in May 2012. The taxpayer attached to the return a Form 2555, “Foreign Earned Income” form, claiming an exclusion for a portion of her income earned in 2009, and included a payment. [Id]. The IRS audited the taxpayer’s return and issued a second NOD in which the Service denied the taxpayer’s claimed foreign earned income exclusion on the grounds that:

1) the taxpayer did not make a valid election and did not file Form 2555 with a timely-filed return;

2) did not elect to exclude the foreign income on a prior return; and

3) did not otherwise comply with the procedure for making a valid election to exclude the foreign income under Section 1.911-7(a)(2).

The sole issue in the case was whether the taxpayer was entitled to the FEIE. The taxpayer’s claim that she was entitled to the exclusion was based primarily on her argument that Section 1.911-7(a)(2) was invalid. [Id]. The FEIE is provided for in IRC Section 911, which states: “At the election of a qualified individual (made separately with respect to paragraphs (1) and (2)), there shall be excluded from the gross income of such individual, and exempt from taxation . . . for any taxable year – (1) the foreign earned income of such individual, and (2) the housing cost amount of such individual.” [IRC Section 911(a)]. [Id]. The procedural rules for making an election are provided in Regulations Section 1.911-7. Regulations Section 1.911-7(a)(2) provides for the requirement of a return when making an election under IRC Section 911. As discussed by the court, Regulations Section 1.911-7(a)(2)(i) establishes the timing requirements under which a valid FEIE election can be made, and the regulation provides four alternative timing methods via which a taxpayer can make a valid election. [Id].

The court held that the Secretary had the statutory authority to impose a deadline for electing the FEIE. The court found that the Secretary had the authority under IRC Section 7805(d) to prescribe when the election was to be made. [Id]. The court also held that the regulation’s deadline was reasonable. [Id]. The court noted that the court had addressed and rejected the same challenge to Section 1.911-7(a)(2)in a prior case [Faltesek v. Commissioner, 92 T.C. 1204 (1989) ] where the court had held that the alternative periods in Section 1.911-7(a)(2)(i)(A) through (C) were not unreasonable or arbitrary and “were within the specific authority granted to the Secretary under section 911 as well as the Secretary’s general authority to promulgate regulations under section 7805.” [Id].

The court concluded that:

. . . the Secretary’s interpretation and implementation of the statute is valid, because it reasonably implements Congress's specific grant of authority in section 911(d)(9) to prescribe regulations that are necessary and appropriate to carry out the purposes of the statute, and Congress's general grant of authority under section 7805(d) to prescribe rules for the time and manner of making elections under the Code. The regulation provides taxpayers with four alternative methods by which they can timely elect the FEIE. The fact that the Secretary could have chosen longer periods within which to permit the election is of no consequence, because the alternative methods with four varying periods are reasonable. [Id].

Accordingly, the court ruled in favor of the Service and granted the Service summary judgment in the case. [Id]. The court’s clear and concise opinion presents an interesting example of the burden a taxpayer faces when challenging the validity of a treasury regulation.


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