Mike Giangrande, J.D., LL.M.

Federal Tax Editor

Have you ever wanted to slam your head on the desk because you accidentally e-filed a planning file from your tax software? Confession: I have! And I will never. Ever. Do. It. Again. Here’s what I do now every time I copy a file to use as a planning file in my tax software:

• Very first thing — uncheck the stinkin’ e-file box.
• Second thing — change your client’s SSN/EIN to something fictional, such as 111-22-3333. However, don’t pick random numbers like 568-22-6689 because that’s probably someone else’s SSN (I apologize ahead of time to whoever this person might be).

By doing these two very simple tasks, you will never accidentally e-file your client’s planning file, then have to apologize profusely to the client, then file an amended return, then eat the cost of an audit because the IRS wants to know why your amended return removed $1 million of income from the originally filed return.

Kathryn Zdan, EA

Editorial Director

“We do not follow maps to buried treasure, and “X” never, ever marks the spot.” — Indiana Jones

In 1988, having received a diagnosis of terminal cancer, art dealer Forrest Fenn conceived of a treasure hunt project. He gathered gold nuggets, rare coins, jewelry, and gemstones (together valued around $2 million) and hid them somewhere in the Rocky Mountains, in a small wooden and metal box believed to be from the 12th century. Flash forward to 2010: He had recovered from his illness, and he published a memoir that contained clues to where the treasure was located.¹ The race was on.

Even though Fenn insisted treasure seekers needn’t scale rock walls or attempt to move heavy boulders to find the prize, the search was fraught with mishaps.² Several people were arrested for digging holes in state parks or for damaging other artifacts during their search. One man was banned from Yellowstone after getting trapped while searching; he was also fined $4,000 for his rescue costs. And sadly, five people died while trying to locate the treasure.

Over the years, people called the treasure a hoax. They implored Fenn to call off the search when people lost their lives. Then in the summer of 2020, reports appeared that the box had been found, but the location and the finder’s identity were being kept a secret. Following a lawsuit, in December 2020 the treasure finder came forward: Jack Stuef, a medical student from Michigan.³

Stuef is about to get a lesson in tax, though … time to trot out the old piano.

Found property is includable in gross income in the tax year in which a taxpayer has “undisputed possession.”⁴ This is illustrated in the classic Cesarini case involving a piano in which taxpayers found almost $5,000.⁵ The taxpayers had purchased the piano seven years prior to finding the cash and tried to argue that was the year of undisputed possession, for which the statute of limitations had conveniently expired. The year of possession was ultimately determined to be the year in which they found the cash inside the piano.

The value of Fenn’s treasure box is includable as ordinary income on the 1040 on Line 8 in the year the items were found. If Stuef hangs on to the items for a later sale, the gain or loss on appreciation from the date the coins were found to the date of sale would be capital gain/loss, assuming he’s not in the trade or business of selling coins or nuggets or jewels.

Diane Fuller and Lynn Freer, EA

Have you noticed how we’re bombarded with acronyms? In a world where even “thank you” has been reduced to “Ty,” we’re all suffering from acronym overload.

At the end of 2019, after a year of confusion over TCJA acronyms, a group of frustrated Spidell editors declared 2020 an acronym-free year. But before the end of the first quarter, with the FFCRA, we were again pulled into the quagmire of acronyms.

For the tax community, consider these new acronyms we got from 2020 federal legislation: CAA, FFCRA, ACRRA, TCDTRA (which our own Mike Giangrande lovingly named the “Wanna buy a vowel?” Act), PPP, PPPHCE, PPPFA, PPPEA, ERC, EIP, CARES, SECURE, and PUA.

ICYMI, the ACRRA (Additional Coronavirus Response and Relief Act, part of the Consolidated Appropriations Act of 2021 (CAA)) reopened the Paycheck Protection Program (PPP) loan program ASAP. FYI, the program has now been extended to March 31, 2021, with more funding for PPP loans and with set-asides for certain businesses (IMO, it might be too little, too late, for many businesses, but WTH). New PPP funds are available either as second draw loans for smaller businesses whose gross receipts have dropped or as supplemental funding for original PPP loans. And the ACRRA makes it clear that expenses paid with forgiven PPP loan amounts are deductible on the federal return, TYVM.

BTW, it can be fun to get creative with acronyms, e.g., ACRRA — Acronyms Cause Raging Recurrent Anger. We’d love to hear your ideas … just RSVP to this e-mail. We’ll probably all LOL.

Also, does anyone remember Roy Can Just Get Sam? Not an acronym, but it’s how I learned the dependency tests: Relationship, Citizenship/residency, Joint return, Gross income, Support.

For those who aren’t textperts, here’s what some of the above acronyms mean:

BTW: By the way

ICYMI: In case you missed it

IMO: In my opinion

LOL: Laugh out loud

TYVM: Thank you very much

WTH: What the heck

In the upcoming weeks, we’ll review some of the other 2020 tax acronyms and give them new meaning!