Q. I obtained an automatic extension for filing my 1989 tax returns, but now the returns are due Aug. 15.
My accountant has asked me to get him all the relevant documentation by the first of August, so that the tax returns can be returned in time to meet the deadline.
I am trying to put together these documents, but was curious to know whether the Internal Revenue Service issues any publications that might give me some guidance.
I own some investment real estate as well as my own home, and am quite confused by all the new laws.
A. The Internal Revenue Service does indeed publish a number of helpful booklets. In fact, the IRS also provides free tax information and services, so you may want to obtain publication 910, "Guide to Free Tax Services for Tax Year 1989," for your assistance.
This booklet is available from your local IRS office or you can call a toll-free number from 8 a.m. to 5 p.m. weekdays and 9 a.m. to 3 p.m. on Saturday. The toll-free number is 1-800-424-3676. According to the IRS, you should receive your order within seven to 10 working days after you call.
The IRS also has a toll-free telephone assistance operation, which is available in all 50 states, the District of Columbia, Puerto Rico and the Virgin Islands.
By using the toll-free system, you can get answers to your tax questions and pay only local charges. There is no long-distance charge for your call. In the Washington Metropolitan area, the number is 488-3100.
I have reviewed many of the various IRS publications and have found them relatively helpful.
However, everyone makes mistakes. Indeed, when there is a split of authority as to whether certain items are deductible, often the IRS will give only its position, and will not necessarily give you both sides of the issue.
For example, as this column has discussed regarding the taxable benefits of vacation homes, the Tax Court has permitted a formula by dividing the total number of days rented by the total number of days in the year.
Despite this Tax Court opinion, which has been affirmed in the 9th and 10th Circuit Courts of Appeal, the IRS still takes the position that you have to divide the total days rented only by the total number of days used.
This can make a significant difference to taxpayers, but IRS publication 527 entitled "Residential Rental Property (Including Rental or Vacation Homes)" does not advise the taxpayer of these options.
Thus, when you review these helpful publications, keep in mind that the IRS often is advocating its own position and not necessarily the interpretation of the Internal Revenue Code as decided by the Tax Court or by federal appellate courts.
There are many, many IRS publications. The following are but selected documents that may be helpful to you in analyzing your real estate-related tax issues. I have broken this down into two categories, residential and investment activities, with publication number and title:
Residential 54 Tax Guide for U.S. Citizens and Residents
504 Aliens Abroad
515 Tax Information for Divorced or Separated Individuals
523 Tax Information on Selling Your Home
530 Tax Information for Homeowners (Including Owners of Condominiums and Cooperative Apartments)
551 Basis of Assets
554 Tax Information for Older Americans
555 Community Property and the Federal Income Tax
588 Tax Information for Homeowners Associations
908 Bankruptcy and Other Debt Cancellation
Investment Activities 527 Residential Rental Property (Including Rental of Vacation Homes)
536 Net Operating Losses
537 Installment Sales
545 Interest Expense
587 Business Use of Your Home
589 Tax Information on S Corporations
925 Passive Activity and At-Risk Rules
There are many other publications, but the previous one mentioned will highlight some of the important ones for your immediate use.
A strong caution has to be given. While these booklets are helpful, clearly no booklet can address each specific issue that all of us have.
You are wise to consult your tax adviser for assistance in preparing your own tax returns.
Benny L. Kass is a Washington lawyer. For a free copy of the booklet "A Guide to Settlement on Your New Home," send a self-addressed, stamped envelope to Benny L. Kass, Suite 1100, 1050 17th St. NW, Washington, D.C. 20036.