In her column in the September, 2009 issue of TAXES — The Tax Magazine, Susan Kalinka discussed the recent Tax Court ruling in P.D. Garnett and the U.S. Court of Federal Claims opinion in J.R. Thompson, agreeing with the Garnett court. Determining whether a member of an LLP or LLC is a general partner or a limited partner is a thorny issue facing members of these entities. Material participation is one of the most important requirements under the passive activity loss rules. The Tax Court in Garnett held that members of a LLC or LLP are general partners under Code Sec. 469(h)(2). CCH is pleased to feature this insightful article, the last submission from Susan Kalinka prior to her untimely death this month. We remember Susan as meticulous, passionate and brilliant as an author, and witty and kind as a friend and colleague.

In the July-August 2009 issue of the International Tax Journal, Mark A. Oates and James M. O’Brien analyze the Ninth Circuit’s recent decision in Xilinx, which indicated that the cost sharing regulations set forth in Reg. §1.482-7 (1995) are incompatible with the general arm’s-length standard of Code Sec. 482. The authors examine why the arm’s-length standard has not only been adopted by the United States but by the international community and explain that Treasury and the IRS intended the cost sharing regulations to be fully compliant with and governed by the arm’s-length standard..

In their article, Bernie Madoff “Made Off” with My Investment: Evaluating the Tax Options Available for Victims of Fraudulent Investments appearing in Vol. 8 No. 2 of the Journal of Taxation of Financial Products, Andrea Kramer and Thomas Ward explain the complicated situation facing taxpayers who have suffered losses resulting from fraudulent investment schemes. The authors point out that it wasn’t just Madoff who engaged in this fraud, but that 2008 was a big year for Ponzi schemes, which is affecting untold numbers of taxpayers.

Robert Wood, in the August, 2009 issue of M & A Tax Report discusses the continuing influence of the IRS victory in the 1992 Indopco case and the continuing uncertainty involved in the treatment of certain fees involved in changing a corporate structure.