Caputo Brosnan P.C. Newsletter
 July 2014




On July 1, 2014, the IRS released a short form application for small charities to use in requesting recognition of their 501(c)(3) tax-exempt status. The form is called 1023-EZ.


The new 1023-EZ is only 3 pages long, compared to the 26 pages and multiple added schedules in the standard 1023.


Organizations with less than $250,000 in assets and anticipated annual gross receipts of less than $50,000 will be eligible to use the short form.


Although there are still 2 pages of questions and a number of technical requirements which must be met, smaller charitable organizations should now find the qualifying process to be quicker, less onerous and less expensive.


We at Caputo Brosnan P.C. have experience with many types of charitable organizations including those involved in arts, education, amateur sports, as well as churches. We recently created the 501(c)(3) Public Charity, known as Friends of the Macomb County Veteran's Treatment Court.


If you are involved with a community service organization and think it may qualify as a 501(c)(3) organization, feel free to contact us for a consultation.








Baseball fans not only have to be on alert for fly-balls at the ballpark, now we can add hot dogs to that list.


The Missouri Supreme Court has ruled on behalf of a baseball fan who says he was hit in the eye with a hot dog thrown by the Kansas City Royals mascot, Sluggerrr.


The Plaintiff said he suffered a detached retina after he was hit in the eye by a hot dog thrown by Sluggerrr during a 2009 game.


The state's highest court said in a unanimous ruling that a legal standard called the baseball rule, which protects teams from being sued over fan injuries caused by events on the field, court or rink, didn't apply to a mascot tossing hot dogs to fans in the stands.


The state Supreme Court said the risk of being injured by a tossed hot dog is not an inherent risk of watching a baseball game. "That risk is no more inherent in watching a game of baseball than it is inherent in watching a rock concert, a monster truck rally, or any other assemblage where free food or T-shirts are tossed into the crowd to increase excitement and boost attendance," the Court said in its 36-page ruling.


Jurors should decide in a re-trial whether Sluggerrr tossed the hot dog that injured Plaintiff and whether Sluggerrr was negligent.





"Lexophile" is a word used to describe those that have a love for words. A competition to see who can come up with the best lexphillies is held every year in an undisclosed location. Enjoy some of the lexphillies from this year's competition, the winning submission is posted at the end; enjoy!



When fish are in schools, they sometimes take debate. 


A thief who stole a calendar got 12 months. 


When the smog lifts in Los Angeles U.C.L.A.


The batteries were given out free of charge. 


A dentist and a manicurist married. They fought tooth and nail.


A will is a dead giveaway. 


With her marriage, she got a new name and a dress. 


A boiled egg is hard to beat.


When you've seen one shopping center you've seen a mall.


Police were called to a day care center where a 3 year old was resisting a rest.


Did you hear about the fellow whose whole left side was cut off? He's all right now.


A bicycle can't stand alone; it is two tired.


When a clock is hungry it goes back four seconds.


The guy who fell onto an upholstery machine is now fully recovered.


He had a photographic memory which was never developed.


When she saw her first strands of grey hair she thought she'd dye.


Acupuncture is a jab well done. That's the point of it.


Those who get too big for their pants will be exposed in the end. 


Quick Links







The Federal Tax Court recently ruled that the one IRA rollover per year rule applies to ALL of the taxpayer's IRA's rather than to each IRA separately. This ruling is in direct conflict with IRS Publication 590, the bible for IRAs.


There are two ways to move money from one IRA to another:


Transfers. The taxpayer directs that money from one IRA be directly deposited into another IRA. The taxpayer does not receive the money and the transaction is not reported to the IRS. This type of transaction is not affected by the ruling.


Rollovers. With a rollover, the taxpayer withdraws (takes possession of) the IRA funds but pays no tax on the withdrawal if the funds are returned to an IRA within 60 days. This can only be done once annually. The IRS, through their regulations and publications, has for over 20 years applied the rollover rule on a "Per-IRA" basis.


The following was still on the IRS website as of June 29, 2014:


Generally, if you make a tax-free rollover of any part of a distribution from a traditional IRA, you cannot, within a 1-year period, make a tax-free rollover of any later distribution from that same IRA. You also cannot make a tax-free rollover of any amount distributed, within the same 1-year period, from the IRA into which you made the tax-free rollover.


The 1-year period begins on the date you receive the IRA distribution, not on the date you roll it over into an IRA.




You have two traditional IRAs, IRA-1 and IRA-2. You make a tax-free rollover of a distribution from IRA-1 into a new traditional IRA (IRA-3). You cannot, within 1 year of the distribution from IRA-1, make a tax-free rollover of any distribution from either IRA-1 or IRA-3 into another traditional IRA.


However, the rollover from IRA-1 into IRA-3 does not prevent you from making a tax-free rollover from IRA-2 into any other traditional IRA. This is because you have not, within the last year, rolled over, tax free, any distribution from IRA-2 or made a tax-free rollover into IRA-2.


Alvan Bobrow rolled over two distributions from his IRAs and in reliance upon the published IRS instructions asserted that they were tax free because they were done in a timely manner and involved different IRAs.


The IRS disagreed and determined that only one of the two rollovers was valid. So, Uncle Sam and Mr. Bobrow went off to court. The Tax Court, much to the surprise of all IRA experts, agreed with the IRS. The mistake cost Mr. Bobrow an additional $51,298 in income tax and a penalty of $10,260.


You can read the full details of the case here:


United States Tax Court vs. Bobrow, et al 


The bottom line is only one of Mr. Bobrow's distributions was eligible for rollover during the 12 month period. The Tax Court concluded that the Internal Revenue Code Section 408(d)(3)(B) limitation applies to all of the taxpayer's retirement accounts and that regardless of how many IRAs a person maintains, a taxpayer may make only one nontaxable rollover contribution within each one year period.


In other words, taxpayers have been operating under the impression that what is written in IRS Publication 590 is correct, but it is not.


The Bobrow case highlights an important rule that is sometimes overlooked


If conflicting information is provided in multiple sources, one must consider the hierarchy and reliability of such sources. In this case, Publication 590 is not authoritative and is not considered official guidance. The Tax Code is the more authoritative, and supersedes any other guidance in the event of conflict.


The IRS has said that it will be changing its publications; changing what they have been saying for 20 years. The IRS will implement this change for everyone beginning in 2015; except Mr. Bobrow who has to pay those taxes and penalties.




Thomas Jefferson


Thomas Jefferson would have been 271 years old this year. He was born April 13, 1743 and died on July 4, 1826, on the 50th anniversary of the signing of the Declaration of Independence.


In celebration of our nation's independence here are 10 interesting facts about the versatile Founding Father.

  • Lover of Books - After Jefferson retired he sold his library of 6,500 volumes to the Library of Congress after it was ransacked by the British. 
  • Economist - Jefferson learned economic theory while he spent time in France. He believed in free market policies and opposed bank notes as currency. 
  • Architect - Jefferson designed the rotunda for the University of Virginia, his home in Monticello and the Virginia State Capitol. 
  • Foodie - During his visit to France, Jefferson acquired a taste for the French cuisine. James Hemings accompanied Jefferson as his slave during his visit and the pair agreed that if Hemings learned how to prepare French cuisine he would be freed on his return to America. 
  • Wine Snob - Jefferson had two vineyards at Monticello. He was known as a great wine expert of early America and sought to promote wine as an alternative to whiskey and cider. 
  • Agriculturalist - Jefferson believed in the U.S. as an agrarian society. He was one of the first American farmers to employ crop rotation and redesigned the plow to make it more efficient. 
  • Paleontologist - Jefferson was obsessed with fossils and was involved in a great debate about the mammoth that became a political cause. He even has a mammoth named after him. 
  • Writer - The Thomas Jefferson Papers at the Library of Congress includes about 27,000 documents, including his extensive correspondence with key historical figures. 
  • Musician - Jefferson was violinist. He used his violin to court his wife Martha Skelton. He later changed his tone and complained about music being played in the New World as being in a "state of deplorable barbarism."