Tuesday, August 4, 2009

US Tax Court rejects IRS position on deducting losses in LLC's

LLCs, LLPs, and tenancies-in-common should be aware of this US Tax Court decision:
In a recent Tax Court case, the IRS asserted that interests in LLCs, LLPs, and tenancies-in-common were limited partnership interests, thereby disallowing losses to the individual owners generated by passive investments. However, the Tax Court determined that the ownership interests were not the same as limited partners and that the losses were therefore fully deductible.

The IRS argued that the Petitioners' interests in the tavpayers' various companies should be considered as limited partners in limited partnerships, which then presupposes that the subject interests' income is generated from passive activities. Underlying the IRS position was inability of the subject interests to control the parent entities, and the limited liability the interests received in exchange for the lack of control. The holding companies were disregarded by the IRS.

The taxpayers argued that § 469(h)(2) was not applicable because none of the companies in which they owned interests were limited partnerships and because the subject interests were general partner interests rather than limited partner interests.

The Court disagreed with the IRS position and cited the legislative history of the regulations in finding that that although Congress considered limited liability in the enabling legislation, limited liability was not the only determinative factor.

Further, Congress believed that statutory restriction on a limited partner's ability to manage the business meant the limited partner did not materially participate. The Tax Court believed such logic did not apply to the taxpayers' interests in this case, as their interests were not restricted statutorily from participation in company management. Accordingly, the Tax Court ruled the taxpayers' interests were general partners' interests within the meaning of the regulations. Therefore the losses generated by the interests were allowed by the Tax Court.

Paul D. Garnett and Alicia Garnett v. Commissioner, 132 T.C. No. 19, Docket No. 9898-06, June 30, 2009.

Wednesday, July 8, 2009

I-9 enforcement inspections

Immigration Customs and Enforcement (ICE) has just announced a new initiative whereby it will conduct I-9 enforcement inspections at 652 companies nationwide. It is important that companies conduct inhouse I-9 audits in order to ensure compliance with all I-9 regulations. If you would like assistance in this matter or have questions regarding I-9 compliance and/or employer sanctions, call our immigration department: 603-669-2211.
www.wiggin-nourie.com/pdfs/ICE I-9.pdf

“What part of illegal don’t you understand?”

That was a theme running through many of the letters and emails our office received, as well as in posts on various blogs, four years ago when we successfully defended clients charged with criminal trespass. Why criminal trespass? The cases arose when the Chiefs of Police in Hudson and New Ipswich, New Hampshire arrested and charged our clients because they did not have valid immigration status.



First, the part I do understand…

I understand that it is illegal for a non-citizen to enter the country without inspection; specifically, it is a class B misdemeanor or a “petty offense” as defined under federal immigration law and criminal law. This criminal provision of the law is, in my experience, seldom used except at the border. Rather, the cases are most often handled as civil matters. Most people who enter the United States without inspection and are later caught by Immigration & Customs Enforcement Officers are not charged with a crime – they are charged as being deportable from the United States. They go to a specialized administrative court called the Immigration Court, which is part of the Department of Justice.

Now here’s the part I don’t get…

With a very few exceptions, people who have lived here for decades get basically the same deal as those who illegally crossed the border last week. The petty offender gets nearly the same treatment as the very dangerous criminal – and that treatment is deportation. This is a problem. Why? You might ask. If they all broke the law they should be treated equally and get the same punishment right?


The United States has a “destroy the village to save the village” strategy when it comes to immigration policy. When we deport someone who has been here 10, 15, or even 20 plus years – that person often has a home, a business or a strong work history, and a family. So what is the result? It can often be a fire sale of the family home, a business closure or an employer who loses productivity while training a new worker, and U.S. born children that end up on public assistance or in foster care. For a class B misdemeanor? This is not smart public policy; it is self-defeating and unnecessary.

We have the right as a country to limit immigration levels and to secure our borders. However, that we have the right to deport persons from our soil if we wish does not mean that we should always do so. The United States needs some alternative remedies for dealing with immigration law violations. Alternatives that are not so destructive to the economy and the society that (through our laws) we claim to be trying to preserve.

In the 1990’s there was a program that allowed illegal immigrants to become legal residents if they had a U.S. citizen spouse or a U.S. employer to petition for them. They had to be otherwise admissible (meaning no serious criminal record, no communicable diseases, not likely to use public benefits, and no prior deportations, etc…) and they had to pay a $1,000.00 fine on top of the usual fees (over a thousand dollars each) the government charges immigrants to process their paperwork. That is called paying a fine for breaking the law; that is not amnesty -- unless you consider it an act of amnesty when you pay a speeding ticket.

Legalization of those immigrants who are not a danger to the public and who have family and employment ties to the United States would bring thousands of dollars per capita in fees to the U.S. Treasury ($24 billion perhaps). Investigating, detaining, trying and deporting a far smaller number of these same people each year costs the tax payers millions of dollars. There is no logic to inflicting emotional and financial damage on families and communities and to emptying the Treasury on account of the vast majority of illegal immigrants who are not terrorists or hardened criminals or otherwise undesirable. So why do we continue this way? It is time to change our approach.

“FAIR and Unbalanced”

There is more at work in America’s immigration policy debate than the simple logic of law enforcement. There is a coordinated attempt to blame immigrants for most, if not all, of society’s ills and to dehumanize them and make them objects of hatred and derision. I don’t just mean the talk radio and television pundits. Their constant drumbeat of negative stereotyping, name calling and scapegoating is an important part of driving any rational debate into the ditch. However, there is another more insidious factor at play.

You might remember hearing about how the cigarette companies used to commission their own studies from their own laboratories staffed by scientists and doctors on the company payroll. What a surprise it was that they concluded that cigarettes were safe and nicotine was not addictive. It’s kind of the same with anti-immigrant research. When Lou Dobbs, Pat Buchanan or Sean Hannity needs an anti-immigrant study, report or poll to quote they can turn to several organizations for back up such as the Federation for American Immigration Reform (FAIR), the Center for Immigration Studies, or NumbersUSA.

The problem is (according to the Southern Poverty Law Center) all of these organizations owe their existence to one very rich and very racist man named John Tanton. Check this SPLC link to find out more about Tanton and his organizations.


It took a long time to get past the propaganda machine that cigarette money built. I hope it doesn’t take as long for people to realize that much of the complaining and pot stirring about illegal immigration is being bought and paid for by a small number of wealthy cranks. Here’s another name to be aware of - Frosty Wooldridge (notice who he is talking up in his online article?):


Unfortunately, when people with power, money and a media platform start broadcasting messages of fear and hate it can have some really horrible effects downstream when the not so rich and powerful take up the cause in violent ways. Scott Roeder’s “alleged” murder of abortion providing physician George Tiller and James Von Brunn’s “alleged” recent murder of security guard Stephen T. Johns at the Holocaust Museum in Washington, DC are the most publicized episodes of right wing domestic terrorism by mentally unbalanced individuals.

Here are links to some stories that discuss, if not acts of domestic terrorism, certainly crimes motivated by hate and fear of immigrants. These appear to be crimes committed to send the message that immigrants (and Latinos in particular) are not welcome in the United States. The seed of that message germinates in groups like John Tanton’s; it is spread on a cultivated field by hate spouting media and it flowers in acts of violence.




Tuesday, July 7, 2009

Comprehensive Immigration Reform

Is there a chance for Comprehensive Immigration Reform this year? The list of proponents is growing.

Response to immigration a 'test of our humanity,' Archbishop Chaput says at forum

Colin Powell on Comprehensive Immigration Reform

Texas Police Chief Says Immigration Reform needed to help fight crime

Amoskeag Business Incubator

As a board member of the Amoskeag Business Incubator, I am pleased to announce that on June 18, 2009, the Yankee Chapter of the Public Relations Society of America presented the ABI with the 2009 Patrick Jackson Award. The award is a given to an organization that shows concern for the common good, excels at building relationships that earn the trust of the community and has an effective presence within the community.

The mission of the ABI is to provide a supportive entrepreneurial environment that stimulates the growth of businesses which ensures economic vitality and encourages job creation. The mission is accomplished by providing affordable office space and technical assistance to early stage companies. In light of the current economic landscape, in which history proves can spawn innovation and encourage business start-ups, the ABI is an exceptional resource for new companies with high growth potential. A job loss may prompt individuals to venture out on their own or partner with others who have been impacted by downsizing. The ABI is an ideal environment for these new businesses to grow and prosper.

Thank you to the ABI an its staff for improving our community.

For more information about the ABI, please visit: http://www.abi-nh.com

Friday, May 15, 2009

Got Milk?

GOT MILK? Then thank an immigrant.

A recent Associated Press story highlights the part Latino immigrants have played in saving what is left of the family dairy farm in Vermont and other states throughout the country. These dairy farms do not fit neatly into the usual media description of large, greedy corporate villains that are exploiting undocumented workers -- and keeping jobs from US citizens in order to cut payroll costs. The fact is, even if times as tough as these it is hard to find citizens who are willing to work on the farm. These are jobs that offer difficult hours, bad weather, and physical exertion; the pay is not necessarily bad -- but it is not enough to say attract unemployed software engineers from Boston or unemployed autoworkers from the mid-west. Yet there are still workers who will journey from Guatemala or Mexico for these jobs and other farming jobs around the country in what some like to call the "Real America".

To link to the story: http://www.burlingtonfreepress.com/article/20090514/NEWS02/90514008

Old Promises and New Blood...

That is the title of a report produced in November of 2008 by the Reform Institute in Washington, DC. Past Directors of the Reform Institute include former New Hampshire Congressman Charlie Bass.

The report points out that the impending retirement of the baby boom generation will present enormous challenges to the United States economy and push entitlement programs such as social security and Medicare to their limits and beyond. As approximately 78 million Americans begin to exit the workforce over the next two decades, how can we as a nation continue to grow the economy? Retirees tend to reign in their spending and many move from their long-time residences to smaller retirement homes or even assisted living facilities -- what can support the market for family housing (which even now is just beginning to recover from the bursting of the housing bubble) in the years to come?

The report explains that immigration has to be part of the answer. The United States population is getting older. This is particularly true here in New England which has the highest median aged population in the country. Immigrants tend to be younger people and to have more children than longer established American families. If we as a country do not encourage immigration, we face the prospect of having only a little more than two workers supporting every retiree. Social security and Medicare cannot function properly under that kind of stress. If we are going to find rational solutions to the demographic and economic challenges ahead -- we as a country have to get over our fear of people from elsewhere moving here. If we cannot find a way to welcome and assimilate a new generation of immigrants into this country, our standard of living is likely to suffer.

To read the report (requires Adobe Reader): http://www.reforminstitute.org/uploads/publications/Old_Promises_New_Blood_Final_11-21-08.pdf

Friday, May 8, 2009

ICE Enforcement Strategy

Immigration Customs and Enforcement has set forth its strategy for enforcement of employer sanctions.


Monday, May 4, 2009

Immigration Reform and Improved Economy

The Wall Street Journal links immigration reform with an improvement in the econonmy.


Comprehensive Immigration Reform

All signs point toward comprehensive immigration reform and it may be sooner than we think.

http://immigrationimpact.com/2009/04/30/immigration-reform-100-days-obama-schumer-dhs/ See also: http://immigrationimpact.com/2009/04/29/immigration-reform-obama-100-days/


On April 30, 2009, Immigration Customs and Enforcement (ICE) announced a new strategy for enforcement of employer sanctions. For details see the ICE release at:



Funding for the controversial E-Verify program will end in September 2009. Because of the reliability issues, many businesses want the program to remain voluntary. Advocates for stricter immigration want mandatory participation. To understand the history or E-Verify and the issues involved see this article from the Migration Policy Institute.


Wednesday, April 29, 2009


A recent op-ed piece in the Wall Street Journal notes that Immigration Reform might be just the medicine that the economy needs to get back on its feet. Immigrants have always been a driving force for the American economy. Here in New Hampshire, immigrants came by the thousands to work in the mills producing textiles and many other goods during the Industrial Revolution. Immigrants built the railroads that connected this country and opened up the west. Immigrants have worked on our skyscrapers and in our shipyards as well as in our fields and orchards; contributing to every aspect of what makes America great. As the article points out, immigrants have also been largely responsible for the innovation of the United States economy, holding many patents and creating many of today's best known American high-tech firms.

There are many ways that immigration reform can help revive our economy. When Asian and South Asian engineering students come to the United States to earn their degrees (which they do in far larger numbers than U.S. citizens) shouldn't we try to employ them here so they can buy houses and goods and services here rather than send them home to create tech companies that compete with our firms? If you want an economic shot in the arm...how many millions of immigrants that currently have no legal status do you suppose would be willing to pay a hefty fine for violating the immigration laws if they could gain legal residency and remain in their jobs and with their family without fear? Those same millions of immigrants who currently are part of the underground economy could then become taxpayers and could have the security, the legal status, and the credit to buy a home and perhaps a even a new car.

The time for trying to find someone to blame for the bad economy is over; now is the time to find pragmatic solutions for getting the country working again. Immigration reform is one of those solutions; hard working and entrepreneurial immigrants have always been one of this country's great economic advantages -- and should be in the future.

To see the article click here:

White House Announces Plans For Immigration Reform

Congress is considering a plan for Comprehensive Immigration Reform. That reform will include a pathway for undocumented aliens to obtain legal status as well as reform of the system that forces extremely long waiting times for both family and employer based cases. http://money.aol.com/article/white-house-announces-plans-for/422003?icid=sphere_wsj_teaser