In United States v. Windsor (570 U.S.___, 133 S. Ct. 2675(2013)), the United States Supreme Court held that Section 3 of theDefense of Marriage Act is unconstitutional because it violates theequal protection principles of the Constitution. As a result ofthis ruling, the IRS issued Revenue Ruling 2013-17, whichrecognizes same-sex marriages for Federal tax purposes if theindividuals are lawfully married under state law. As a generalrule, the IRS will recognize a marriage of same-sex individualsthat was validly entered into in a state whose laws authorize themarriage of two individuals of the same sex even if the marriedcouple is domiciled in a state that does not recognize the validityof same-sex marriages. (Rev. Rul 2013-17) This ruling appliesprospectively as of September 16, 2013. In addition, the ruling maybe relied upon in filing amended tax returns for any open year.Assume it is March 2014 and you are a senior associate at Ernest,Frank, and George, CPAs. Your clients are Andrew Bond and CharlesDavis. They were lawfully married in Massachusetts in 2006. Theyreside in Orlando, FL a state with no individual income tax. Theyhave provided you with their Federal tax returns for 2010, 2011,and 2012 (provided in a separate file), which were timely filedusing the Single filing status. They would like to know if theyshould amend their tax returns for these years using the MarriedFiling Joint status. Additionally, they want to know which filingstatus they should use for 2013, Married Filing Joint or MarriedFiling Separate. Andrew and Charles have provided the followingadditional information: 2010 Andrew worked full time as anengineer. Charles had an unpaid internship during the springsemester. He took graduate courses during the summer session andstarted working as the activities director in the fall. 2011 Andrewworked full time. Charles worked full time. 2012 Andrew workedduring the first few months of the year, but then took a sabbaticalto take care of his sick mother. Charles worked full time. Neithermade any charitable contributions. 2013 Andrew worked full time.Charles worked full time. Neither made any charitablecontributions. Your manager, Harry Idleman, has asked you toprepare an analysis of the tax situation for Andrew and Charles.Specifically: Should they amend their 2010 tax returns? Should theyamend their 2011 tax returns? Should they amend their 2012 taxreturns? What filing status should they use to file their 2013 taxreturns? To allow you to focus on the analysis, Harry asked a staffmember to prepare mock Married Filing Joint tax returns for 2010 â2012 (provided in a separate file). For 2013, the staff memberprepared proforma tax returns using the Married Filing Joint andMarried Filing Separate filing statuses. Deliverable: Pleaseprovide a memo to the file with your recommendations and supportingcalculations regarding the decision to amend prior year returns andthe appropriate filing status to use for the 2013 tax return. Harryalso asked you to prepare a memo documenting several topicsillustrated by this case. Several deductions and credits wereaffected by the choice of filing status and AGI levels when the taxreturns were combined. Please document the impact of filing statusand AGI on phase-outs for each year, e.g. in 2010, Andrewâs AGI istoo high to claim the deduction for student loan interest whenfiling Single. The memo should also include your findings about themarriage tax penalty, when it is likely to exist, and how this caseexemplifies this issue. Please provide a memo to the filedocumenting the impact of filing status and AGI on phase-outs and abrief discussion of the marriage tax penalty. Deliverable: Memo tothe file regarding the impact of filing status and AGI onphase-outs and the impact of the marriage tax penalty.Additionally, Andrew and Charles would like to know if Andrewshould itemize his deductions for 2013 if they file Married FilingSeparate. They would also like to know if there are any tax ornon-tax issues, other than refund status, they should considerbefore amending their tax returns. Please prepare a letter to theclient regarding the results of your analysis as well as addressingthese issues. Deliverable: Client letter discussing which, if any,returns to amend, your filing status recommendation for 2013, ifthey should itemize their deductions for 2013, and any other issuesthey should consider before amending returns and selecting a filingstatus.
In United States v. Windsor (570 U.S.___, 133 S. Ct. 2675(2013)), the United States Supreme Court held that Section 3 of theDefense of Marriage Act is unconstitutional because it violates theequal protection principles of the Constitution. As a result ofthis ruling, the IRS issued Revenue Ruling 2013-17, whichrecognizes same-sex marriages for Federal tax purposes if theindividuals are lawfully married under state law. As a generalrule, the IRS will recognize a marriage of same-sex individualsthat was validly entered into in a state whose laws authorize themarriage of two individuals of the same sex even if the marriedcouple is domiciled in a state that does not recognize the validityof same-sex marriages. (Rev. Rul 2013-17) This ruling appliesprospectively as of September 16, 2013. In addition, the ruling maybe relied upon in filing amended tax returns for any open year.Assume it is March 2014 and you are a senior associate at Ernest,Frank, and George, CPAs. Your clients are Andrew Bond and CharlesDavis. They were lawfully married in Massachusetts in 2006. Theyreside in Orlando, FL a state with no individual income tax. Theyhave provided you with their Federal tax returns for 2010, 2011,and 2012 (provided in a separate file), which were timely filedusing the Single filing status. They would like to know if theyshould amend their tax returns for these years using the MarriedFiling Joint status. Additionally, they want to know which filingstatus they should use for 2013, Married Filing Joint or MarriedFiling Separate. Andrew and Charles have provided the followingadditional information: 2010 Andrew worked full time as anengineer. Charles had an unpaid internship during the springsemester. He took graduate courses during the summer session andstarted working as the activities director in the fall. 2011 Andrewworked full time. Charles worked full time. 2012 Andrew workedduring the first few months of the year, but then took a sabbaticalto take care of his sick mother. Charles worked full time. Neithermade any charitable contributions. 2013 Andrew worked full time.Charles worked full time. Neither made any charitablecontributions. Your manager, Harry Idleman, has asked you toprepare an analysis of the tax situation for Andrew and Charles.Specifically: Should they amend their 2010 tax returns? Should theyamend their 2011 tax returns? Should they amend their 2012 taxreturns? What filing status should they use to file their 2013 taxreturns? To allow you to focus on the analysis, Harry asked a staffmember to prepare mock Married Filing Joint tax returns for 2010 â2012 (provided in a separate file). For 2013, the staff memberprepared proforma tax returns using the Married Filing Joint andMarried Filing Separate filing statuses. Deliverable: Pleaseprovide a memo to the file with your recommendations and supportingcalculations regarding the decision to amend prior year returns andthe appropriate filing status to use for the 2013 tax return. Harryalso asked you to prepare a memo documenting several topicsillustrated by this case. Several deductions and credits wereaffected by the choice of filing status and AGI levels when the taxreturns were combined. Please document the impact of filing statusand AGI on phase-outs for each year, e.g. in 2010, Andrewâs AGI istoo high to claim the deduction for student loan interest whenfiling Single. The memo should also include your findings about themarriage tax penalty, when it is likely to exist, and how this caseexemplifies this issue. Please provide a memo to the filedocumenting the impact of filing status and AGI on phase-outs and abrief discussion of the marriage tax penalty. Deliverable: Memo tothe file regarding the impact of filing status and AGI onphase-outs and the impact of the marriage tax penalty.Additionally, Andrew and Charles would like to know if Andrewshould itemize his deductions for 2013 if they file Married FilingSeparate. They would also like to know if there are any tax ornon-tax issues, other than refund status, they should considerbefore amending their tax returns. Please prepare a letter to theclient regarding the results of your analysis as well as addressingthese issues. Deliverable: Client letter discussing which, if any,returns to amend, your filing status recommendation for 2013, ifthey should itemize their deductions for 2013, and any other issuesthey should consider before amending returns and selecting a filingstatus.
