June 5, 1992

Should You Have a Living Will?

          As American society has experienced rather rapid lifestyle changes over the past several decades, questions have surfaced that challenge the way individuals plan for the future. What are your feelings concerning life-support systems for the terminally ill? What decision would you want your family to make if faced with the question of whether to forego or terminate life-sustaining medical treatment for you?

          Those who would choose death in the face of critical or terminal illness are receiving support. At the present time all states but Pennsylvania and Nevada have passed some form of law dealing with the requirements for living wills or health care proxies. While a health care proxy allows you to appoint someone to make decisons on your behalf, a living will allows you to specify the particular types of treatment you would like to have provided or withheld. Each state has its own set of requirements.

          A living will is a medical directive written in advance, which sets forth an individual`s preference for treatment in the event of his or her inability to direct care. The document may be drafted to include when the directive should be initiated and who has the decision-making responsiility to withdraw or withhold treatment.

          In addition to allowing respect for the wishes of the individual, the living will helps to alleviate feelings of guilt or uncertainty experienced by the those faced with the responsibility of making important decisions for loved ones.

          Even more far reaching is a new federal law that went into effect in December of 1991 requiring all health care providers that receive Medicare and Medicaid to inform everyone over age 18 of their right to determine how they want to deal with this issue and whether they want to fill out a living will. If you recently received information on this subject, it`s no coincidence, since the new law also requires increased emphasis on community outreach and education. Known as the Patient Self-Determination Act, the new law will impact virtually every hospital, nursing home and health maintenance organization (HMO) throughout the country. It is important to note that the law doesn`t require health care providers to ensure that their patients have a living will; instead, it only requires that health care providers ask whether the patient would like to have one.

          At the present time, it appears as if most of these organizations have determined that the most appropriate time to deal with the problem is when a patient is admitted. Therefore, the next time you are admitted to a hospital, even for something as minor as having a mole removed, don`t be surprised if someone requires you to fill out a form which asks whether you have a living will and whether you would like more information.

          The living will is a legal document, and the requirements for its validity are quite specific. Each state has its own laws, and it is important to consult with your legal advisor beofre making any decisions about a living will. While it can be an uncomfortable subject to confront, taking action in advance is simply good planning that can save your loved ones considerable heartache.

          If you do not have another attorney who can prepare such a document, as an attorney specializing in Elder Law, I can prepare it for you.

New IRS Collection Policy

          In a recent memo to collection personnel, the Assistant Commissioner stated the IRS` new policy on offers in compromise. This policy states clearly that the IRS will accept an offer if the amount offered reasonably reflects collection potential. The IRS believes this policy might bring in money which is worth more on a present value basis than money that might be collected in the future.

          We have a problem with this policy since in a recent meeting I had with the Manhattan District Director, he was unsure what the policy was and how it would be implemented.

IRS Acquiesces in Tax Court Decision Giving Sole Proprietor Above the Line Deduction for Professional Fees

          Few Service about-faces have been as thorough as the revised official position on legal and accounting fees of sole proprietors. The Service appears to have finally laid the matter to rest with a reversed non-acquiescence. It now agrees with a 35 year-old Tax Court Case that OK`d above-the-line deductions for legal and accounting fees paid in a tax dispute involving a sole proprietor.

          The controversy resurfaced in 1991, with the release of a surprising private ruling that held a sole proprietor`s Schedule C tax-return preparation fees were below-the-line deductions. In a Revenue Ruling issued last month the Service effectively revoked the private ruling and declared unequivocally that the following items are deductible above-the-line on Schedule C (with similar treatment OK`d for Schedule E and F related work):

• The fee for preparing a sole proprietor`s Schedule C; and
• Professional fees paid in connection with resolving tax disputes relating to the sole proprietor`s business.

          Last month`s Revenue Ruling reversed a 1970 Revenue Ruling that denied above-the-line deductions for litigation expenses paid in connection with a tax dispute involving a sole proprietor`s business. Now, with its acquiescence on the issue in the recent Court case, the Service has closed the book on the subject.

          We will continue to take the position, unless our clients state otherwise, that the fee we charge is for the principal purpose of preparing the Schedule C or Schedule E and therefore should be reflected above the line and not as an itemized deduction on Schedule A.

New York Taxes Beepers

          Effective June 1, 1992, New York State is imposing a $1 a month fee on paging devices used or authorized for use in New York, when used in conjunction with a paging service that is provided for consideration. If you believe you are being unfairly subjected to this law there are a limited amount of exemptions from this law. You should call us.

Strategic Alliance

          In a further effort to bring the best service to our Macintosh based clients we have established a relationship with A La Carte Systems, one of the largest Macintosh consulting groups in the country. For further details call me.

More on Kuwait and Saudi Arabia

          For those of you who are less than enamored with Kuwait and its wealthy Arab brethren, it may be of interest to note that the son of the Suadi Arabian King, the former finance minister of Kuwait and the oil minister of the United Arab Emirates, as well as other wealthy Arabs have formed a corporation called Investcorp that now owns Carvels, Tiffany`s, Saks Fifth Avenue and 50% of Gucci. I for one, shall miss Tom Carvel`s gravelly voice and Cravel ice cream.

          If you have questions about these, or any other financial matters, please call us.