RTRP challenge question

[FEDUKE404]

One of the "well-known" tax services has the following question on its review for the RTRP exam.

Being an acknowledged picker of nits (isn't that what the IRS is now turning all of us into??), I have a different answer from the "correct" answer provided by the tax service.

Here is the (paraphrased) question. Give it a try, let us know (brief summary) the reasons for your answer, and we'll see what the general consensus is. I would strongly suggest you read the posed question very carefully. The official answer is (to be revealed some time later).

Who knows when a question of this type might become relevant???

FE


Joe and Jane (married) moved from Kansas to Oregon on May 1, 2011. Jane immediately found a job as a part-time substitute teacher, but only worked 23 weeks during the year. In Oregon, Joe held one full-time job for 10 weeks, then another full-time job for 6 more weeks during 2011. Joe expects that he will start a new full-time job in January 2012. Can Joe and Jane claim a deduction for their moving expenses on their 2011 jointly filed return?

1 - They cannot, since Joe did not meet the 39-week test in 2011.
2 - They can, since Jane worked 23 weeks and Joe worked 16 weeks for a total of 39 weeks.
3 - They can, since Joe expects to meet the 39-week test in 2012.
4 - They cannot, since both Jane and Joe have to meet the 39-week test individually.

[appelman]

I'd go with answer 3.

Based on Pub. 521 (shift years back by one):

"Time Test Not Yet Met

You can deduct your moving expenses on your 2012 tax return even though you have not met the time test by the date your 2012 return is due. You can do this if you expect to meet the 39-week test in 2013 or the 78-week test in 2013 or 2014."

[smithtax]

Cannot

IRC §217(c)(2)(A)..during the 12-month period immediately following his arrival in the general location of his new principal place of work, the taxpayer is a full-time employee, in such general location, during at least 39 weeks..

Joe must be employed fulltime for at least 39 weeks between May 1, 2011 and April 30, 2012. If he doesn't begin work until January 1, 2012, he'll never attain the 39 weeks. If you wish to consider Jane the TP, she doesn't qualify either since she's only part-time.

IRC §217(c)(2)(B)..during the 24-month period immediately following his arrival in the general location of his new principal place of work, the taxpayer is a full-time employee or performs services as a self-employed individual on a full-time basis, in such general location, during at least 78 weeks, OF WHICH NOT LESS THAN 39 WEEKS ARE DURING THE 12-MONTH PERIOD REFERRED TO IN SUBPARAGRAPH (A).

(Capitalization added for emphasis)

[appelman]

I yield to Smithtax.

Missed that "immediately following" bit. With only 16 weeks under his belt in 2011, he needs another 23 in 2012, and there aren't enough weeks before May 1. So answer 1 is closest to being right, but the reason is imprecise. It should say "...since Joe did not meet the 39-week test in 2011 and cannot accumulate the additional needed weeks before May 1, 2012."

[Kram BergGold]

#1

After thinking it was three it sawned on me that there was not enough time in 2012 to meet the test fo rJoe. I might have gotten this wrong had it been on a test.

[Roland Slugg]

I'd like to know how you "paraphrased" the question.

4 ... They cannot, since neither Jane nor Joe has met the 39-week test, and the couple can not meet the 39-week test.

Jane's P/T employment doesn't count ... only F/T work counts. Joe worked 16 weeks in 2011 but with only 17 weeks remaining before the 12-months-after-the-move time limit runs out (i.e. January thru April 2012), he or Jane can only add a maximum of 17 weeks in 2012 to the 16 weeks he worked F/T in 2011, bringing their highest possible total to just 33 weeks. You can't count a week twice if both spouses work F/T during that week. A week either gets counted or it doesn't, whether one spose works F/T that week or they both do.

I'm afraid I don't understand why you characterize this as nit-picking. The law is very clear, and the required weeks either add up to 39 ... or they don't.

[FEDUKE404]

Update

I expected a few more nibbles on this.....

After reading the question, and applying my own knowledge of the rules, I concluded that the "best" answer was #1. Others here have reached the same conclusion. Actually, there is also a bit of a problem with the verbiage "...in 2011."

The primary obstacle is that Joe cannot (barring a space/time continuum disruption) meet the 39-week test prior to the April 30, 2012 deadline.

#4 is close, but the word "both" is apparently not correct.

(Secondary obstacles would be that Jane had part-time work, and also that full-time work of spouses cannot be additive for meeting the time requirements.)

However, the "official" correct answer is.....drumroll, please.....#3.

Go figure! The best I can come up with is that the question, or at least the choice of answers, could have been written better.

More? : http://www.irs.gov/pub/irs-pdf/p521.pdf

FE

[Gene V]

Temporary absence from work

I agree with answer number 1. However,

I think the IRS pick answer number 3 because they are counting the Temporary absent from work were the weeks counts as working week. See Pub. 521 page 5.

Temporary absence from work. You are considered to have worked full time during any week you are temporarily absent from work because of illness, strikes, lockouts, layoffs, natural disasters, or similar causes.

[FEDUKE404]

I agree with answer number 1. However,

I think the IRS pick answer number 3 because they are counting the Temporary absent from work were the weeks counts as working week. See Pub. 521 page 5.

Temporary absence from work. You are considered to have worked full time during any week you are temporarily absent from work because of illness, strikes, lockouts, layoffs, natural disasters, or similar causes.

Valid point, but a real stretch of the IRS definition of "temporary absence from work" as cited.

As the old saying goes, "assumes facts not admitted into evidence."

But, who knows what those test question folks use for "logic."

Thanks for the additional input.

FE