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Friday, September 28, 2007

IRS Defines Death for Tax Purposes as "Separation from Life"

The IRS has released Notice 2007-90, which defines "death" for tax purposes:

[T]the Treasury will consider a service provider to be dead if the service provider’s death meets the criteria necessary for a separation from life. ... A service provider separates from life with the service recipient if the service provider has a termination of all mental and bodily functions. However, the service provider’s life is treated as continuing intact while the individual is temporarily unconscious, having an out of body experience, cryogenically frozen or experiencing another bona fide leave of absence from the individual’s conscious state, if the period of such leave does not exceed ten minutes, or if longer, so long as the individual retains a right to regain life and/or reanimation under an applicable contract (with the devil or otherwise) or other arrangement.

If the period of leave exceeds ten minutes and the individual does not retain a right to regain life and/or reanimation under an applicable contract or otherarrangement, the death is deemed to occur on the first minute immediately following such ten-minute period. Notwithstanding the foregoing, where a leave is due to any medically determinable physical or mental impairment that can be expected to result in death, where such impairment causes the service provider to be unable to perform the essential functions of life without mechanical support, a 525,600 minute period of absence may be substituted for such ten minute period. ...

A service provider will be deemed to have experienced a separation from life if he or she experiences a termination of life. Whether a termination of life has occurred is determined based on whether the facts and circumstances indicate that the service provider reasonably anticipated (or would have reasonably anticipated) that no further mental and bodily functions would be performed after a certain date or that the level of bona fide mental and bodily functions the service provider would perform after such date (whether with or without mechanical assistance) would permanently decrease to no more than 20 percent of the average level of bona fide mental and bodily functions performed (whether with or without mechanical assistance) over the immediately preceding 36-month period (or the full period of life if the service provider has been living less than 36 months). Facts and circumstances to be considered in making this determination include, but are not limited to, whether the service provider continues to be treated as living for other purposes (such as whether or not he or she continues to receive a paycheck from the service recipient), whether similarly situated service providers have been treated consistently by the service recipient, and whether the service provider is permitted, and realistically available, to perform services for other service recipients. A service provider is presumed to have separated from life where the level of bona fide mental and bodily functions performed decreases to a level equal to 20 percent or less of the average level of mental and bodily functions performed by the service provider during the immediately preceding 36-month period. A service provider will be presumed not to have separated from service where the level of bona fide mental and bodily functions performed continues at a level that is 50 percent or more of the average level of mental and bodily functions performed by the service provider during the immediately preceding 36-month period. No presumption applies to a decrease in the level of bona fide mental and bodily functions performed to a level that is more than 20 percent and less than 50 percent of the average level of bona fide mental and bodily functions performed during the immediately preceding 36-month period. The presumption is rebuttable by demonstrating that the service provider reasonably anticipated that as of a certain date the level of bona fide mental and bodily functions would be reduced permanently to a level less than or equal to 20 percent of the average level of bona fide mental and bodily functions provided during the immediately preceding 36-month period or full period of life if the service provider has been alive for a period of less than 36 months (or that the level of bona fide mental and bodily functions would not be so reduced). For example, an service provider may demonstrate that the service provider reasonably anticipated that the service provider would cease mental and bodily functions, but that, after the original cessation of mental and bodily functions, a deal made with God (such as in the movie “Heaven Can Wait”) caused the service provider to return to life. Although the service provider’s return to life may cause the service provider to be presumed to have continued to live because the service provider is performing mental and bodily functions at a rate equal to the rate at which the service provider was performing mental and bodily functions before the termination of life, the facts and circumstances in this case would demonstrate that at the time the service provider originally ceased to perform mental and bodily functions, the service provider reasonably anticipated that the service provider would not perform mental and bodily functions in the future. ...

Example 2 – Pete uses 5% of his brain and 50% of his body on a daily basis. Pete has struck a deal with the devil such that, in exchange for his soul, Pete retains the right to regain life after the first two times that he would otherwise separate from life. Pete gets mauled by a cougar and is not performing any mental and bodily functions for more than 10 minutes. However, because Pete retains the right to regain life, he has not experienced a separation from life.

(Hat Tip:  Jack Bogdanski & Michael Kreps.)  And yes, it is a joke!

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Tracked on Oct 1, 2007 7:27:53 PM

Comments

Cryogenically frozen? Damnit--my attorneys said this was fool proof.

Posted by: Walt | Sep 28, 2007 8:19:52 AM

You have been had. Check out the contact information at the end of the notice. The IRS does not officially have a sense of humor, though many people working there do.

Posted by: John | Sep 29, 2007 8:37:53 PM

Funny parody. I particularly like the contact information.

Posted by: John | Sep 29, 2007 8:39:24 PM