Taxpayers who are issued a notice of deficiency by the Internal Revenue Service (“IRS”) have ninety (90) days from the date such notice of deficiency is mailed to file a petition with the Tax Court for a redetermination of the deficiency.[1] Last year, the Tax Court dismissed several cases for lack of jurisdiction when the…
Read More
How is relief of debt treated for tax purposes? Does it matter if the debt is recourse or non-recourse? Does it matter if the debtor is a separate entity guaranteed by the owner(s)? Does it matter if the debt is forgiven as part of a sale of property securing the debt? These issues were addressed…
Read More
The Tax Court recently issued an order declining to grant either the IRS’s or taxpayers’ motions for partial summary judgement.[1] The taxpayers in question are the shareholders of a subchapter S corporation that in prior, now closed years, deducted losses from the corporation in excess of their adjusted bases in the corporation’s stock. The IRS…
Read More
Generally, expenses related to activities that are not engaged in for profit are not deductible.[2] In a recent memorandum opinion[3], the United States Tax Court reiterated the criteria upon which the Court considers if an activity is engaged in for profit. While the recent decision was not a landmark case[4], it provides some cautionary guidance…
Read More
We have covered timing and delivery issues in several articles, such as the recent Demuth and Hoensheid cases.[1] Similarly, the recent Tax Court case of Gage v. Comm’r dealt with the taxpayers that believed they paid a $875,000 settlement to the Department of Housing and Urban Development (“HUD”) in December of 2012.[2] Unfortunately for the…
Read More
Charitable remainder annuity trusts, or CRATS, are excellent estate planning vehicles and provide a litany of benefits to those who implement them, but as Devin Mills discussed in his recent article on the 2023 IRS Dirty Dozen list, the IRS considers CRATS as one of the legitimate tax strategies that are often abused by taxpayers.[1]…
Read More
It is fairly common to make charitable gifts of property prior to a sale transaction. Often, those gifts are of real property or closely-held business interests. This is for good reason. Structured properly, not only do donors generally receive a charitable income tax deduction equal to the fair market value of the donated property, they…
Read More
While most people know the phrase not everything you read on the internet is true, many don’t know what can actually be relied upon in a legal setting. A reasonable person might think the instructions on an IRS publication or a web article or website published by a credible source, such as an accounting or…
Read More
The United States Tax Court recently decided yet another case[1] involving conservation easements and the corresponding charitable contribution deduction. Such cases have been prevalent lately, although recent cases have dealt more with syndicated conservation easements and the IRS’s failure to follow certain procedural rules.[2] In the subject case of this article, however, the Court, for…
Read More
Being in the midst of the holiday season, many people are making gifts to friends, family members, employees, and others important to them. Rarely is much thought given to the income tax consequences of such gifts. A recent case from the Tax Court illustrates how gifts between an employer and employee are treated.[1] Income Tax…
Read More