Original Characterization by Taxpayers Matters, Even When Reporting Improperly

In an ongoing breach of contract case,[1] in which the parties contested the treatment of certain transfers as either gifts or as compensation under a contract, the U.S. District Court of Arizona dismissed the portion of the plaintiff’s motion for summary judgment related to “gift tax damages” due to the fact that gift tax labilities…
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Deny It Like It’s TOT – Conservation Easement Denial Upheld

It is no secret. Everyone likes reading and writing about syndicated conservation easements. In December 2019, the Tax Court ruled in the case of TOT Property Holdings LLC v. Comm’r.[1] The result was an unfavorable one for the taxpayer. The transaction in question was more-or-less a run of the mill syndicated conservation easement, albeit ending…
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Entities and the Performance of Personal Services: Berry

Owners of legal entities typically establish those entities to achieve certain planning goals, be them tax, asset protection, contract management, or other reasons. Key to accomplishing those goals is that courts respect the entity planning structure that is established. In the recent Tax Court opinion of Berry v. Commissioner[1], we see a taxpayer who intended…
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Insult to Injury – Properly Documenting and Taking Bad-Luck Deductions

In a recent case involving taxpayers Ronnie S. Baum and Teresa K. Baum, the IRS disallowed many deductions, including deductions for theft losses and worthless securities.[1] This case is a quick and helpful reminder of some common deduction rules. Fact Summary This case relates to events occurring between years 2010 and 2019. The tax years…
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FBAR Penalties Not Subject to Pay to Play Rule

In a recent case out of the United States Court of Federal Claims, the Court held that the plaintiff was not required to pay the full amount of the assessed Report of Foreign Bank and Financial Accounts (“FBAR”) penalty in order for the Court to have jurisdiction over a suit for refund.[1] The Court of…
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Fashion Designer Denied Research Credits

As it turns out, fashion design will not usually constitute qualified research for the purposes of qualifying for the research credit under Section 41 of the Internal Revenue Code. In a recent case from the Tax Court, taxpayer, Leon Max, failed to convince a sympathetic court that expenses related to his fashion design process should…
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Student Loans – Not Dischargeable, Even If Made to Family

When an individual files for bankruptcy, they are released from personal liability for certain specified types of debts. However, for public policy reasons, Congress has determined that certain debts can’t be discharged by filing for bankruptcy.[1] One of the most well-known non-dischargeable liabilities is student loan debt.[2] The recent U.S. Bankruptcy Court case, In re…
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