In January of 2002 the Internal Revenue Service (“IRS”) issued a press release highlighting a dozen different tax scams and encouraged taxpayers to “maintain national vigilance.”[1] This list was dubbed the “Dirty Dozen,” and the IRS has continued to issue similar press releases containing updated lists of purported tax scams for taxpayers to be on…
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The Multistate Tax Commission (“MTC”) has recently started its Project on State Taxation of Partnerships (“Project”).[1] The proposed scope of the Project is to consider a number of issues relating to state taxation of income associated with partnership income or partner income from the sale of partnership interests. Importantly, the Project is commencing on the…
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This article will be the final in a series of articles covering the installment method of reporting income. In our first article of the series, we discussed §453 and the basics of the installment method of income tax reporting.[1] As noted in the article, the installment method of reporting income can be a powerful tax…
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Last week, Charles Allen wrote about Blossom Day Care Centers, Inc. (“Blossom”) and its owners regarding their employment tax case.[1] Frequently, we write articles intending to remind readers of the importance of substantiation, especially in the income tax world. In reviewing Charles Allen’s article, I kept finding myself wondering about the income tax implications of…
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In a recent Tax Court case, the Court determined that corporate officers were indeed employees of the corporation entitled to reasonable compensation, and as such, the corporation is liable for employment taxes on reasonable compensation imputed to the corporate officers.[1] Mr. and Mrs. Hacker, who owned 51% and 49% of Blossom Day Care Centers (“Blossom”)…
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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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We regularly see continuing education materials, blog posts, publications, and other materials titled “LLC v. S Corp. – Which is Right for Your Business?” or something similar. Regardless of the exact title, these items purport to ask the question of whether an LLC or S Corp. is the better choice of entity. But is that…
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In a previous article, I wrote about the basics of the installment method of income tax reporting under IRC §453.[1] As noted in my prior article, the installment method of income tax reporting can be a powerful way of deferring income tax where the seller receives payments over time. However, there are numerous exceptions and…
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The U.S. Treasury recently issued its “Green Book”[1] which includes, among other items, a proposed increase in the capital gains rate up to 43.4%[2] for taxpayers with incomes over $1 million as well as an elimination of like-kind exchanges where gain deferral will exceed $500,000. This means that taxpayers will be subject to significantly higher…
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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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