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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On January 1, 2021, the Senate voted to override former President Trump’s veto of the National Defense Authorization Act for Fiscal Year 2021 (“NDAA”), which included the Corporate Transparency Act (“CTA”).[1] The CTA requires certain U.S. businesses, absent an exemption, to file beneficial ownership information with the Financial Crimes Enforcement Network (“FinCEN”), in an attempt…
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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 United States District Court for The Western District of Virginia recently granted the government a default judgment against a law firm for nearly $220,000, plus interest and penalties, in unpaid federal employment taxes and unemployment taxes. U.S., v. Miller Law Group, P.C., et al.,[1] is a perfect example of one of the worst ways…
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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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Gray Edmondson previously discussed the tax considerations for Initiative Measure 65 (“Initiate 65”) and medical marijuana in Mississippi following the approval by a majority of voters in November 2020. However, it appears that Mississippians will have a while to wait before medical marijuana is actually legalized in Mississippi. On May 14, 2021, the Mississippi Supreme…
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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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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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