Introduction Last year I discussed President Joe Biden’s Proposed Tax Policy For Individuals, Charles J. Allen discussed the tax plans of the democratic presidential candidates, and Josh Sage discussed some of Biden’s potential changes. We are now a few months into President Biden’s tenure and the first ripples of tax reform can be felt by…
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In the recent Complex Media[1] case, the Tax Court addressed a taxpayer’s ability to recast the form of a transaction under the “substance over form” doctrine. Since taxpayers typically control the form their transactions take, tax decisions routinely stick taxpayers with the consequences of that form. Some courts have precluded taxpayers from even raising substance…
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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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In a recent decision, the Tax Court held that the taxpayer failed to qualify for an exception from the 10% additional tax applicable to an early withdrawal from a retirement account.[1] Generally, any distribution from a retirement account to the original plan participant who established the retirement account prior to the date when such plan…
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On March 3, 2021, the Tax Court issued a new opinion in Pankratz v. Comm’r, T.C. Memo 2021-26. This case is a good reminder of some of the good faith and reasonable reliance rules to avoid penalties. The opinion, authored by Judge Holmes, was a typical Holmes’ opinion. It told a detailed story of the…
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Many know the old adage of “it’s the thought that counts” when it comes to gifting. According to a recent Tax Court opinion, when it comes to charitable contributions, what the recipient receives is significantly more important than what is given by the donor. Charles Allen previously discussed this issue in his article on the…
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As taxpayers are preparing their 2020 income tax returns, several will face questions related to remote working. Can they deduct employment related expenses for new furniture, new equipment, and other items to facilitate working remotely? Can they take a home office deduction? In what state(s) should they file income tax returns? These questions are nothing…
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When starting a new business, an important consideration to is to determine at what point expenses become deductible as a business expense under §162[1] as opposed to being classified as startup expenditures which must be amortized over 15 years under §195[2]? In general, expenses eligible to be deducted as an ordinary and necessary expense of…
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On January 7, 2021, the IRS issued final regulations under § 1061 of the Internal Revenue Code (“Code”)[1]. These final regulations largely adopt the proposed regulations issued in July 2020[2] but contain a number of taxpayer favorable changes. As discussed below, the rules under § 1061 can apply in a number of situations such as…
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In a recent case from the Fourth Circuit Court of Appeals, Mann v. U.S., 127 AFTR 2d 2021-XXXX (4th Cir. Jan. 6, 2021), the Court determined that the donation of a house which was subject to demolition failed to satisfy two requirements under Section 170 of the Code. First, the taxpayer failed to donate the…
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