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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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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Introduction The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) authorized approximately $350 billion to fund the Paycheck Protection Program (“PPP”). The PPP was designed to provide a direct incentive for small businesses to keep their workers on the payroll via potentially forgivable loans (“PPP Loans”), assuming certain criteria were met. The Consolidated Appropriations…
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As result of the special runoff in Georgia for their two senate seats, the Democrats will now hold power in the Senate, the House, and the Presidency following President-Elect Joe Biden’s inauguration on January 20th. With the Democrats controlling the Presidency, the House, and the Senate, many have started to wonder what tax changes may…
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In recent elections, Mississippians overwhelmingly voted to pass Initiative 65 legalizing medical marijuana. This paves the way for an entire new business industry to operate in Mississippi, creating opportunities for business owners, investors, and those who serve them. With businesses possibly being allowed to open sometime in the summer of 2021, it will be important…
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Introduction The U.S. Court of Appeals for the Ninth Circuit recently affirmed a District Court’s ruling against a married couple who claimed their losses related to three vacation properties were not limited under the passive activity loss rules of IRC § 469.[1] The couple argued that the management company responsible for renting the property to…
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A recent case shows how a shareholder and corporation, being considered alter egos, can cause unintended consequences. In Lothringer,[1]a corporate shareholder’s individual property was subject to enforced collection action by the IRS to satisfy corporate tax liabilities.[2] The court’s finding that the corporation was the shareholder’s alter ego allowed the IRS to hold the shareholder…
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Introduction Generally, a taxpayer may deduct the fair market value of appreciated property donated to a qualified charitable organization.[1] This provision expands the benefits available to taxpayers with respect to charitable deductions. The result, in effect, is that a taxpayer may gift an appreciated asset in lieu of selling the asset, paying tax, and then…
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In a recent Tax Court opinion, the Court granted the IRS’ motion for summary judgment holding that a state law Nonprofit corporation could not election to be treated as S corporation for federal income tax purposes.[1] Clinton Deckard attempted to make an S election for Waterfront Fashion Week, Inc., a Nonprofit corporation organized under the…
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In a recent opinion out of the United States Court of Appeals for the Seventh Circuit, the Court upheld the Tax Court’s ruling that cash payments made from a family owned company to the son of the founder were not bona fide debts, and thus not deductible as bad debt expenses.[1] Additionally, the Court sided…
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