Most tax law is made up of very detailed statutes, regulations, case law, and other guidance. Layered on top of that body of law are a number of “judicial doctrines” that seek to serve as a backstop to formalistic analyses that could result in unintended tax results, allow taxpayers to place the form of transactions…
Read More
Passive Activity Loss Rules Lead To Yet Another Taxpayer Loss In Court – Why Keeping Adequate Records Is Essential In a recently issued Memorandum Opinion[1], the United States Tax Court found that a husband and wife who owned and operated real estate investment properties were not entitled to deduct losses derived from properties owned in…
Read More
In a recent case from the Tax Court, two married taxpayers failed to establish that their settlement proceeds fell within a statutory exception to taxation.[1] This case is a bit more straightforward than others we may write about from time to time. Factual Background In September 2009, Chicago State University (“CSU”) hired Mr. Bryant Tillman-Kelly…
Read More
Last year, I wrote about the Multistate Tax Commission’s (“MTC”) undertaking called the Project on State Taxation of Partnerships (“Project”).[1] Throughout the Project, the MTC has updated the Project website with summaries, notes, markups to draft documents, and other useful information.[2] The most recent Project meeting was held on July 25, 2022.[3] Broadly speaking, the…
Read More
In a recent appellate decision from the Ninth Circuit, a taxpayer/attorney/neurosurgeon/corporate shareholder who helped develop a patented imaging technology was held liable for ordinary income assessments with respect to annual royalty payments related to patent royalty income. Facts Dr. Aaron Filler, a licensed attorney and neurosurgeon, contributed to the development of a certain Diffusion Tensor…
Read More
In a recent case out of the United States District Court for the Middle District of Tennessee, the Court held that attorney fees awarded plaintiff’s counsel who was handling the case pro bono, that is, free of charge, were not income to the plaintiff who was represented by the attorneys receiving the fees.[1] In the…
Read More
In a recent Tax Court case[1], the Court held that husband and wife taxpayers failed to meet the so-called real estate professional exception to the passive activity rules resulting in the Court denying their excess deductions from rental real estate. The passive activity rules related to rental real estate activities are a little more complex…
Read More
In a recent Chief Counsel Advice (“CCA”) issued by the IRS, the IRS concluded that the taxpayer’s sale of stock did not qualify for the gain exclusion as Qualified Small Business Stock (“QSBS”) under Section 1202 since the business of the corporation was akin to brokerage services.[1] The IRS concluded that the corporation’s business, one…
Read More
In another recent case involving a multi-entity tax savings strategy, pitched as the “integrated tax plan,” particularly leveraging “management fees,” we see again the Tax Court scrutinizing the legitimacy of the structure, incorporating a C corporation and a partnership, and in turn allowing the IRS to whipsaw the taxpayers.[1] Facts Around late 2009 through early…
Read More
Earlier this year I discussed President Joe Biden’s proposed tax policies, which was prepared in anticipation of President Biden’s impending announcement regarding the Build Back Better Act.[1] As we approach the end of the Biden administration’s first year, tax professionals are on the edge of their seat. A plethora of different legislative changes directed at…
Read More