We have written numerous articles over the years about substantiating deductions, whether they be charitable donations or business expenses or any other type of deduction.[1] As noted by the Supreme Court, deductions “are a matter of legislative grace, and taxpayers bear the burden of proving their entitlement to any deduction claimed.”[2] A recent Tax Court…
Read More
Most U.S. citizens are familiar with the concept of filing an income tax return. As with any other work product, errors and omissions can occur in tax returns. Once a tax return has been filed, the taxpayer can generally only correct the return by filing an amended tax return. The IRS recently published a third-party…
Read More
Treasury recently finalized regulations imposing significant reporting obligations on persons involved in what the regulations describe as “related party basis adjustment transactions.” These regulations designate such transactions as “transactions of interest,” a form of reportable transactions.[1] Reporting obligations can apply to transactions completed prior to the date of these regulations and also may extend many,…
Read More
A recent Tax Court opinion sheds light on how unauthorized withdrawals from a jail food account were treated for federal tax purposes.[1] An Alabama sheriff found some unexpected relief when her unauthorized withdrawals, totaling $155,000 from a jail food money account were treated as impermissible, albeit genuine loans, and not embezzled income, subject to taxation.…
Read More
As I have written about previously[1], if a Tax Court petition is not timely filed, the Tax Court will generally[2] lack jurisdiction to hear such petition.[3] In the cases mentioned in my previous article, taxpayers’ petitions were dismissed for lack of jurisdiction despite the taxpayers having good excuses, such as (1) the taxpayers mailed their…
Read More
The IRS has recently announced a compliance campaign intended to address “the attempted deferral of contingent or court-awarded attorney fees by cash-method attorneys/law firms (taxpayers) who direct that such fees be paid to a third-party instead of the taxpayer.”[1] The IRS is concerned that plaintiff’s attorneys are deferring payment of income tax on legal fees…
Read More
In a recent Tax Court opinion[1], the taxpayer Michael Shaut (“Mr. Shaut”), representing himself, contested the IRS’s determination of a tax deficiency. The court had to decide on several key issues, including whether Mr. Shaut was entitled to deductions for theft loss, legal fees, and net operating losses, as well as whether he was liable…
Read More
We are often contacted by clients, other attorneys, CPA’s, or others, looking to deal with unjust tax outcomes. Often, we are able to assist in avoiding those results. Sometimes, however, tax law simply allows what many see as injustices to occur. This can be the case, for example, when owners of a pass-through entity, S…
Read More
When receiving a bequest, many people question whether they will be subject to income tax.[1] As a basic matter, an individual’s income “does not include the value of property acquired by gift, bequest, devise, or inheritance.”[2] However, that does not mean the individual receiving assets by bequest has no income tax consequences to consider. Those consequences…
Read More
In a recent article, my colleague Gray Edmondson covered the recent Supreme Court case, Loper Bright[1], and the demise of the Chevron Doctrine.[2] The Loper Bright case was handed down by the Supreme Court on June 28, 2024. As Gray explains in his article, the Chevron case has to do with determining the validity of…
Read More