Generally, expenses related to activities that are not engaged in for profit are not deductible.[2] In a recent memorandum opinion[3], the United States Tax Court reiterated the criteria upon which the Court considers if an activity is engaged in for profit. While the recent decision was not a landmark case[4], it provides some cautionary guidance…
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So, you mooned in the short term on a completely degenerate gamble and want to offset income with charitable giving. First off, good on you for wanting to do the right thing. Second, don’t mess up. It may seem really simple that if you send some cryptocurrency to a qualifying organization, you should be able…
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Generally speaking, tax follows the facts. One can of course change those facts, but when done so merely superficially, intended results may not follow. Some may be more familiar with the phrase “putting lipstick on a pig.” Well, that seems to be more or less the case in the recent opinion released in the Eighth…
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In the recent Tax Court Opinion of Sherwin Community Painters, Inc. v. Comm’r, a corporation was denied a Section 162 business deduction for amounts paid for the boyfriend of the sole shareholder’s daughter to take a course in coding.[1] Gray Edmondson discussed the importance of being in a trade or business years ago, one of…
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The IRS Office of Chief Counsel recently issued CCA 202152018 (“CCA”), in which the IRS is attacking yet another business valuation.[1] The IRS takes the position in the CCA that because the valuation used failed to account for a potential acquisition, the grantor retained annuity trust (“GRAT”) failed to properly qualify as a GRAT even…
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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…
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So, we did not write on the first District Court case which was a loss for CIC Services, LLC (“CIC”) and Ryan, LLC(“Ryan”), the Plaintiffs. But, a Supreme Court decision gave the Plaintiffs another bite at the apple. This case involves Notice 2016-66 (“Notice”), the older-sibling notice to Notice 2017-10, in which micro-captive insurance transactions…
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In a recent Tax Court case, a taxpayer was denied a contribution deduction for income paid into a sole proprietorship profit-sharing plan when the Court determined that such income had not been derived from the trade or business with respect to which the plan was established.[1] Rather, the income was paid to the taxpayer under…
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Last week, Charles Allen wrote about Blossom Day Care Centers, Inc. (“Blossom”) and its owners regarding their employment tax case.[1] Frequently, we write articles intending to remind readers of the importance of substantiation, especially in the income tax world. In reviewing Charles Allen’s article, I kept finding myself wondering about the income tax implications of…
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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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