In a recent Tax Court decision, the Court again approached the critical issues surrounding loss deductions and tax compliance.[1] This case involves Heather and Stewart Weston, a married couple from California, who claimed a $2.1 million loss deduction on their 2017 tax return tied to failed business ventures in Indiana. The Internal Revenue Service (“IRS”)…
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Litigation involving estates and trusts, while sometimes impossible to avoid, is usually exhausting to all parties involved, especially given that such litigation is often among family members and/or is following the death of a loved one. Alternative dispute resolution (“ADR”) is an alternative to traditional litigation, encompassing various methodologies, including mediation and arbitration, aimed at…
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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…
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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.…
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Small business corporations, aka S corporations[1], have been much more common than their C corporation counterparts since 1997.[2] S corporations are taxed much differently than their C corporations, with the defining characteristic being that S corporations are flow-through entities, as they are not taxed at the entity level and avoid the widely known “double taxation”…
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President Franklin Delanor Rosevelt signed the Social Security Act on August 14, 1935, with regular monthly benefits starting in January of 1940.[1] Since then, the Social Security system has formed the foundation of the retirement system for most Americans. However, Social Security covers much more than just retirement income, as it provides benefits for surviving…
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The recent Tax Court decision in McDougall v. Comm’r, 163 T.C. No. 5 (2024) provides important insights into the intersection of Qualified Terminable Interest Property (QTIP) trusts and the associated gift tax implications. This article delves into the case’s facts, legal issues, court holdings, and practical implications for estate planners and tax professionals. Factual Background…
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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…
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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…
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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…
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