In the recent Complex Media[1] case, the Tax Court addressed a taxpayer’s ability to recast the form of a transaction under the “substance over form” doctrine. Since taxpayers typically control the form their transactions take, tax decisions routinely stick taxpayers with the consequences of that form. Some courts have precluded taxpayers from even raising substance…
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When an individual files for bankruptcy, they are released from personal liability for certain specified types of debts. However, for public policy reasons, Congress has determined that certain debts can’t be discharged by filing for bankruptcy.[1] One of the most well-known non-dischargeable liabilities is student loan debt.[2] The recent U.S. Bankruptcy Court case, In re…
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In a recent decision, the Tax Court held that the taxpayer failed to qualify for an exception from the 10% additional tax applicable to an early withdrawal from a retirement account.[1] Generally, any distribution from a retirement account to the original plan participant who established the retirement account prior to the date when such plan…
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In the recent case of Lateesa Ward, TC Memo 2020-32, the Tax Court addressed a regular tax planning and reporting issue – reasonable compensation to an S corporation shareholder. The issue is important for at least a couple of primary reasons. First, as opposed to dividends, wages paid to the S corporation shareholder are subject…
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On March 3, 2021, the Tax Court issued a new opinion in Pankratz v. Comm’r, T.C. Memo 2021-26. This case is a good reminder of some of the good faith and reasonable reliance rules to avoid penalties. The opinion, authored by Judge Holmes, was a typical Holmes’ opinion. It told a detailed story of the…
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It is quite common in transactions for the seller to accept a promissory note with payments over time rather than being paid the full purchase price up front. In this situation, if the taxpayer were to be taxed on the full amount of income at the time of the transaction, but not be paid the…
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Many know the old adage of “it’s the thought that counts” when it comes to gifting. According to a recent Tax Court opinion, when it comes to charitable contributions, what the recipient receives is significantly more important than what is given by the donor. Charles Allen previously discussed this issue in his article on the…
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As taxpayers are preparing their 2020 income tax returns, several will face questions related to remote working. Can they deduct employment related expenses for new furniture, new equipment, and other items to facilitate working remotely? Can they take a home office deduction? In what state(s) should they file income tax returns? These questions are nothing…
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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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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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