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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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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In a recent case from the Fourth Circuit Court of Appeals, Mann v. U.S., 127 AFTR 2d 2021-XXXX (4th Cir. Jan. 6, 2021), the Court determined that the donation of a house which was subject to demolition failed to satisfy two requirements under Section 170 of the Code. First, the taxpayer failed to donate the…
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Hobby loss tax rules of IRC § 183 are nothing new. However, there are a couple of recent developments that make the application of those rules especially relevant: Starting in 2018, the Tax Cuts and Jobs Act (“TCJA”) went into effect. Under the TCJA, taxpayers lost the ability to take miscellaneous itemized deductions. Previously, taxpayers…
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In recent elections, Mississippians overwhelmingly voted to pass Initiative 65 legalizing medical marijuana. This paves the way for an entire new business industry to operate in Mississippi, creating opportunities for business owners, investors, and those who serve them. With businesses possibly being allowed to open sometime in the summer of 2021, it will be important…
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INTRODUCTION In a prior article, Charles J. Allen previously discussed the tax plans of the democratic presidential candidates, while Josh Sage discussed some of Biden’s potential changes here. With the Associated Press calling the presidential race for former vice president Joe Biden on November 7th, time is running short for many taxpayers to take advantage…
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In a recent opinion out of the United States Court of Appeals for the Tenth Circuit, the Court affirmed the Tax Court’s decision denying taxpayers loss on the sale of a residential property as well as depreciation deductions on property that was purportedly used in taxpayer’s business.[1] Additionally, the Court upheld the imposition of the…
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