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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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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On January 7, 2021, the IRS issued final regulations under § 1061 of the Internal Revenue Code (“Code”)[1]. These final regulations largely adopt the proposed regulations issued in July 2020[2] but contain a number of taxpayer favorable changes. As discussed below, the rules under § 1061 can apply in a number of situations such as…
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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 a newly released Chief Counsel Advice opinion[1], the transfer of assets from a foreign entity referred to as the “Foundation” directly to a third party (the “Recipient”) at the request of the beneficiary of the Foundation (the “Beneficiary”) was deemed to be a gift from the Beneficiary to the Recipient. This is a logical…
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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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A recent case shows how a shareholder and corporation, being considered alter egos, can cause unintended consequences. In Lothringer,[1]a corporate shareholder’s individual property was subject to enforced collection action by the IRS to satisfy corporate tax liabilities.[2] The court’s finding that the corporation was the shareholder’s alter ego allowed the IRS to hold the shareholder…
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