Categories
Federal Income Tax Tax Tax Deductions

Planning for Tax Deductible Entertainment Expenses

Entertainment expenses are deductible but the deduction is limited to 50 percent of the amount spent. There have been a number of disputes between taxpayers and the IRS as to what counts as a limited entertainment expense. The law was recently changed such that entertainment expenses are no longer deductible.  This change to full disallowance […]

Categories
Federal Income Tax Tax Tax Loss

Documenting Tax Losses for Worthless Securities

Tax losses for worthless securities are often challenged by the IRS.  It particularly important to document the loss.  There are several elements taxpayers have to establish to secure the benefit of tax losses for worthless securities.  The recent Giunta v. Commissioner, T.C. Memo. 2018-180, case provides an opportunity to consider these elements. Facts & Procedural History The […]

Categories
Federal Income Tax

Donations to Pastor are Taxable Income, Not Gifts

The distinction between taxable compensation and non-taxable gifts comes up in a number of contexts and has led to a number of tax disputes.  Severance payments made to workers are an example.  The recent Felton v. Commissioner, T.C. Memo. 2018-168, court case addressed this issue in the context of segregated donations made by a congregation […]

Categories
Tax Litigation Tax Procedure

Failures in Reporting Taxes is Not Tax Obstruction

Does a taxpayer commit a felony offense if they pay a babysitter without withholding taxes, fail to keep receipts for charitable donations, or neglect to provide every record to an accountant? A strict reading of the law would suggest that these actions are felony offense. The U.S. Supreme Court recently addressed this in Marinello v. […]

Categories
IRS Audits Tax Procedure

Getting Out of IRS Adjustments Agreed to on Audit

Taxpayers often regret agreeing to IRS audit adjustments. These agreements are not necessarily final when the paperwork is signed. The taxpayer typically still has time to change their mind. In Sandoval Lua v. United States, No. 2016-1313 (5th Cir. 2016), the court considered a case where the taxpayer changed his mind, but failed to act […]

Categories
IRS Audits Tax Procedure

TIGTA Questions IRS’s Future State Reorganization

IRS has the power to decide who gets what, when, and how when it comes to federal taxes. Many of these decisions are made by IRS employees as part of examining tax returns. This is why we are all watching the IRS reorganize its audit function. The Treasury Inspector General for Tax Administration (“TIGTA”) recently […]

Categories
Federal Income Tax

The Impact of Filing a CPA Malpractice Case

The YA Global Investments, L.P. v. RSM McGladrey, Inc.Docket No. A-2152-15T3 (2016), case addresses the difficult situation whereby a taxpayer sues their CPA firm in state court for incorrect tax advice, while at the same time arguing that the tax advice and position is correct in the U.S. Tax Court. This situation arises given the […]