Tax Archives

The Difference Between a Bad Business Investment and a Theft Loss

Business ventures fail for countless reasons. Partners mismanage funds. Projects never materialize. Promises about how capital will be deployed go unfulfilled. When an investment goes south, the parties have to figure out how to minimize the damage. This often shifts the focus to how to benefit from the loss, which can warrant closer examination of…

Using Ranching Tax Loss to Offset Other Income

Ranch operations often start with genuine business intentions. A successful business owner buys land. They get into cattle grazing areas or orchards. The owner hires experienced ranch hands and invests in equipment and facilities. The ranch may make money from livestock sales, hay production, or crop harvesting. The ranch would likely report losses for the…

What is a Statutory Employee and Who Qualifies?

Our tax laws usually look to various foundational definitions, such as units of property, activities, or even roles. When it comes to workers who receive compensation for their work, it is often the role that matters the most. We see this in disputes over whether a contractor is really an employee for payroll tax purposes.…

Business Owner Liable for Tax Incurred by a Buyer After the Sale of the Business?

If you own a business and you sell it to a third party, should you be liable to the IRS for taxes triggered by the buyer after the business you sold? What if the tax was triggered by the buyer’s wrongdoing? What if there was no evidence that you even knew that the buyer would…

Do You Report Stock an Employer Mistakenly Gave You to the IRS?

When your employer deposits 100,000 shares of stock into your brokerage account after you’ve left the company, and you believe it was done in error, do you have taxable income? And what do you do in this case? If the amount is taxable to you as compensation, then when do you report it? Should you…

What Makes a Partnership Transaction a Disguised Sale?

You own a depreciated asset or an asset that has gone down in value. It happens. But say you cannot take advantage of the tax loss for some reason. Maybe it is because you don’t have other Income triggering a tax that year or maybe there is a limitation on the use of the loss…

Captive Insurance Tax Deductions Denied, No Risk Distribution

Insurance premiums go up and then they go up some more. The amounts can be substantial. This is particularly true for businesses that offer insurance to employees or that insure more types of risks. And many business owners note that while they pay substantial insurance premiums, the insurance companies often do not have high payouts.…

Split-Dollar Insurance Failure: Income and No Tax Deduction

Business owners frequently seek ways to maximize tax deductions while providing benefits to key employees. Life insurance arrangements can play a part of this strategy. Life-insurance related strategies can be particularly useful if they come with significant tax advantages and help the parties meet their financial goals. However, the line between legitimate business expenses and…

Tax Court Strikes IRS Timeline for Partnership Adjustments

The partnership audit regime rules are not all that new at this point. But what makes them new is that the IRS hasn’t fully implemented them, is often not following the new rules, and the disputes involving this have just started to trickle up to the courts. Practitioners are also at fault here. Many have…

Business Advances in Revenue-Sharing Deals Not Deductible

Government agencies and non-profits often enter into business arrangements with private companies that, ultimately, are structured as a percentage of revenue. This approach frequently replaces traditional fixed payments like rent or management fees. The typical example involves a building that a business owns and leases to a government agency or non-profit. The business collects a…