If a U.S. person commits tax fraud under the laws of a foreign county, can the foreign country’s tax collector use the U.S. court system to collect from the U.S. person? This is an international tax law issue. The court recently addressed this in In re SKAT Tax Refund Scheme Litigation, No. 18-md-2865 (LAK) (S.D.N.Y.…
Tax Articles
Retaining Rights With a Charitable Conservation Easement
Conservation easements can result in significant charitable deductions for real estate owners and investors. But can an owner or investor retain rights to the property and still get the charitable deduction? The courts continue to define when this is possible. The Pine Mountain Preserve LLLP v. Commissioner, 151 T.C. 14, case is the latest case…
Statements Made to IRS Special Agents
If you are contacted by an IRS special agent for an informal meeting, can statements made during the meeting be used against you in court? The answer is “maybe.” The court addresses this in United States v. Henry, No. 2017-0001 (D. VI 2018). Facts & Procedural History The IRS criminal investigation unit received a tip…
Appropriate a Book of Business, Capital or Ordinary Gain?
If an investment advisor is terminated by the bank he works for and the bank keeps the advisors book of business, is the bank compensating the investment advisor for the sale of his book of business or is it paying compensation for services? One would seem to produce capital gain and the other ordinary gain.…
Innocent Spouse Relief for One’s Own Income
While taxpayers are often aware that innocent spouse relief can eliminate their liability for tax on items of income earned by their spouse (or ex-spouse), fewer taxpayers realize that innocent spouse relief can also help with tax on income they earned themselves. The recent Heydon-Grauss v. Commissioner, T.C. Memo. 2018-209, case provides an opportunity to…
IRS Can Collect Father’s Tax Restitution from Son
The rules that allow the IRS to assess and collect criminal restitution as if it is a tax due present some unique questions. In Bontrager v. Commissioner, 151 T.C. 12, the court considered whether the IRS can assess and collect a father’s tax restitution payment as tax restitution against the son. Facts & Procedural History…
IRS Appeals Guidance on In-Person Conferences
The IRS Office of Appeals has been making changes to how it conducts appeals conferences. In the past few years, these changes have made it difficult to obtain an in-person conference. The IRS recently issued interim guidance AP-08-1118-0013 to authorize appeals to allow for more in-person conferences. Contents1 About the IRS Office of Appeals2 The…
The Dilemma: File A Timely or An Accurate Tax Return?
If you have an ongoing dispute with the IRS for one or more years and the outcome of that dispute will impact the current year, can you take a wait-and-see approach for filing the current year’s tax return? Or should you wait to file an amended tax return after the audit? The Namakain v.…
Court Clarifies Inventory Capitalization Rules for Producers
There are a few items that are low hanging fruit that make for easy adjustments for IRS auditors. The adjustment for indirect costs is an example of such an adjustment that can be made for any taxpayer that has inventory. The recent Patients Mutual Assistance Collective Corporation v. Commissioner, 151 T.C. No. 11 (2018), case provides…
Early IRA Distribution, Gambling Not a Disability
Early distributions from IRAs are subject to a 10 percent additional tax. The 10 percent additional tax does not apply if the distribution is taken when the IRA owner is disabled. The recent Gillette v. Commissioner, T.C. Memo. 2018-195, case addresses whether medically-induced compulsive gambling qualifies as a disability. Contents1 The Facts & Procedural History2 The Additional Tax…