You have to be careful when electing to waive the right to carry back a net operating loss. This is particularly true if there are items on your tax returns from earlier years that the IRS may eventually adjust if audited. The Bea v. Commissioner, No. 18-10511 (11th Cir. 2019), case provides an example of…
Tax Articles
Research Tax Credit Records Must Be Kept for 40+ Years
A frequent question is how long one has to keep records for tax purposes. The United States v. Quebe, No. 3:15-cv-294 (S.D. Ohio 2019) case provides the answer for research tax credits. The answer is that you have to keep records that pre-date the formation of your business by twenty years and then you have…
How to Correct Late Accounting Method Changes
A consistent mistake on a tax return for more than two years may require an accounting method change to correct. The IRS has procedures for making these elections, which generally require a timely filed tax return. But what if you miss the filing deadline–are you out of luck? Private Letter Ruling (“PLR”) 201850013 provides the…
Can Defective Deed Defeat IRS Estate Tax Lien?
The IRS lien is broad and attaches to the taxpayer’s property. Creative tax attorneys have tried to find ways around the lien with limited success. The recent Saccullo v. United States, No. 17-14546 (11th Cir. 2019) case raises the question as to whether a defectively executed deed be used to defeat the IRS’s estate tax…
Foreign Government Use U.S. Court to Collect From U.S. Person?
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.…
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…