Contents1 Payments Made to Ex-Spouse Were Alimony Despite Missing Language in Divorce Agreement2 Facts and Procedural History3 The Alimony Rules4 Planning for Divorce Payments Made to Ex-Spouse Were Alimony Despite Missing Language in Divorce Agreement Tax issues are often the last thing that spouses consider when going through a divorce. In other cases, one spouse…
Tax Articles
Taxes from IRS Audit Remitted to U.S. Virgin Islands
Contents1 Taxes Remitted to the U.S. Virgin Islands in Error were Not Compulsory Payments in an Audit2 Facts and Procedural History3 The U.S. Foreign Tax Credit4 The Typical Fact Pattern for “Compulsory” Payments5 The Current Fact Pattern for “Compulsory” Payments Taxes Remitted to the U.S. Virgin Islands in Error were Not Compulsory Payments in an…
Payment for Failed Real Estate Deal, Capital or Ordinary Gain?
How is a termination payment for a failed real estate deal taxed? Does it trigger capital or ordinary gain? The court recently addressed this in CRI-Leslie, LLC v. Commissioner, 147 T.C. 8. Contents1 Facts & Procedural History2 Capital vs. Ordinary Gain or Loss3 Section 1234A4 Termination Payments are Ordinary Gain5 The Takeaway Facts & Procedural History…
Options to Contest Taxes
The IRS puts taxpayers on notice by mailing letters and notices. It is common for these letters and notices to not be delivered or to be delivered late. This can present a serious problem for taxpayers, particularly when the letter or notice is one that proposes to increase the about of tax that is due.…
Extend Time for an IRS Audit
Contents1 Agreeing to Extend the Time for an IRS Audit or Not?2 The Assessment Statute3 Extending the Assessment Statute4 Why Taxpayers Agree to Extend the Statute5 Consequences of Not Extending the Statute Agreeing to Extend the Time for an IRS Audit or Not? Congress provided a limited time for the IRS to audit tax returns.…
How to Prove Refund Claim Timely Filed
The Tax Code imposes several artificial deadlines and consequences for not meeting those deadlines. Many tax deadlines are strict. The result in tax cases often come down to whether a taxpayer can prove that he met these deadlines. In Chan v. United States, No. 2:15-cv-739-DN-BCW (D. Utah 2016), the court considered whether an Adobe PDF…
IRS Agents Contact Third Parties During IRS Audit
We often get questions as to whether IRS agents can contact various third parties during the course of an IRS audit. The general rule is that IRS agents can in fact contact third parties. And they sometimes do. The ability to do this is limited and it does not exempt IRS agents from the confidentiality…
Can U.S. Tax Court Order IRS to Make Refunds?
There are a number of forums for litigating tax disputes, such as the U.S. Tax Court. There are pros and cons associated with bringing suit in each forum. Taxpayers often pass on litigating cases in the U.S. Tax Court in cases when they are seeking a refund of an amount in excess of the amount…
Evidence for Excluding Settlement Award from Income
Settlement payments paid to compensate a taxpayer for his physical sickness or injury are not taxable. Can you prove physical sickness or injury by showing that the payments were not for an economic harm? The court addressed this in George v. Commissioner, T.C. Memo. 2016-156. Contents1 Facts & Procedural History2 The Exclusion for Physical Injuries or…
Grouping Nonpassive Activities Under the PAL Rules
Taxpayers are often surprised to learn that some losses may not be netted against gains in the current tax year. This is often due to the passive activity loss and material participation rules. The IRS National Office addressed these rules in TAM 201634022, in the context of whether two businesses should be grouped together and…