Given the potential for the adjustments to trigger extremely large tax liabilities, accounting method changes made by the IRS on audit can be doomsday scenarios for unwary taxpayers. In Nebeker v. Commissioner, T.C. Memo. 2016-155, the court addressed a common situation where the IRS makes an adjustment on audit that is an accounting method, but…
Tax Articles
Duty Applied to IRS Lawsuit to Collect Unpaid Taxes
Contents1 Duty of Consistency in Suit to Collect Unpaid Taxes2 Facts & Procedural History 3 The Duty Of Consistency 4 The CDP Request – Valid? Duty of Consistency in Suit to Collect Unpaid Taxes Many tax cases are won or lost based on tax procedure issues. The U.S. v. Holmes, Civil Action No. 4:15-cv-00626 (S.D. Texas 2016),…
What Facts are Needed to Abate Penalties?
The IRS is authorized to abate penalties for reasonable cause. There is no set of standard facts or factors that show reasonable cause. Taxpayers have made various arguments, with the IRS and courts rejecting most of them. How bad does life have to be for there to be reasonable cause? The court addresses this in…
Start-Up Expense Limitation
Contents1 The Start-Up Expense Limitation: Starting a Business in Retirement2 Facts & Procedural History3 Start-Up or Pre-Opening Expenses4 Factors Indicating a Trade or Business Had Started5 Business Revenues6 Advertising and Solicitations7 Evidence of a Business Plan8 Start-Up Expense Election The Start-Up Expense Limitation: Starting a Business in Retirement There are several occupations where highly skilled…
IRS Collections for U.S. Military Personnel
Contents1 Military Tax Rights under the SCRA2 Military Tax Rights Under the SCRA3 IRS and State Tax Collections4 IRS and State Tax Collection Statutes5 IRS and State Tax Penalties and Interest6 Who Does the SCRA Cover? Military Tax Rights under the SCRA Judicial and administrative proceedings are temporarily suspended for those serving in the United…
Unmarried Taxpayers Can Claim Mortgage Interest Deduction
Mortgage Interest Deductions for Unmarried Couples In Voss v. Commissioner, 796 F.3d 1051 (9th Cir. 2015), the court addressed the rule that limits the deductibility of interest on home mortgages and home equity loans. This rule limits the amount of interest that can be deducted on mortgages in excess of $1 million and home equity…
Real Estate Professionals Subject to Material Participation Rules
But can you be a real estate professional for the passive activity loss rules and then have your passive losses denied under the material participation rules? The Gragg v. United States, No. 14-16053 (9th Cir. 2016) case presents an opportunity to consider this fact pattern. Contents1 The Facts & Procedural History2 The Passive Activity Loss…
TIGTA Review of the IRS’s Practices in Levying on Social Security Payments
The IRS has the power to levy on or take a taxpayer’s property. This includes nearly all property, including Social Security payments. The Treasury Inspector General for Tax Administration (TIGTA), the agency that audits the IRS, recently released a report that examined the IRS’s practices in levying on Social Security payments. Social Security Payments TIGTA’s…
The IRS’s Streamlined Procedures for Foreign Accounts
Given its limited resources and ability to detect foreign assets, accounts and income, the IRS has offered various voluntary programs to entice taxpayers to come clean and report this information. The IRS’s OVDP program and the more recent streamlined procedures are two examples. The Maze v. Internal Revenue Service, Nos. 15-1806 (D.D.C. 2016), highlights several…
Online Account Trigger FBAR Filing, Not Poker Websites
In Hom v. United States, No. 14-16214 (9th Cir. 2016), the court addressed whether an online payment account and poker websites triggered FBAR filing requirements. The stakes are high with FBAR penalties, so those with foreign accounts should take heed. Contents1 FBAR Filing Requirements2 What Foreign Accounts Trigger FBARs?3 The Technical Explanation4 The Layman’s Explanation5…