In tax, we spend a lot of time focusing on tax rules. But tax rules only go so far. The results in tax cases are impacted by the people who work tax cases as much as they are by the tax rules. Our system of tax administration also plays a role. This is hard to…
Tax Articles
Court Revisits Reasonable Cause Abating Penalties
The U.S. Supreme Court has made it clear that taxpayers cannot avoid penalties by blindly rely on tax attorneys to file tax returns and make tax payments. These situations are unfortunate. The court in Specht v. United States, No. 15-3095 (6th Cir. 2016) highlights one way that taxpayers may be able to avoid the bright…
Charitable Deduction With a Defective Valuation
There are a number of cases where taxpayers have had to pay more tax than they should due to technical foot faults. These cases often come up when the IRS auditors believe that their job is to look for strict compliance (100%) rather than substantial compliance (something more akin to 80%). This brings us to…
Payments Were Alimony Despite Missing Language Agreement
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…
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…