In Nolder v. Commissioner, T.C. Summary Opinion 2012-50, the U.S. Tax Court examined a number of different expenses incurred by a truck driver to determine which expenses were deductible. This case provides a good overview of the typical expenses truck drivers incur that are and are not deductible. Facts & Procedural History Mr. Nolder was…
Tax Articles
Wages for Research Were Not Reasonable
The research tax credit provides a significant incentive to perform research. The credit is calculated by factoring in wages paid by the business and income from the business subject to self-employment. Given this, can a business owner pay himself an unreasonably large salary and thereby increase the amount of the credit? The court recently addressed…
Tax on Nonresident Alien Gambling Winnings
Are non-resident aliens who receive gambling winnings while visiting the U.S. able to deduct the gambling expenses incurred in earning the gambling winnings? And can they avoid the withholding tax on their gambling winnings? The court addresses these international tax law issues in Park v. Commissioner, 136 T.C. 569 (T.C. 2011). Contents1 Facts & Procedural…
The IRS’s Reach in a Research Tax Credit Audit
The IRS has a track record of taking aggressive stances when auditing research tax credits. But its position in the Bayer Corp. & Subs v. United States, Civil Action Nos. 08-693, 09-351 (W.D. PA 2010), raises the question whether a taxpayer claiming a research tax credit is signing up to disclose their confidential information. Facts &…
What is a Project for the Research Tax Credit?
It can be difficult to separate qualified and nonqualified research in computing the research tax credit. The research tax credit rules are generally applied to the “project,” but the term “project” is not even mentioned in the Code. The Trinity Industries, Inc. v. United States, 691 F. Supp. 2d 688, (N.D. Tex. 2010), case provides guidance…
Research Tax Credit: Taking Expenses for Depreciable Property
The IRS exam function often raises a number of questions about the rules for claiming expenses for depreciable property for the research tax credit. The recent TG Missouri Corporation v. Commissioner, 133 T.C. 13, provides much needed clarity in how to apply these rules. Facts & Procedural History TG Misouri is in the trade or…
Termination Payments to Insurance Agents: Capital vs. Ordinary
When insurance agents exit the business, are termination payments considered capital gains or ordinary income for tax purposes? The characterization can mean thousands in potential tax savings or liabilities. The Lendard v. Commissioner, T.C. Summary Opinion 2009-165, case addresses this issue. It involves an agent who challenged the IRS’s treatment of his termination proceeds. The…
Foreign Branch Income & the Research Tax Credit
The research tax credit is one of the most complicated provisions in our tax code. The international tax law aspects of this credit are even more difficult to follow. In Deere & Company v. Commissioner, 133 T.C. No. 11, the U.S. Tax Court considered whether income from foreign branches must be included in the gross…
Per Diem for Truck Drivers (Explained)
Truck drivers are on the road and focused on driving. They do not have access to an organized office or have time to stop and process paperwork. So they are an easier target than some other types of taxpayers. This is why truck drivers are frequently targeted by IRS auditors. Truck drivers also earn above-average…
IRS Appeals Does Not Have to Hold Open CDP Hearing
Our system of income taxes is based on arbitrary deadlines. Income and expense are counted and tax computed on a set interval, whether calendar year, fiscal year, or a 52-53 week tax year. Tax returns are filed three, four, nine or ten months later. Audits have to be done within three years usually unless extended…