When the IRS levies or takes property from the taxpayer, the taxpayer has the right to request that the property be sold within 60 days. This rule applies to more than just stocks. It also applies to cryptocurrency, for example. In Zapara v. Commissioner, 126 T.C. 215 (2005), aff’d, 652 F.3d 1042 (9th Cir. 2011),…
Tax Articles
What Gross Receipts are Used in R&D Credit?
For the research tax credit, what gross receipts do you include in computing its tax credit? Despite the credit being on the books for several decades, this is an open question. The court addressed this in Hewlett-Packard Co. v. Commissioner, 139 T.C. 8. Facts & Procedural History Hewlett-Packard Co. (“Hewlett-Packard”) is a global technology and service…
Does Work to Validate Prior Research Qualify for the R&D Tax Credit?
For the research tax credit, does work to validate prior research count as a qualified research expense? The court recently addressed this in United States v. Davenport, No. 3:09-cv-02455-L (N.D. Tex. 2012). Facts & Procedural History Morris and David Davenport (collectively, “Davenports”) were fifty percent owners of Burly Corporation (“Burly”). Burly manufactures residential metal roofing and…
Using Third-Party Statistics for Tax Deductions
If you remember the time before the widespread use of personal computers, you will understand this better than others. We live in a society full of data. It’s everywhere. And it’s growing in volume, scope, and utility. The explosion of data has allowed taxpayers to produce documents, documents, and more documents. But why? Documenting business…
Household Expense Rules for IRS Offers in Compromise
The IRS has broad discretion to settle unpaid taxes. It can compromise taxes for any amount and for any reason–even for no reason. Absent the IRS dropping the ball, the IRS set up a very specific process and rules that it applies in deciding to compromise tax debts. This is the IRS’s offer in compromise…
Moving Truck Driver Allowed to Estimate Contract Expense Deduction
In Bauer v. Commissioner, T.C. Memo. 2012-156, the U.S. Tax Court held that a moving truck driver was entitled to deduct expenses to hire contractors to load and unload his truck by estimating the amount of the expenses. Facts & Procedural History Mr. Bauer was a moving truck driver. He was hired by clients as…
Court Determines What Truck Driving Expenses Are Deductible
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…
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 &…