The tax laws in the United States provide for several types of tax-exempt organizations, including charities, social welfare organizations, and business leagues. In Private Letter Ruling 200709070 the IRS has brought attention to the requirements for organizations to qualify as a tax-exempt “business league.” The ruling denied tax-exempt status to a referral/leads group on the…
Tax Articles
Video Poker Cannot Qualify as Professional Gambling
As technology and computers advance, there are more and more activities that put us, as humans, against computers. We, as humans, are in the position of having to game or strategize how to manipulate or beat computers to produce desired results. While it is not pointed out generally, whole industries are focused on doing just…
How HRAs Can Help Your Business
As a business owner, it’s always important to keep costs down while looking for opportunities to grow your business. One potential way to do this is through a Health Reimbursement Arrangement (HRA). An HRA is a tax-advantaged benefit that allows employers to reimburse employees for medical expenses on a tax-free basis. The employer contributes a…
Is Tournament Poker the Same as Live-Action Poker?
Are tournament poker losses subject to the same tax rules as live-action poker losses? This question turns on whether tournament poker is a “wagering activity.” Despite the amount of money at stake and the importance to taxpayers who gamble, the term wagering activity is not defined. This is where the recent Today, in Tschetschot v.…
Car Dealerships and Cash Reporting Requirements
Cash-based businesses can pose a challenge for the IRS, as they may be susceptible to tax fraud. To address this issue, Section 6050I(a) requires businesses to report any cash payments exceeding $10,000. This provision enables the IRS to track substantial cash payments made to cash-based businesses, and Form 8300 is the designated form for reporting…
Money Limit for “Small Case” Election for Collection Cases
Navigating tax disputes can be a daunting task for taxpayers, especially when it comes to the technical litigation rules that they may not be familiar with. The U.S. Tax Court‘s small tax case procedures provide a way to simplify the process. Taxpayers need to be aware that the amount of money involved in the dispute…
The Hobby Loss Rules: Planning for Unprofitable Businesses
American culture still has a hint of the protestant work ethic. There are people in the United States who still work hard and are willing to take risks to make things happen. The country benefits if they are successful–particularly if it ends up in a viable commercial venture. Not all ventures end up being successful.…
Tax Basis Planning for Inherited Property
When you sell a property, you are typically required to pay income tax on the gain, which is calculated as the difference between the sales price and the tax basis. The tax basis is usually the amount that you paid to purchase or invest in the property plus the amount paid to improve the property.…
Retirement Accounts: Restorative Payments vs. Return of Human Capital
If you get something returned to you, you generally do not pay income tax on the return. You just get your property back. It can be difficult to tell whether you are getting your property back or getting some other property back. Is there a difference? Or should there be a difference? The court grappled…
IRS Clarifies Real Estate Broker 1099 Filing Requirements
The IRS relies on voluntary compliance from taxpayers, meaning that most people follow tax laws willingly. However, noncompliance can result in penalties, making it an incentive for individuals to comply. To help identify potentially taxable transactions, third parties are required to file information reporting forms with the IRS. For instance, real estate sales typically require…