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.…
Tax Articles
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…
Tax Court Judge Can Rewrite Facts of Case That He/She Did Not Hear
The U.S. Tax Court is a unique court. Some say that the court is not really a court, rather, it is an executive agency of the government. There is some truth to this. The judges are appointed and not elected. The court isn’t authorized to hear general disputes. Instead, it has to look to Congress…
When Tax-Free IRA Rollovers as Short-Term Loans Fail: Two Examples
Taxpayers often withdraw funds from their IRAs to cover short-term expenses with the hope that they can put the funds back in their IRA within the 60-day window for making a tax-free IRA rollover. This can work out well when taxpayers put the funds back into their IRAs within 60 days. When taxpayers miss the…
Role of the Judge in Criminal Tax Sentencing
Tax fraud is a serious crime that can result in harsh criminal tax penalties, including fines and imprisonment. However, the specific sentence for a tax crime varies depending on the case and the judge presiding over it. In cases of tax fraud, the discretion of the judge can play a crucial role in determining the…