The Balancing Act: Records Needed for Tax Positions

The Goldilocks Principle says that the best outcomes are achieved by finding a balance. It looks for the “just right”—neither too much nor too little. This concept applies not only to storytelling but also to tax recordkeeping. Taxpayers have to strike a balance in maintaining records that are thorough enough to satisfy the IRS but…

Using Estimates to Prove Business Expenses

Imagine this common scenario – you own a small business and incur a legitimate expense that you pay and have some record of. Years later the IRS audits and disallows the deduction for lack of receipts or other documentation. The auditor may request bank statements, which you provide, only to be told those are inadequate.…

Tax on Funds Received as an Intermediary Conduit

As tax attorneys in Houston, we often see investments made by local ethnic communities that are focused on investing overseas or raising money from overseas. This often involves those who immigrate to the U.S. from foreign countries, and do well in the U.S. financially. The investments are often made based on direct knowledge of opportunities…

Using Accounting Records in Tax Court

Whether one likes it or not, the federal government is their business partner. The tax code is often compared to a partnership agreement that sets out the share of the income that belongs to the federal government. Continuing the analogy, the records the business keeps are the support for making the allocation between the taxpayer…

The IRS’s Bank Deposit Analysis

When conducting an audit involving income tax returns, the IRS will almost always check for unreported income. The IRS has specific procedures for conducting this type of income verification. This often involves a bank deposit analysis by the IRS agent. This type of analysis can be used to identify unreported income, but it can also…

The Qualified Nonpersonal Use Vehicle

What Congress provides with one provision, it often takes away with another. This can result in legal challenges whereby the court creates exceptions. The exceptions can be modified and qualified by later legislation. This creates a labyrinth that one has to navigate to determine how an item is treated for federal income tax purposes. The…

Double Tax on Inter-Company Transfers

There are those who make things happen. They are usually the ones doing what it takes even when doing so is difficult, tiring, and draining. They are the ones that often make personal sacrifices and take risks to succeed. They are the ones that had the luck or grit to stick with something to see…

IRS Documentation for Travel Expenses

Business travel expenses are deductible. These are expenses for business trips and work trips, such as car and truck expenses, airfare and hotels and lodging. It can also include travel meals. Those looking to deduct business trip expenses are running a risk as the IRS frequently disallows these expenses on audit. It does so even…

Travel Expenses Allowed for Repetitive Pattern of Travel

Travel Expenses Allowed For Repetitive Pattern Of Travel

The IRS frequently challenges travel expenses.  These expenses have a higher substantiation requirement, which the IRS uses to disallow every expense no matter how reasonable or how certain it is that the expense was incurred.  But what if it was exceedingly certain that the expense was incurred and there is a method for computing the…

Can IRS Rely on Third Party Reports to Identify Taxable Income?

Can Irs Rely On Third Party Reports To Identify Taxable Income?

If a third party collects monies for you and send you a report reflecting the monies but the reports show too much income, should you be taxed on the higher income or what you actually received? The Ghadiri-Asli v. Commissioner, T.C. Memo. 2019-142, case addresses this. Facts & Procedural History The taxpayer is a physician.…