In the tax world, excise taxes are often the neglected step-child. They take a back seat to income and estate taxes. They do not make the headlines very often. Excise taxes are largely transaction-based taxes that target specific industries or activities. The businesses that are subject to these taxes generally just pay them, and consider…
Category: Tax
Tax
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What is a Bona Fide Loan for Tax Purposes?
It is often said that a taxpayer is free to structure their affairs as they see fit and can even do so in a way to minimize or avoid paying taxes. While this is true, it is equally true that the IRS is not bound by the taxpayer’s characterization of transactions. The IRS has a…
Gift Tax Triggered for Termination of Trust After Death
When someone sets up their estate plan, one would hope that the probate process would result in the terms of the estate plan being carried out. State law often allows beneficiaries and heirs to change the terms of someone’s estate plan after they die. For example, in Texas, beneficiaries can usually agree to override the…
Taxes and Flow-Through Entities in Divorce
When a marriage involving owners of a flow-through entity is on the rocks, the intertwining of personal and business finances can create significant tax complications. This is especially true when one spouse is more involved in the business operations than the other. There are more than just tax issues to consider in divorce. But taxes…
A Government Step Transaction Doctrine
When taxpayers weave together various tax rules to produce a favorable outcome, the IRS will often cite various judicial doctrines to avoid the result or to unwind the transaction. This can include economic substance, the step transaction doctrine, etc. These doctrines allow the IRS to effectively reverse the tax treatment of transactions when multiple tax…
CDP Hearings and OICs: When Does the 24-Month Clock Stop?
When it comes to tax deadlines, taxpayers are often held to strict standards. Miss a filing deadline by a day, and the taxpayer could lose their rights and/or ultimately be stuck with a higher tax balance. But what happens when it’s the IRS that has a deadline to meet? The short answer is that the…
From Commingled to Contested: The IRS’s Audit of Tax Deductions
The common idea that business expenses are deductible while personal expenses are not is an oversimplification. In reality, the tax rules are more nuanced. Some personal expenses are deductible, and the line between personal and business expenses is often blurry. This complexity is further compounded by the fact that many businesses, particularly small ones, fail…
The Tax Treatment of Pre-Start-Up Costs
Can you deduct costs incurred while investigating whether to start a business? What if you spend several years researching, planning, and preparing to launch and you incurred costs during these years to do so? Are these expenses deductible in the years before your business officially begins operations? Does the answer change if the business actually…
Tax Planning With Disproportionate Distributions from S Corporation
There are several rules one has to meet for a legal entity to qualify as an S corporation. One of the rules is the requirement that shareholders of S corporations get identical distributions. Because this is a qualification to be an S corporation, one might think that the consequence of violating this rule is that…
IRS Collections: Different Rules for Foreign Debts?
The United States is built on fundamental principles of rule of law, due process, and justice. These concepts are not merely abstract ideals but are deeply ingrained in our legal system and societal expectations. They form the bedrock of what many consider to be American exceptionalism – a system where laws are transparent, consistently applied,…