Many businesses today have some international transactions. Many U.S. businesses even have operations in foreign countries–which may include ownership of entities, operations, or just sales. Our tax laws include several provisions that require U.S. taxpayers to report most of these foreign business interests and activities. These filings are mostly made by filing various information returns.…
Category: Tax
Tax
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Attorney Fees in Tax Litigation: Jury Says Yes, Judge Says No
In most litigation, each party pays their own attorney fees regardless of who wins the case. This “American Rule” applies even when one party is clearly right and the other clearly wrong. But litigation against the government, such as tax litigation, presents a unique inequity. When taxpayers are forced to defend against an incorrect IRS…
Charitable Deductions for Defective Inventory
Manufacturers and retailers frequently face the challenge of handling defective or obsolete inventory that cannot be sold. This situation often results in waste. The inventory has some utility or value, but the benefit of repurposing or rehabilitating the inventory is often outweighed by the cost of handling or repurposing the inventory. Examples are easy to…
Tax Disputes When You Have Too Many Records
There are quite a few tax court cases involving taxpayers who did not have sufficient records to substantiate their tax positions. This is probably more than half of the cases that end up in the U.S. Tax Court. But what about the opposite situation where there are too many records? How is one to contend…
Fifth Circuit Expands Tire Import Excise Tax
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…
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…