Tax Archives

Truck Stop Electrification Expenses Deductible, But Travel Expenses and Traffic Ticket Are Not

In Howard v. Commissioner, T.C. Memo. 2015-38, the U.S. Tax Court concluded that truck stop electrification expenses were deductible, but travel expenses and a traffic ticket were not deductible. Facts & Procedural History Mr. Howard was a long-distance truck driver for a Nebraska trucking company in 2009. He logged business travel for 358 days out…

Opting Out of Gaming Industry Tip Compliance

The IRS often challenges the amount of income received by workers who are paid tips. The IRS’s Gaming Industry Tip Compliance Agreement Program (“GITCA Program”) provides a method for avoiding these disputes. But what happens if you opt out of the tip program? The Sabolic v. Commissioner, T.C. Memo. 2015-32, case provides the answer. The Facts &…

Over-the-Road Truck Driver Not Entitled to Deduct Travel Expenses

In Jacobs v. Commissioner, T.C. Summary Opinion 2015-3, the U.S. Tax Court concluded that an over-the-road truck driver was not entitled to deduct travel expenses for traveling away from home since he lived in his truck. Facts & Procedural History Mr. Jacobs is a truck driver. He operated his own truck prior to 2006, worked…

Research Was Not Routine, But Compensation Was Excessive

For the research tax credit, when is research so routine that it does not qualify for the tax credit? And what if the founder of the company is paid an unreasonably high wage–can the high wage be considered as an expense for computing the credit? The court addressed these issues in Suder v. Commissioner, T.C. Memo.…

Bad Debt Deduction Not Allowed Until Business Fails

If you lend money to a failing business and the business eventually fails, can you take a bad debt deduction? And if so, when? The U.S. Tax Court addressed this in Cooper v. Commissioner, 143 T.C. 10, which provides an opportunity to consider the question. Facts & Procedural History The Coopers started Pixel in 1983. Pixel…

Self-Directed IRA Purchase of Real Estate is Taxable

Self-directed IRAs present a number of opportunities. But what if the self-directed IRA custodian chooses to limit the account holder’s options? Can the IRA account holder go around the custodian’s wishes? The recent Dabney v. Commissioner, Docket No. 14566-12, provides an example where the purchase real estate by a self-directed IRA was a taxable distribution from…

Self-Directed IRA can Flip Houses & Share Ownership of Property

In In re Cherwenka, the U.S. Bankruptcy Court for the Northern District of Georgia concluded that house flipping activities in a self-directed IRA and shared ownership of property with the IRA and the account holder were not prohibited transactions. Facts & Procedural History Mr. Cherwenka was in the business of flipping houses. Mr. Cherwenka established…

Promissory Notes Distributed by Self-Directed IRA Were Not Worthless

Self-directed IRAs are usually profitable. But there are times when they lose money. In Berks v. Commissioner, Docket No. 26883-11S, the U.S. Tax Court addressed a situation where the IRAs held promissory notes that may have been worthless. Facts & Procedural History The Berks rolled over money from pre-existing IRAs to self-directed IRAs, with the…

Car and Truck Expenses Allowed Based on Mileage Not Actual Costs, Absent Records

In Aivatzidis v. Commissioner, T.C. Summary Opinion 2013-105, the U.S. Tax Court concluded that a professional driver could deduct expenses based on mileage, but not for actual expenses. This case provides an example of why drivers should compute car and truck expenses based on mileage if they do not have sufficient records. Facts & Procedural…

Insurance Agent Denied Depreciation Deduction For Airplane

In Brown v. Commissioner, T.C. Memo. 2013-275, the U.S. Tax Court denied an insurance salesman’s bonus depreciation deduction for his private jet as it was not placed in service in the tax year. The case highlights the highly factual nature of determining when an asset is deemed to have been placed in service for tax…