The importance of planning and documenting transactions is a critical aspect of tax law that can impact taxpayers across various industries and transactions of all sizes. It is a lifesaver when the IRS attacks. Documenting transactions can help taxpayers provide evidence of the details of the transaction, such as the parties involved, the terms of…
Category: Tax
Tax
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The IRS’s Strategic Litigation Approach: One Case at a Time
In the complex landscape of tax law, the IRS plays a significant role in shaping and enforcing tax laws and regulations. One of the key strategies employed by the IRS is the careful selection of cases to litigate, particularly when previous decisions have favored taxpayers. By patiently waiting for the right set of facts to…
The Hobby-Loss Grouping Rules
The IRS is not a government agency. It does not have to earn a profit. It does not even have to be concerned about keeping basic books and records. Unlike the standard that it imposes on even the smallest of business taxpayers, the IRS cannot produce anything close to a simple profit and loss statement…
The Section 44 Small Business Disabled Access Credit
The Section 44 small business disabled individuals tax credit provides a tax incentive to comply with the Americans With Disability Act of 1990 (“ADA”). There is very little guidance for the tax credit, which makes it hard for taxpayers to plan for this tax incentive. The recent Arevalo v. Commissioner, No.05-61129 (5th Cir. 2006), case provides an…
Late Section 475(f) Election and Section 9100 Relief
Those who are traders in securities or commodities can make a mark-to-market election. This election can allow the trader to immediately deduct losses each year and avoid the wash sale rules. But many traders do not know about this election and only learn of it after it is too late to benefit from it. Even…
Part-Time Employee Not Entitled to IRA Contribution Deduction
Taxpayers who participate in their employer’s retirement plan are not able to deduct contributions the taxpayer makes to their IRA retirement account. This is also true for taxpayers who are entitled to participate in their employer’s retirement plan, but choose not to do so. In Colombell v. Commissioner, T.C. 2006-184, the court considered whether an…
Comparison: U.S. and France’s Approach to Small Business Taxes
In recent years, governments worldwide have been exploring new ways to address tax-related issues. For example, the French government, which reported a budget deficit of approximately 3% of its GDP, has proposed using the surplus tax revenues to exempt minimum wage employees working for small businesses from payroll taxes. This approach contrasts with the United…
Navigating the Deductibility of Investment Advisory Fees for Trusts
The tax treatment of investment advisory fees paid by trusts has become a hotly debated topic in recent years. The conflicting decisions of various circuit courts of appeals have led to discrepancies in tax treatment across different jurisdictions. While some courts have ruled that investment advisory fees paid by trusts are subject to the same…
Compensatory Damages May Not be Taxable
The tax code is an intricate and complex framework that governs the collection of taxes in the United States. While numerous provisions have been contested in courts, it is quite rare for a provision to be deemed unconstitutional, particularly for a tax code section that has already undergone substantial litigation. In the landmark case of…
Taxes & Limited Liability Companies
A Limited Liability Company (“LLC”) is a popular business entity choice for entrepreneurs and small business owners. It offers the flexibility of a partnership or sole proprietorship, while also providing limited liability protection for its owners. Once formed, LLC owners have the ability to determine how the entity is taxed for Federal income tax purposes,…