Website Development Tax Deductions & the Start-Up Rules

There are several tax laws that have to be considered to determine when and how costs to develop websites are deductible. These expenses are almost always deductible. These tax laws raise timing questions. It’s a matter of when the expenses are deductible. For those who are developing website businesses as side-hustles, the issue takes on…

IRS Substantiation for Charitable Contributions & Gifts

Our tax laws allow a deduction for contributions and gifts made to charities. The idea is that the charity is relieving the government of some service or function that the government would have to otherwise have provided. The amount of the charitable contribution deduction can be significant. This benefit has been part of tax planning…

Choice of Entity: Tax Plans for Pharmacies

Our laws have long said that taxpayers are free to structure their legal affairs to minimize their taxes. Congress has even provided very specific provisions to accomplish this. Section 1202 stock is an example. This provision is intended to encourage start-ups to take business risks by rewarding those who are successful by allowing them to…

Restructured Business Fails Passive Activity Loss Rules

Successful businesses change over time. We often see this when a business gets ready for the founder or owner to exit the business. The business is often reorganized and maybe even divided up. Various tax strategies come into play to help facilitate the transfer, like the F Reorganization for S corporations. Other plans to minimize…

Is Military Pension Taxable (Answered)

There are a number of tax breaks afforded to those in the military. This includes collection holds on unpaid taxes owed by members of the military to laws that exempt certain income from tax altogether. The exemption from paying tax on military pay for injuries is an example. The recent Valentine v. Commissioner, T.C. Memo.…

Retired Pilot Taxed on Flights Employer Provided to Relatives

A fringe benefit is a perk provided to an employee. These benefits can make many forms. It may include a company car, company meals, or even insurance. These benefits may or may not be taxable for the employee. The Mihalik v. Commissioner, T.C. Memo. 2022-36, case provides an opportunity to consider these rules. The Mihalik…

Section 1031 Exchange Into Jointly-Held Partnership Property

The Section 1031 exchange rules can help real estate investors defer paying tax on the transfer of property. Many real estate investors use these rules to upgrade their real estate portfolio over time. This tax deferral can be helpful as monies that would have been paid to the IRS in taxes can be rolled into…

When is Real Estate Placed in Service?

Several tax laws are triggered by when property is purchased. Other tax laws are triggered when property is placed in service. Depreciation on real estate is a good example. It is triggered when property is purchased and placed in service. These dates raise questions about whether property is placed in service and sits idle or…

Reporting Illegal Income to the IRS (It’s All About Choices)

claim of right deduction

Assume you commit a crime and receive a financial windfall. Then you get caught and have to repay the windfall in the form of restitution. Further assume that you have three options when it comes to reporting and paying tax on the illegal income: (1) you file tax returns to report the income and you…

Divorce Planning for Those With IRS Back Taxes

The IRS often audits tax years where there is some change. This includes mergers, significant asset transfers, deaths or even divorces. The reason why it does this is that these transitions create opportunities for savvy taxpayers or pitfalls for the unwary. These transitions also create motives and introduce new parties to income or assets that…