Federal Income Tax S Corporation Tax Tax Tax Loss

Loan to an S Corporation to Allow Tax Loss

Tax basis can limit a shareholder’s loss from an S corporation. If an S corporation has a tax loss but the shareholder doesn’t have sufficient tax basis to take the loss, the shareholder will typically have to loan money to the S corporation. This tax debt basis makes the loss allowable in the current year. […]

Federal Income Tax Lawsuit Awards Tax

Tax on Payment for Being Born With Medical Condition

We can do some amazing things given the state of our science and technology. These advances lead to some interesting tax questions. The IRS recently addressed such a question in PLR 201950004. It considers whether damages paid by a fertility clinic for failing to perform a genetic test are excluded from the recipient’s income as […]

Accounting Method Federal Income Tax Real Estate Tax

Sale of Trailers Doesn’t Qualify for Installment Sale Treatment

If you buy, subdivide and sell real estate, can you seller-finance the sales and report the gain over a long period of time? The answer is generally yes, but advance planning is needed. The court addresses this in Joyner Family Limited Partnership v. Commissioner, T.C. Memo. 2019-159. Facts & Procedural History The taxpayers purchased land […]

Federal Income Tax Tax Tax Loss

Bad Debt Tax Deduction for Guarantee Payment?

If you guarantee a loan for a third party and have to make payments due to the guarantee, do you get to deduct the payment as a bad debt for tax purposes? The court addresses this in Baker Hughes, Inc. v. United States, No. 18-20585 (5th Cir. 2019) in the context of a payment made […]

Capital vs. Ordinary Federal Income Tax Tax

Sale of Long-Term Service Contracts: Capital or Ordinary Gain?

If a taxpayer sells a business that owns long-term service contracts, is the gain attributable to the contracts subject to tax at ordinary or capital gains rates? The IRS’s recent action on decision for the Greenteam Materials Recovery Facility PN v. Commissioner, T.C. Memo. 2017-122 court case deals with this in the context of a […]

Federal Income Tax Tax Tax Deductions

Travel Expenses Allowed for Repetitive Pattern of Travel

The IRS frequently challenges travel expenses.  These expenses have a higher substantiation requirement, which the IRS uses to disallow every expense no matter how reasonable or how certain it is that the expense was incurred.  But what if it was exceedingly certain that the expense was incurred and there is a method for computing the […]

Depreciation Federal Income Tax Tax

Records Needed for Partial Asset Dispositions

Taxpayers often overlook “partial asset dispositions.” Their tax advisers do too. This may be due to it being a depreciation issue that seems unimportant. It may also be that the partial asset disposition is a relatively new concept. Regardless, partial asset dispositions can save taxpayers quite a bit in taxes (it is a timing issue, […]