But can you be a real estate professional for the passive activity loss rules and then have your passive losses denied under the material participation rules? The Gragg v. United States, No. 14-16053 (9th Cir. 2016) case presents an opportunity to consider this fact pattern. The Facts & Procedural History The taxpayer was a real…
Category: Federal Income Tax
Federal Income Tax
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Seismic Surveyor Entitled to G&G Expense Deductions
In CGG Americas, Inc. v. Commissioner, 147 T.C. 2, the U.S. Tax Court concluded that a seismic surveyor is entitled to geological and geophysical (G&G) expenses deductions even though they merely gathered data for license to third parties and did not engage in exploration or development work. Facts & Procedural History The taxpayer was in…
IRS Allowed Interest for Unpaid Taxes Despite Waiver
The IRS often does not act to collect unpaid taxes. When it does, it usually does so after several years have passed since the tax was due. Even though interest rates remain at historically low levels, it is not unheard of for the interest incurred on unpaid taxes to be more than the original tax…
Tax Deductions for Hobby Survives IRS Scrutiny
There are quite a few cases where the IRS disallowed loss deductions for “hobbies.” There are also quite a few cases where the courts have upheld the IRS’s position. These cases are decided based on the facts and how the courts interpret these facts. The facts in Main v. Commissioner, T.C. Memo. 2016-127, provide a…
Fines or Sanctions Paid to FINRA Are Not Deductible
In CCA 201623006 the IRS concluded that the payment of a fine or similar penalty to the Financial Industry Regulatory Authority (FINRA), a non-government entity, is not deductible as an ordinary and necessary business expense. Fines & Penalties Non-Deductible ..WHY?? The law is clear that fines and penalties paid to government entities for violation of…
Delayed Sale to Former Spouse Not Taxable
You didn’t realize it at the time, but growing up, you didn’t take full advantage of opportunities. With time, you realize that you not only failed to take advantage of opportunities, but the actions you took actually made life even more difficult. It’s more than failure by neglect. It’s also failure by action. That is…
NOL Triggers Refund for Earlier Year Adjustments
The tax loss carryback can result in some interesting math. The difficulties come in when one thinks about how to take one number, a loss, from a latter year, and apply that loss back to a former year. This may sound simple enough. It is one number that is being carried back. That part is…
Payment from Accounting Firm to Settle Claim Excluded From Income
The IRS released Action on Decision 2016-01 to disagree with a court case that held that a payment from an accounting firm to settle a claim against the firm for selling an abusive tax shelter was not taxable to the recipient. Facts & Procedural History The case is Cosentino v. Commissioner, T.C. Memo. 2014-186. In…
TV Commercial Set Designer Was an Independent Contractor
In Quintanilla v. Commissioner, T.C. Memo. 2016-5, the U.S. Tax Court concluded that a set designer for TV commercials was an independent contractor and not an employee for tax purposes. This case provides a good example of factors that show that a worker is in fact an independent contractor. Facts & Procedural History Mr. Quintanilla…
R&D Credit Made Permanent & Enhanced
Congress made the research tax credit permanent and enhanced the credit. The changes are retroactive back to January 1, 2015. Temporary Nature of the R&D Credit The permanent research tax credit solves one of the ongoing problems with the credit. As critics of the credit have noted, the credit cannot provide much of an incentive…