Typically the common definition of terms is used. This helps those who are not lawyers to understand and follow the law. But there are instances where the legal definition of a common term differs from the common understanding of what the term means. The tax law has several of these. When it comes to taxes,…
Category: Tax Deductions
Tax Deductions
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Prepayment: to Deduct in Year 1 or Year 2?
Say you are an accrual method taxpayer and you hire someone to provide a service to you in year one, the service is to be provided to you over a twelve month period, and you prepay the person for this yet to be provided service. When can you claim a deduction for this prepayment? The…
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…