Are you purchasing a business or real estate that involves financing a business or investment that is likely to produce tax losses in the future? Or have you already made the purchase? If so, there may be ways to ensure that you can take the loss in the future. To do so, you have to…
Category: Tax Loss
Tax Loss
Our tax professionals will help you navigate the complexities of tax loss harvesting and other strategies for reducing your tax liability. Give us a call to see how we can help, (713) 909-4906.
Can “Business Synergies” be an Asset that Increases a Tax Loss?
The tax consequence of a transaction often depends on how one characterizes or describes the transaction. Business synergies are often cited as the rationale for merger and acquisition deals. In a M&A deal, are “business synergies” a separate asset for tax purposes? Can you list “business synergies” as a separate asset and then take a…
Tax Planning for the Start-up Limitation Rules
Our tax laws include start-up rules that limit the ability to deduct certain business and investment expenses. For business owners and investors with other sources of income, this can result in funds being sent to the IRS to pay taxes at a time when the capital is needed to fund the business or investment growth.…
Bad Debt Tax Deduction for Guarantee Payment?
When an individual or company guarantees a loan for a third party, they are essentially agreeing to assume responsibility for the debt if the borrower defaults on their payments. In some cases, the guarantor may be required to make payments to the lender on behalf of the borrower. But what happens when the guarantor has…
Avoiding Hobby Loss Limits for Long-Term Projects
Long-term projects often lose money. They often do so for several years. This is the result of a project that needs capital to build infrastructure or to develop a new market or to capture market share. Taxpayers may be disappointed to learn that the tax losses coming from these long-term projects in the early years…
Bad Debt Deduction for Real Estate Lender for Non-Real Estate Loan
In the world of finance and investing, making loans is often seen as a relatively safe way to earn a higher rate of return than other investment opportunities. For many individuals, this means venturing into the realm of real estate loans, where they can use their expertise to evaluate the merit of investment opportunities and…
Is Election to Waive NOL Carryback Irrevocable?
You have to be careful when electing to waive the right to carry back a net operating loss. This is particularly true if there are items on your tax returns from earlier years that the IRS may eventually adjust if audited. The Bea v. Commissioner, No. 18-10511 (11th Cir. 2019), case provides an example of…
Documenting Tax Losses for Worthless Securities
tax loss for a worthless security, taxpayers must document the loss and establish several key elements. These elements include proving the existence of the security, the amount invested in the security, and the occurrence of a fixed and identifiable event that caused the security to become worthless. The recent Giunta v. Commissioner, T.C. Memo. 2018-180…
A Partnership is Worth Less, Not Entirely Worthless
The complexities surrounding tax loss deductions can be particularly challenging for taxpayers. While claiming tax losses for worthless securities may seem like a straightforward process, the IRS often scrutinizes these deductions, raising questions about the timing and character of the loss. In many instances, the IRS challenges the year in which the loss is allowed,…
IRS Rejects Court’s Passive Activity Loss 5% Owner and Grouping Decision
The passive activity loss (“PAL”) rules can limit the ability to deduct losses from passive activities, such as rental losses. The real estate professional and activity grouping rules can allow taxpayers to avoid having their losses limited by the PAL rules. Earlier this month, the IRS issued AOD 2017-007, IRB 2017-42, to note its formal…