Gift Tax Annual Exclusion Amount Increases for the First Time Since 2018... [ read ]
As inflation recently hit a three-decade high, the IRS announced adjustments to various tax deductions, credits, and exemptions.
Defined Valued Transfer - How the Taxpayers Got it Wrong... [ read ]
On November 3, 2021, the Fifth Circuit issued its opinion in Nelson v. Commissioner and unanimously affirmed the opinion of the Tax Court in favor of the IRS.
Employers Beware: Federal Government Continues its Laser Focus on Employment Tax Fraud... [ read ]
According to the IRS Criminal Investigation annual report, there were 2,596 criminal investigations initiated in 2020, of which 298 were employment tax cases. In January 2021, the Department of Justice Tax Division noted "employment tax enforcement is among the Tax Division's highest priorities." A recent example of the government's focus on employment tax fraud can be found in U.S. v. Christina Anglin (W.D. Okla. 2021). Ms. Anglin was the controller and CFO of a technology company in Oklahoma. As the controller, one of her responsibilities was withholding payroll taxes (Social Security and Medicare taxes and federal income taxes) and paying them to the IRS.
The Impact of Delinquent International Informational Returns on the IRS Statute of Limitations... [ read ]
Early this year the U.S. Tax Court released a decision in Kelly v. Commissioner, which, among other things, discusses how a delinquent international return impacts the IRS statute of limitations for assessment. It is a welcomed partial win for a taxpayer and contains a good discussion of reliance on a tax professional as the basis for reasonable cause.
Ways and Means Proposes Limited "Get Out of S Corp. Free" Card... [ read ]
Do you or your clients have an S corporation that you would like to convert to a limited partnership for tax purposes, but for the taxable gain thereon? Surprisingly, the Ways and Means tax proposals introduced on September 13 would permit a tax-free reorganization from an S corporation to a domestic partnership, with one catch.
Proposed Changes to Gift and Estate Tax Provisions... [ read ]
On September 13, 2021, the House Ways and Means Committee issued a series of proposals for consideration for the payment of the Biden Administration's desired $3.5 Trillion infrastructure Bill. The final legislation will likely look very different than the proposals as issued on Monday. Nevertheless, they are instructive as to the way things may develop over the next few months.
The Hidden Danger of Filing a Tax Court Petition, Part II... [ read ]
In an earlier blog post, I discussed the hidden danger of filing a Tax Court petition, i.e., that the IRS can raise new issues, including new penalties. In the case referenced in the prior blog post, Wegbreit v. Commissioner, T.C. Memo. 2019-82, the Notice of Deficiency included a 20% negligence penalty, the taxpayer filed a Tax Court petition and after the IRS filed its answer and conducted some discovery, the IRS amended its answer to include 75% civil fraud penalty.
Court Agrees with Taxpayer and Quashes Summonses to Third-Party Record Keeper... [ read ]
In a rare win for a taxpayer, a federal district court in Idaho turned down an IRS request to enforce third-party summonses for information and granted the taxpayers' motion to quash the summonses. The court said the IRS failed to properly notify the taxpayers of its intent to contact a third party during the course of the examination and therefore, the summonses was not enforceable.
TIGTA Says the IRS Should Be Pursuing Taxes From S Corporation Owners... [ read ]
The tax treatment of compensation to S-Corp owners has reared its head again in an August 11th report issued by the Treasury Inspector General for Tax Administration (TIGTA). As long as I have practiced tax law, tax treatment of distributions to S corporation shareholders has been an issue with no clear answer. Not surprisingly, the TIGTA report says the IRS should be doing more to examine distributions to S corporation owners.
The Magical Metamorphosis of S Corporations Through an F Reorganization... [ read ]
Whether to implement a reincorporation of an S corporation, from say California to Texas, or to pave the way for an S corporation asset sale to a buyer taxed as a partnership, an F reorganization can be a tax efficient tool to achieve those objectives, among others.
