Section 469 and Material Participation... [ read ]
One of the tools in the IRS toolkit for limiting a taxpayer's business and investment loss deductions is IRC Section 469 and material participation. In Gurpreet S. Padda and Pamela B. Kane v. Commissioner, the U.S. Tax Court held that a practicing medical doctor met the IRC Section 469 material participation requirements for five restaurants and a brewery, and could deduct the losses generated by those business in full.
Can An Executor of An Estate That Owes Taxes Be Personally Liable?... [ read ]
In an unpublished decision, a U.S. District Court in New Jersey granted the government summary judgment against the executors of two related estates for fiduciary liability claims for failure to pay federal estate tax. United States v. Estate of Lorraine Kelley, et. al has a detailed discussion of how an estate executor can become personally liable for the estate tax and is a good example of what an executor should not do.
"Houston, We Have a Problem"- Options for Correcting Mistakes and Omissions on Tax Returns and Other IRS Filings... [ read ]
The federal tax system is a voluntary system that relies on taxpayers to file complete and accurate tax returns and other information with the IRS. However, sometimes after a tax return or other information in filed with the IRS, a taxpayer discovers it was incomplete or inaccurate. In order to avoid potential civil or criminal penalties, a taxpayer may want to act. This blog post discusses some of the options taxpayers have for addressing incomplete or inaccurate tax filings.
What is the Danielson Rule?... [ read ]
In the recent case of Watts v. Comm'r, T.C. Memo. 2020-143, the Tax Court cited to the Danielson rule in holding for the IRS. So, what is the Danielson rule?
IRS Stays True to its Word and Stiffens Microcaptive Settlement Terms... [ read ]
Earlier today, the IRS announced a second time-limited settlement initiative for certain taxpayers under audit who participated in micro-captive insurance transactions.
The IRS uses the 5-Letter "F" word in relation to Syndicated Conservation Easements... [ read ]
I know what you are thinking: I can't count letters. But the truth is far worse. The IRS used the five-letter "F" word: Fraud.
Amended Tax Return or Superseding Tax Return?... [ read ]
I recently had one of those "aha" moments and thought it was blog-post worthy. A tax return preparer called me after a tax return he tried to electronically file was rejected by the IRS because a return had already been filed for the taxpayer for same tax period. The first thought is: this is a case of stolen identity and a fraudulent return, right? In most cases, yes; but in this case, wrong. Upon further investigation, the preparer found that his office had inadvertently filed an incomplete return for the taxpayer, ten days before. In fact, the return that was filed was completely blank.
IRS Stands Firm on Microcaptive Settlement Terms and Warns of Similar Treatment for Variations... [ read ]
Lest we forget the IRS' position on microcaptives, yesterday the IRS issued a reminder to taxpayers that they should consult an "independent tax advisor" to size-up their captive insurance planning because "any future settlement terms will only get worse, not better." This warning applies not only to Section 831(b) microcaptives, but also variations that do not involve a Section 831(b) election that the IRS also identified as abusive.
IRS Has Requested Comments on Ending Revenue Procedure 94-69 Disclosures As a Defense to Penalties... [ read ]
On August 19, 2020 the IRS requested comments on whether it should eliminate disclosures made under Revenue Procedure 94-69, which allows taxpayers to avoid accuracy-related penalties with respect to self-reported adjustments at the beginning of an IRS audit
COVID Crisis Prompting the Need for a Private Letter Ruling in a Flash? No Problem.... [ read ]
Is COVID to blame for you missing a tax election, inadvertently terminating an election, or making the wrong election? Do you need immediate IRS attention… during a global pandemic when most IRS offices are closed? Don't you worry – the IRS is urging taxpayers to take advantage of expedited handling for private letter ruling requests to give you the tax certainty you need, when you need it.
