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.
Claiming A Theft Loss Deduction... [ read ]
Pursuant to IRC Section 165, a taxpayer can deduct uncompensated losses resulting from a theft. For the years 2018-2025 personal theft loss deductions are limited to those attributable to a federal declared disaster. However a theft loss connected with a trade or business or a transaction entered into for profit is still deductible to the extent the theft loss meets the requirements of Section 165.
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.
To Forgive or Not to Forgive (in 2020): That is the PPP Question... [ read ]
For the many businesses that secured a potentially forgivable loan under the Paycheck Protection Program (PPP), one of the more pressing issues is whether to apply for forgiveness now or later and the tax implications of forgiveness in 2021 with respect to 2020 expenses that may become non-deductible upon forgiveness. So what is the right answer?
Missed Yesterday's Deadline? Just "COVID-19" It.... [ read ]
While the IRS has refused any formal program for late penalty relief, informally the IRS is embracing the virtue of forgiveness, with the magic word being "COVID-19."