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Most Recent Posts

Horse Breeder/Lawyer Wins In Tax Court. Was It Worth It?

Horse Breeder/Lawyer Wins In Tax Court. Was It Worth It?

Pretty much everything I know about the horse breeding business, I’ve learned from reading Tax Court decisions.  The appeal of working with animals quite a bit bigger than I who appear to defecate quite a bit escapes me. Also, the stories in the Tax Court lead me to believe that the business consists of calamity following misfortune or as my blogging buddy, Robert  Flach would put it, one GD thing after another.

Mr. Tolin’s focus in the years in question was on a stallion named Chosen Choice.  Chosen Choice’s racing career had been cut short by injuries, but he had done well enough to have potential in the post-racing career of the successful stallion.

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Sawyer Taxi Heirs Midcoast Fortrend Deal – Could Have Been Worse

Sawyer Taxi Heirs Midcoast Fortrend Deal – Could Have Been Worse

In the end, the Sawyer Trust is not responsible for the entire corporate tax that Fortrend dodged, but it does have to give back the premium it received over the net asset value of the companies it sold (Cash on hand less correct corporate tax).  The IRS had wanted to get nearly $20 million in corporate tax from the Trust.  The decision limits the recovery to $13.5 million, before interest and penalties.  It is still quite painful when you consider that an S election in 1987 would have legitimately avoided the entire problem.

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IRS Chief Counsel Has To Decide If Nail Polish Is A Luxury

IRS Chief Counsel Has To Decide If Nail Polish Is A Luxury

Taxpayer’s contributions of wrinkle creams, hair gels, perfumes, hair sprays, hair texturizers, curling irons, hair dyes, nail polishes, epilators, and hair restoration treatments (the “Donated Products”), are not “qualified contributions” that are eligible for the enhanced deduction under  I.R.C. § 170(e)(3), because they are not needed for the care of the ill, the needy, or infants under  I.R.C. § 170(e)(3)(A)(i) and  Treas. Reg. § 1.170A-4A(b)(ii).

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Bill Cassidy Providing Emergency Assistance To Wealthy Televangelists

On its face, providing a special tax benefit to “ministers of the gospel” seems blatantly unconstitutional, since it would only apply to Christians.  The IRS early interpreted the statute more broadly to include many who would not otherwise want to be considered “ministers of the gospel” – rabbis and cantors for example.  Hence the preservation of the clergy tax benefit has broad ecumenical support with, for example, Southern Baptists joining with the Russian Orthodox and Krishna Consciousness and Islamic organizations to file an amicus brief supporting the government’s appeal of Judge Crabb’s decision.

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Kansas Hungry For $40 Million Tax Slice Of Pizza Hut Franchisee’s Profits

Kansas Hungry For $40 Million Tax Slice Of Pizza Hut Franchisee’s Profits

This is where it gets a little lawyerly. Mr. Bicknell’s attorneys want to argue that the regulations should not apply in his case since they were issued after he moved. They have other problems with the regulations such as unconstitutional vagueness. DOR argues that they are relevant since the bulk of the assessment relates to 2006.  The Court of Appeals ruled that the challenge to the regulations is premature.

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Tax Court Views Ballpark Guesstimates As Fields Of Dreams

Tax Court Views Ballpark Guesstimates As Fields Of Dreams

If you are involved in a money-losing side activity (or money-making if your income is over the NII threshold), try to keep contemporaneous records of the time you spend.  Ideally, you should cross-reference the time log with invoices and e-mail print-outs, and vendor invoices.  Of course, if your goal is to be featured in one of my blog posts, it might not happen, since there is a decent chance that you win at appeals.  Whatever you do, never refer to whatever reconstruction you come up with as a “ballpark guesstimate”.  That will cause you to strike out.

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Strong Language In Partnership Agreement Might Help With Expense Deductions

Strong Language In Partnership Agreement Might Help With Expense Deductions

The other lesson is more subtle.  It would be a good idea for professional partnerships to look closely at the expense language in their agreements.  Particularly in partnerships with “Eat what you kill” compensation structures, the agreement should be very clear that partners might be expected to spend money on all sorts of things that might not be reimbursed.

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Non-Custodial Parents Out Of Luck When Form 8332 Withheld

Non-Custodial Parents Out Of Luck When Form 8332 Withheld

If the custodial parent is withholding a signed Form 8332 that you are entitled to, there are a couple of approaches.  Filing your return without the required form is not one that I would recommend. My own view which may be of limited applicability is to just forget about it and don’t claim the exemption.  This is clearly the best course if both you and your ex are going to end up leaving money to the same kids.

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