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Most Recent Posts

Graduation Contingency Kills Alimony Deduction

Graduation Contingency Kills Alimony Deduction

In this case, the divorce decree clearly states that the support payments will terminate upon the graduation of the youngest child. With this kind of contingency, the statute compels us to characterize the payments as child support.  The fact that the divorce decree specifies that the payments are to be deducted by Mr. Johnson is not controlling

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Tax Court Denies Amway Losses – Again

Tax Court Denies Amway Losses – Again

My first suggestion is that if you want to have a side business to make personal expenses deductible (which is something that you should not do at all, by the way), Amway is about the worst thing to pick.  People with persistent Amway losses do not do well in Tax Court.  The other is that if you expect that a side activity will ultimately be profitable, you might want to consider suspending the losses under Code Section 469.  Although in principle, this does not immunize you from being attacked under Section 183, as a practical matter it does since you are not getting a current benefit.   You will get the benefit when the activity becomes profitable or you abandon it.

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Football Dad Beats IRS In Tax Court

Football Dad Beats IRS In Tax Court

Weakness in the dependency exemption system that the Form 8332 was supposed to solve.  The system is based on the assumption that there will be a custodial parent designated, but that is not necessarily the case.  I’ve seen in practice that it can be a rather murky question.

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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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