Most Recent Posts
Divorcing Spouses Should be Careful About Joint Returns
Another reason not to file a joint return is that you or your soon to be ex, though he or she might be honest as the day as long, may have a high audit potential. One of you might, for example, be involved in a lot of flow-through entities or family businesses
Credit Card Rebates May Yield Charitable Deductions
I will sometimes see organizations sending out acknowledgments that do not meet the substantiation guidelines of the regulations. They are not being nice to their donors when they do that and they are indicating, at least to me, that there is at least one area where they are not on the ball.
Aggressive Life Insurance Plan Fails – Or Maybe Not
Life insurance actually is a very tax-efficient vehicle. The build-up in value, if there is any, is tax-deferred, and proceeds paid by reason of death are free of income tax. The claim that it saves estate taxes is somewhat fallacious.
Does Tax Court Ruling on Gender Reassigment Go Far Enough ?
The taxpayer was mostly victorious being allowed deductions for hormone therapy, counseling, and reassignment surgery. No deduction was allowed for breast augmentation, the hormones having apparently done enough in that regard (at least in the mind of the Tax Court).
You Have to be Able to Keep Your Face Straight
Unfortunately, automobile expenses are covered under Code Section 274, which takes them out of the Cohan rule. Which means if you don’t have good records, you get nothing, which is what Mr. Moore got.
Guess me Out of the Ballpark
Most people don’t keep very good track of how they spend their time. The regulations do not specify a particular method, but the cases beginning with William Goshorn in 1993 (TCM 1993-578) seem to characterize any method that taxpayers use to reconstruct their time as being a “post-event ballpark guesstimate”. “Ballpark guesstimate” which seems to me to be a fairly robust concept is apparently limited to estimates of time spent to satisfy material participation requirements.
It Doesn’t Have to Be a Good Idea
For example, if someone’s investment in a stock or a business were based on Feng Shui or some other cultural judgment, that would not per se be “irrational”. Petitioners used their best judgment and successfully tested their business approach. Ultimately, the fact that their approach was unsuccessful does not make it irrational.
Investment Interest Relief
If you invest on margin or otherwise have investment interest ( You may, for example, have received a debt-financed distribution from a partnership which you deposited into your brokerage account), take a look and see if your return has Form 4952 attached. On Part III Line 7, there may be a number showing your carryover of investment interest. If that number is a NUMBER, you may want to discuss with your preparer whether you might benefit from the election in the future. If it is REALLY A NUMBER, it may be worth amending even if you have to request permission for a late amendment.
Threat to Parsonage Exclusion
One big difference between the military housing allowance and parsonage is that it is set by statute and is thereby limited. More importantly, except for some really far out militia types, nobody can have much objection to the government saying who is or is not in the military. Having the government say who is or is not a “minister of the gospel” is a little disturbing. but of course, they also have to decide what is or is not a church or an Indian tribe for that matter.
It’s Not Just Us Taxapyers That’s Confused
Suppose, though, that you invest in a partnership and that that partnership invests in some other partnership. What happens is that the partnership you invest in jumps through hoops and then you jump through hoops. The ruling above is reminding agents that the basis hoop and the “at-risk” hoop even though they look a lot alike are not exactly the same. Only individuals and closely held corporations need to be at-risk.