Most Recent Posts
Breaking Up is Hard to Do
There used to be a joke that there are three ways to get out of a burned-out tax shelter. The first was to put the interest into a defective grantor trust and then cure the defect. It was a really neat idea. It doesn’t actually work, but it was clever. Then there was dying. Pretty drastic, but it worked (until this year anyway). Finally, there is giving it to your spouse and getting a divorce. Still works.
The Magic of S Corporations – Tax Alchemy in Reverse
There are two observations to be made here. The first is that it is possible that LLC’s would have better served their purposes. The unified basis of partnership interests would likely have prevented this odd result. The other is that just a little bit of paperwork might have also saved the day. If the S corporation loans had had written evidence of indebtedness then the repayment would have been a capital gain.
Sometimes You Should Just Pay The Taxes
The moral is that tax savings are money. If buying something allows you to save taxes then the thing that you buy doesn’t cost you as much. It doesn’t make it free. And it is possible that, even with the discount that the tax savings create the thing is not worth what you are paying for it. I might go so far as to speculate that if the thing is designed with tax savings in mind that the designer feels entitled to a goodly share of your tax savings. In some cases, it might be your tax savings and then some. In which case, as the title says, it would be better to have just paid the taxes.
Steve Martin – Tax Advisor
We find “Taxpayer A represents that he suffers from a condition which impairs his memory.” There it is. “I forgot.” Whether the memory issues having anything to do with the gender transformation between the head note and the third paragraph is a question left unanswered.
Saint Patrick’s Day in May
James is still processing the experience. He wants to cultivate a spirit of detached generosity. On the other hand he wants to share his joy in the whole experience. It is just possible that he saved Sammy’s life. He is hoping Sammy doesn’t screw up agian, but – I don’t know.
Let’s Be Counted Early and Often
I immediately was thinking about finding a bunch of homeless guys to stay over so that what the genealogy bug bights some future descendant, they can be utterly confused by the 2010 census that includes me.
Listen Pete Reilly Has Come Unstuck in Time
The Mexican War was her generation’s Vietnam. Only it didn’t last as long. And there wasn’t a draft. And what was probably the worst part for her generation was that the United States won that war. It wasn’t just proto-hippy Henry David Thoreau and his ilk that were against the war
IRS Lactation Intolerant
PLR 200941003 was about the deductibility of infant formula as a medical expense. Citing Revenue Ruling 55-261, the service held that the formula was not deductible; the reasoning was that the formula just provided for normal nutrition. I think the ruling is wrong and the basis that they used indicates that they missed the point of the ruling request. The ruling request was on the behalf of not, the presumably well-fed, infant, but rather on behalf of the mother, who as it happens, had had a double mastectomy.
Last Minute Goal by Taxpayers Makes FLP Hockey a Draw for 2009
The two IRS wins, Jorgensen and Linton, were, as usual, failures of execution. The entities weren’t respected. Personal bills were paid with partnership funds and partnership expenses were paid with personal funds. In Linton, the documents made it ambiguous as to which came first the funding or the gift. Jorgensen’s son commented that he just couldn’t “get his head around” the idea that the partnership wasn’t just like a bank account.
Cohan Rules
I made the Cohan rule the Prime Directive of Reilly’s Laws of Tax Planning – If you don’t have documentation, at least have a plausible story.