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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.
They’re From the Government and They’re Not There to Help You
I agree that we can assert increased income and leave it to taxpayer to raise his entitlement to disputed losses.
Tax Court Crafts Ultimate Pick Up Line
At any rate the Tax Court went along with the IRS on this one. It boils down to his exempt purpose not benefiting a broad enough class of people. The petitioner claimed it was a very broad class indeed namely all women in the world capable of bearing children. The tax court thought the class somewhat more limited – namely women who want to bear his children.
Just Because They Won’t Let You Do it Doesn’t Make it a Good Idea
If a couple chooses to use any of these techniques, the most likely way they would fail on audit is through poor execution. Everything must be done in the same way as it would be done in a truly arms-length transaction. If there is a note for a property sale a mortgage should be recorded. Payments should be made regularly as defined by the terms of the contract.
Windfall For “Unmarried’ Couples
CCA 201021050 may provide a significant windfall for some unmarried couples. It is directed toward registered domestic partners in California and some commentators indicate that it is logically applicable to California same-sex married couples. The ruling emphasizes the point that state law determines the ownership of property and that the taxation of income follows the ownership of that income.
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.