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IRS Wins Most Hobby Loss Cases But Don’t Let That Intimidate You
If your client has something that they want to do and can tell you with a straight face that they are trying to make money at it, you should counsel them to take the losses, but only if they are willing to act in a businesslike manner. Separate accounts. Strong substantiation. But most importantly at least once a year talk to your client about why there were losses and what they are going to do differently in the future in order to change things. Document those discussions.
It does not matter that profitability is improbable, it just has to be sincerely pursued.
Tax Court Allows Long String Of Horse Losses
Photo credit Midge Ames. Originally published on Forbes.com. A long string of losses in a horse-related business may well attract IRS attention. Don’t despair. If you...
Tax Planning For The High Salary Pauper
Back in days of very high marginal rates – 70% federal – people who made their money by working got a break. Their was a maximum tax on income from, you know, working. And there were shelters. Many were sketchy and abusive and could get you in trouble, but some like low-income housing were blessed. You could defer your income and when the deferral turned around it was taxed at capital gains rates.
Now it seems that there are breaks for everybody, except the high salaried. Of course, if you are prudent with a very high salary you will accumulate net worth and ultimately be able to do some fancy stuff, if you are so inclined.
Santa Forever
I uncovered where Santa Claus spends his vacation time.
Major Crackdown On Conservation Easements Or IRS Bluff?
Conservation easement charitable deductions are a relatively benign tax expenditure. The idea is that somebody who owns property with a highest and best use different from its current use should be able to give up the right to develop in the interest of conservation and receive a charitable deduction (Note I am simplifying here).
When you give something to charity your deduction is generally the fair market value of what you gave. The best way to arrive at fair market value is through comparable sales. But people don’t buy and sell conservation easements very much, if at all.
So you value the easement by figuring out the value of the property without the easement and subtract the value of the property with the easement. It is the before value that is a problem, because we have to think about what you might do with the property.
Syndicated Conservation Easements – Mining Concepts For Tax Dollars
The recent Tax Court decision Coal Property Holdings is a good illustration of Reilly’s Fourth Law of Tax Planning – Execution isn’t everything but it’s a lot. This is a conservation easement syndication deal and the facts indicate that it is on the questionable side.
Kent Hovind Trying To Undo His 2006 Conviction
Think of a federal court as being something of a bridge tournament. Hovind and Hansen are going there and playing Crazy Eights.
Audiobooks are booming! By Thomas A. Burns, Jr.
I want to thank my good friend Peter Reilly for allowing me space on Your Tax Matters Partner to talk about the growing popularity of audiobooks. Even though...
President Trump Now A Florida Man
President Trump, if challenged by New York, will have to establish that he has abandoned his New York domicile and established a new domicile in Florida. This will be challenging given that he is actually living in Washington DC. (DC is clearly not his domicile though, because he has to move out of his residence in either January 2021 or January 2025).
The other problem I see is that it is hard to establish that you have become a Floridian because it is not quite the distinctive identity that being a New Yorker is. And domicile does turn on irrational factors. That was the basis of the advice that I gave back in 2017, which still stands.
Ed And Elaine “Show Me The Law” Brown May Be Released Soon
According to the Bureau of Prison Inmate Locator, Edward Brown, age 77, has a release date of 7/26/2045 and Elaine Brown, age 78, has a release date of 11/8/2042. Clearly, the sentences that they received in 2009 were virtually life sentences. They had been prosecuted as the result of a months long armed stand off at their home in New Hampshire. They had been resisting surrendering to serve a 2007 sentence related to tax resistance activities.