IRS Takes No Bull on Hobby Loss Rules

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The Internal Revenue Service regularly challenges businesses that are found to generate losses and do not have a profit intent. The specific statute that governs these challenges are known as the “Hobby Loss Rules.” In such challenges, the Internal Revenue Service is trying to prove that the undertaking which has resulted in losses over a […]

Tax Court Disallows Charitable Deduction of Remainder Interest

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In a very significant case, the United States Tax Court found that a limited liability company (LLC) was not entitled to a charitable contribution deduction for the donation of a remainder interest in real property because it failed to adequately substantiate its claimed deduction. The Form 8283 (appraisal summary for noncash charitable contributions) the LLC […]

Income Tax Law (NOT a Divorce Decree), Determines Dependency Exemption

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A common element of every marital dissolution, where the divorcing parties have minor children, is the financial consideration and accountability of federal income tax savings associated with the dependency deductions under the law. Creativity within divorce settlements can provide for any number of ways in which this issue is addressed. However, as one recent Tax […]

Minority Shareholder Found Liable for Corporation’s Unpaid Taxes

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The Eleventh Circuit of the United States Court of Appeals recently found a taxpayer, who was both a minority shareholder and high-level employee of a corporation, liable for the corporation’s income taxes as a transferee. The case offers a good illustration of the capability of the Internal Revenue Service (IRS) to require repayment of prior […]

Shareholder’s Guarantee of S Corporation’s Loan Didn’t Create Basis

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A recently decided Tax Court case once again reinforces the rule that simply guaranteeing corporate debt in an S corporation does NOT increase that shareholder’s tax basis in his stock.  However, the case has a few interesting wrinkles that merit consideration. In William and Amaryllis Tinsley, TC Summary Opinion 2017-9 (Tax Ct.), the taxpayer was […]

noncash charitable contributions, deductions, IRS, tax court

Maximizing Noncash Charitable Contribution Tax Deductions

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It is not at all unusual for individual taxpayers to work to reduce their tax liabilities by donating to charity used personal items such as furniture, clothing and household goods that still have some value and utility left in them. A recent Tax Court case, however, demonstrates how excessive noncash charitable contributions can draw the […]

compensation, taxpayer, tax return, GYF, Grossman Yanak & Ford LLP, Pittsburgh, CPAs

Compensation Paid to Sons of Company’s Founder Was “Reasonable”

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In an important recent case on reasonable compensation, H.W. Johnson, Inc., T.C Memo 2016-95 (Tax Ct.), the Tax Court found for the Taxpayer. The Taxpayer, a concrete contracting business, was owned 51% by the founder’s wife and 49% by her two sons. On its tax return, the taxpayer deducted approximately $4 million and $7.3 million […]