tax deduction
Family Cattle Operation Denied Tax Deductions
In Barnhart Ranch Co. v. Commissioner, No. 16-60834 (5th Cir. 2017), the court considered who was entitled to deduct expenses for cattle that were descended from cattle the taxpayers inherited and other cattle that were subsequently purchased. The case…
Deducting Pre-Acquisition Stock Compensation
In Qinetiq US Holdings, Inc. v. Commissioner, No. 15-2192 (4th Cir. 2017), the court addresses the situation where a taxpayer acquired a target corporation and then claimed a substantial tax deduction for expenses the target corporation had paid prior to the acquisition. There are rules intended to prevent taxpayers from being able to deduct pre-acquisition […]
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Cease-and-Desist Order Not Sufficient Evidence for Bad Debt Deduction
In Sensenig v. Commissioner,T.C. Memo. 2017-1, the court considers whether an investment fund is entitled to a bad debt deduction for cash-hungry start-up companies the fund had invested in when securities regulators barred the investment fund from raising money needed to sustain the start-up companies. The court considers whether the receipt of a cease-and-desist order […]
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Tax Benefit Rule Does Not Apply to Transfers at Death
If a sole proprietor is able to deduct an expense he incurred in the year he died for property that was not used up in the year he died, must his estate then report the amount as income in the following year for the amount of taxes saved by the deduction in the prior year? […]
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Fines or Sanctions Paid to FINRA Are Not Deductible
In CCA 201623006 the IRS concluded that the payment of a fine or similar penalty to the Financial Industry Regulatory Authority (FINRA), a non-government entity, is not deductible as an ordinary and necessary business expense. The law is clear that fines and penalties paid to government entities for violation of the law are not deductible. […]
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