Taxpayers are often surprised to learn that some losses may not be netted against gains in the current tax year. This is often due to the passive activity loss and material participation rules. The IRS National Office addressed these rules in TAM 20163…
Tax Articles
Grouping Nonpassive Activities Under the PAL Rules
Taxpayers are often surprised to learn that some losses may not be netted against gains in the current tax year. This is often due to the passive activity loss and material participation rules. The IRS National Office addressed these rules in TAM 201634022, in the context of whether two businesses should be grouped together and… Continue reading Grouping Nonpassive Activities Under the PAL Rules
IRS Audit Adjustments That Are Really Accounting Method Changes
Given the potential for the adjustments to trigger extremely large tax adjustments, accounting method changes made by the IRS on audit can be doomsday scenarios for unwary taxpayers. In Nebeker v. Commissioner, T.C. Memo. 2016-155, the court addressed …
IRS Audit Adjustments That Change Accounting Methods
Given the potential for the adjustments to trigger extremely large tax liabilities, accounting method changes made by the IRS on audit can be doomsday scenarios for unwary taxpayers. In Nebeker v. Commissioner, T.C. Memo. 2016-155, the court addressed a common situation where the IRS makes an adjustment on audit that is an accounting method, but… Continue reading IRS Audit Adjustments That Change Accounting Methods
Duty of Consistency Applied to IRS Lawsuit to Collect Unpaid Taxes
Many tax cases are won or lost based on tax procedure issues. The U.S. v. Holmes, Civil Action No. 4:15-cv-00626 (S.D. Texas 2016), case serves as a reminder of this. The case involved a lawsuit filed by the government in the eleventh hour and the duty…
Duty Applied to IRS Lawsuit to Collect Unpaid Taxes
Duty of Consistency in Suit to Collect Unpaid Taxes Many tax cases are won or lost based on tax procedure issues. The U.S. v. Holmes, Civil Action No. 4:15-cv-00626 (S.D. Texas 2016), case serves as a reminder of this. The case involved a lawsuit filed by the government in the eleventh hour and the duty… Continue reading Duty Applied to IRS Lawsuit to Collect Unpaid Taxes
Facts Needed to Abate Penalties Based on Reasonable Cause
Taxpayers often contest penalties by arguing that their failures were due to reasonable cause. Many of these penalty abatement requests are resolved at the administrative level. The cases that end up being litigated typically do not have the best facts…
What Facts are Needed to Abate Penalties?
The IRS is authorized to abate penalties for reasonable cause. There is no set of standard facts or factors that show reasonable cause. Taxpayers have made various arguments, with the IRS and courts rejecting most of them. How bad does life have to be for there to be reasonable cause? The court addresses this in… Continue reading What Facts are Needed to Abate Penalties?
The Start-Up Expense Limitation: Starting a Business in Retirement
There are several occupations where highly skilled individuals are forced to retire due to mandatory retirement provisions. These individuals often use their skills to start new businesses during retirement. The court addressed this situation in Tizard…
Start-Up Expense Limitation
The Start-Up Expense Limitation: Starting a Business in Retirement There are several occupations where highly skilled individuals are forced to retire due to mandatory retirement provisions. These individuals often use their skills to start new businesses during retirement. The court addressed this situation in Tizard v. Commissioner, T.C. Summary 2016-42. The case provides an example… Continue reading Start-Up Expense Limitation