There are times when our tax laws draw distinctions that can seem unfair. The Tricarichi v. Commissioner, T.C. Memo. 2016-132, highlights one of these situations. Tricarichi is a transferee liability case in which the taxpayer was held liable for $13 million in interest on a tax liability owed by a third party even though the […]
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In Wells Fargo & Company v. United States, No. 2015-5059, the United States Court of Appeals for the Federal Circuit considered whether a business that has merged with another business can obtain refunds for interest the prior business entity paid to the IRS. The court’s broad reading of the interest netting statute may allow some […]
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The IRS often does not act to collect unpaid taxes. When it does, it usually does so after several years have passed since the tax was due. Even though interest rates remain at historically low levels, it is not unheard of for the interest incurred on unpaid taxes to be more than the original tax […]
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Bankruptcy can be one of the best methods for resolving tax debts. This is particularly true if the taxpayer’s primary assets only consist of retirement accounts and equity in a personal residence. The recent In re Moore, No. 15-42046 (Bankr. E.D. Tex. Jul. 7, 2016), case presents an opportunity to consider the results if the […]
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There are quite a few cases where the IRS disallowed loss deductions for “hobbies.” There are also quite a few cases where the courts have upheld the IRS’s position. These cases are decided based on the facts and how the courts interpret these facts. The facts in Main v. Commissioner, T.C. Memo. 2016-127, provide a […]
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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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There have been a number of bad actors in the tax resolution industry. One only has to do a cursory search of the internet to find consumer complaints about tax relief companies that do this work. The Federal Trade Commission (FTC) has an article on its website that warns consumers about these bad actors. The […]
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In Chief Counsel Memo 201623010, the IRS addressed whether Section 6702 frivolous return penalty can be abated due to the taxpayer’s mental incapacity. One would think that a mentally incapacitated person would not be liable for a penalty for filing a frivolous tax return. Mental Incapacity, Generally The law recognizes that mental incapacity as a […]
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The IRS uses a computer matching system to make various tax adjustments. The IRS refers to this as its automated underreporter program. This program adjusts millions of taxpayer accounts each year. The program generally goes unnoticed, until there is a problem. The Newman v. Commissioner, T.C. Memo. 2016-125, case provides an example of how this […]
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In U.S. v. Kimball, No. 2:14-CV-521-DBH, the U.S. District Court in Maine held that a federal tax lien did not attach to a ski condo held in trust even though the trust was a revocable trust and the taxpayer had access to the condo and he paid the expenses for the condo with his personal […]
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