Are you purchasing a business or real estate that involves financing a business or investment that is likely to produce tax losses in the future? Or have you already made the purchase? If so, there may be ways to ensure that you can take the loss in the future. To do so, you have to… Continue reading Tax Loss Planning: The At-Risk Rules
Category: Tax
Can “Business Synergies” be an Asset that Increases a Tax Loss?
The tax consequence of a transaction often depends on how one characterizes or describes the transaction. Business synergies are often cited as the rationale for merger and acquisition deals. In a M&A deal, are “business synergies” a separate asset for tax purposes? Can you list “business synergies” as a separate asset and then take a… Continue reading Can “Business Synergies” be an Asset that Increases a Tax Loss?
Big Tax Savings With ESOP, But Requires Work
An employee stock ownership plan (ESOP) can produce significant income tax savings. This tax savings isn’t exactly free. One has to keep up with the ESOP and the relevant rules to ensure that the tax savings are achieved. This compliance work is required and failure to comply can be costly. The recent Ed Thielking v.… Continue reading Big Tax Savings With ESOP, But Requires Work
Tax Planning for the Start-up Limitation Rules
Our tax laws include start-up rules that limit the ability to deduct certain business and investment expenses. For business owners and investors with other sources of income, this can result in funds being sent to the IRS to pay taxes at a time when the capital is needed to fund the business or investment growth.… Continue reading Tax Planning for the Start-up Limitation Rules
Loan to an S Corporation to Allow Tax Loss
Tax basis can limit a shareholder’s loss from an S corporation. If an S corporation has a tax loss but the shareholder doesn’t have sufficient tax basis to take the loss, the shareholder will typically have to loan money to the S corporation. This tax debt basis makes the loss allowable in the current year.… Continue reading Loan to an S Corporation to Allow Tax Loss
Tax on Payment for Being Born With Medical Condition
We can do some amazing things given the state of our science and technology. These advances lead to some interesting tax questions. The IRS recently addressed such a question in PLR 201950004. It considers whether damages paid by a fertility clinic for failing to perform a genetic test are excluded from the recipient’s income as… Continue reading Tax on Payment for Being Born With Medical Condition
Sale of Trailers Doesn’t Qualify for Installment Sale Treatment
If you buy, subdivide and sell real estate, can you seller-finance the sales and report the gain over a long period of time? The answer is generally yes, but advance planning is needed. The court addresses this in Joyner Family Limited Partnership v. Commissioner, T.C. Memo. 2019-159. Facts & Procedural History The taxpayers purchased land… Continue reading Sale of Trailers Doesn’t Qualify for Installment Sale Treatment
Bad Debt Tax Deduction for Guarantee Payment?
If you guarantee a loan for a third party and have to make payments due to the guarantee, do you get to deduct the payment as a bad debt for tax purposes? The court addresses this in Baker Hughes, Inc. v. United States, No. 18-20585 (5th Cir. 2019) in the context of a payment made… Continue reading Bad Debt Tax Deduction for Guarantee Payment?
Sale of Long-Term Service Contracts: Capital or Ordinary Gain?
If a taxpayer sells a business that owns long-term service contracts, is the gain attributable to the contracts subject to tax at ordinary or capital gains rates? The IRS’s recent action on decision for the Greenteam Materials Recovery Facility PN v. Commissioner, T.C. Memo. 2017-122 court case deals with this in the context of a… Continue reading Sale of Long-Term Service Contracts: Capital or Ordinary Gain?
The IRS Recent Focus on S Corp Owners
The IRS has announced several new compliance campaigns focusing on S corporations. This is needed as the audit rate for S corporation is extremely low. The most recent IRS compliance campaign focuses on shareholder stock basis issues for S corporation owners. Those who have significant S corporation losses or large distributions should take time to… Continue reading The IRS Recent Focus on S Corp Owners