The IRS has a track record of taking aggressive stances when auditing research tax credits. But its position in the Bayer Corp. & Subs v. United States, Civil Action Nos. 08-693, 09-351 (W.D. PA 2010), raises the question whether a taxpayer claiming a research tax credit is signing up to disclose their confidential information. Facts &… Continue reading The IRS’s Reach in a Research Tax Credit Audit
Category: Federal Income Tax
Federal income tax advice, articles, tips, & more.
The Federal income tax is the largest expenditure for most individuals and businesses. It dwarfs the costs for insurance and basic necessities. This is only going to increase in the future. Tax planning is needed.
This page provides timely and thorough coverage of various Federal income tax law questions, court cases, and rulings.
If you need help with a Federal income tax matter, we can probably help. We help clients minimize their Federal income tax liabilities. Please call our tax attorneys to see how we can help.
If you are looking for an article on a particular topic, you can select one of the following options to sort and limit the articles provided below.
What is a Project for the Research Tax Credit?
It can be difficult to separate qualified and nonqualified research in computing the research tax credit. The research tax credit rules are generally applied to the “project,” but the term “project” is not even mentioned in the Code. The Trinity Industries, Inc. v. United States, 691 F. Supp. 2d 688, (N.D. Tex. 2010), case provides guidance… Continue reading What is a Project for the Research Tax Credit?
Research Tax Credit: Taking Expenses for Depreciable Property
The IRS exam function often raises a number of questions about the rules for claiming expenses for depreciable property for the research tax credit. The recent TG Missouri Corporation v. Commissioner, 133 T.C. 13, provides much needed clarity in how to apply these rules. Facts & Procedural History TG Misouri is in the trade or… Continue reading Research Tax Credit: Taking Expenses for Depreciable Property
Payment to Terminate Agent Agreement Ordinary Income for Insurance Agent
In Lendard v. Commissioner, T.C. Summary Opinion 2009-165, the U.S. Tax Court concluded that contract payment to an independent insurance agent to terminate his agent contract was ordinary income to the agent. This case is an example of how advanced tax planning could have produced a more favorable outcome. Facts & Procedural History Mr. Lendard… Continue reading Payment to Terminate Agent Agreement Ordinary Income for Insurance Agent
Deere & Company v. Commissioner: Foreign Branch Income is Gross Receipts for Research Tax Credit
In Deere & Company v. Commissioner, 133 T.C. No. 11, the U.S. Tax Court concluded that income from foreign branches must be included in the gross receipts in computing the research tax credit. Facts & Procedural History Deere & Company (“Deere”) was in the business of manufacturing, distributing, and financing a full line of agricultural… Continue reading Deere & Company v. Commissioner: Foreign Branch Income is Gross Receipts for Research Tax Credit
Per Diem for Truck Drivers (Explained)
Truck drivers are on the road and focused on driving. They do not have access to an organized office or have time to stop and process paperwork. So they are an easier target than some other types of taxpayers. This is why truck drivers are frequently targeted by IRS auditors. Truck drivers also earn above-average… Continue reading Per Diem for Truck Drivers (Explained)
FedEx Corporation v. United States: Taxpayer Can Pick & Choose Between Regulations
In FedEx Corporation v. United States, Dkt. No. 08-2423, the U.S. District Court for the Western District of Tennessee concluded that FedEx could rely on the internal use software provisions in the 2001 Final Regulations and the taxpayer-favorable discovery test in the 2003 Final Regulations in computing its research tax credit. The taxpayer did not… Continue reading FedEx Corporation v. United States: Taxpayer Can Pick & Choose Between Regulations
Standard for Research Activities for the R&D Tax Credit
In United States v. McFerrin, 570 F.3d 672, the Fifth Circuit Court of Appeals concluded that the trial court applied the wrong standard for determining what research is qualified and failed to estimate the amount of research expenses for the research tax credit. Facts & Procedural History Arthur R. McFerrin (“McFerrin”) is a prominent chemical… Continue reading Standard for Research Activities for the R&D Tax Credit
Innocent Spouse Relief Granted Despite Knowledge of Error on Return
Innocent spouse tax relief can provide a remedy for spouses who are liable for taxes reported on a jointly filed income tax return. It is an equitable remedy. But is it available if the tax is due to an obvious error on the tax returns that the spouses both signed? The court addressed this in Denton… Continue reading Innocent Spouse Relief Granted Despite Knowledge of Error on Return
Truck Driver Not Entitled to Deduct Meal and Supply Expenses
In Elsayed v. Commissioner, T.C. Summary Opinion 2009-81, the U.S. Tax Court reviewed meal and unreimbursed expenses incurred by a truck driver. This is a common tax problem for truck drivers. This case shows the difficulties truck drivers have in capturing and substantiating their expenses for tax purposes. Facts & Procedural History Elsayed was employed… Continue reading Truck Driver Not Entitled to Deduct Meal and Supply Expenses