The IRS has released Revenue Procedure 2007-12, which clarifies what “assurances” real estate brokers must obtain from persons who sell their principal residence. Real estate brokers are generally required to provide a Form 1099-S to a person selling or exchanging real estate. This form helps the IRS track the seller’s proceeds from the sale, to… Continue reading IRS Clarifies Real Estate Broker Filing Requirement – Again
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.
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Tax Free IRA Rollovers as Short-Term Loans: Two Examples of What Not to Do
Taxpayers often withdraw funds from their IRAs to cover short-term expenses with the hope that they can put the funds back in their IRA within the 60 day window for making a tax-free IRA rollover. When taxpayers miss this 60 day window, they are forced to ask the IRS to waive the 60 day time… Continue reading Tax Free IRA Rollovers as Short-Term Loans: Two Examples of What Not to Do
What is a “Foreign Country” for Income Tax Purposes?
Our tax laws allow individual taxpayers to exclude income earned in certain foreign countries. This begs the question as to whether a taxpayer working outside of the U.S. is in a foreign country if he is working in an area that is not governed by the equivalent of what we think of as a government. … Continue reading What is a “Foreign Country” for Income Tax Purposes?
Taxation of Employer Provided Education: A Look At Section 127 Plans
During a recent conversation that I had with another tax blogger, I commented about how many taxpayers fail to take advantage of Section 127 plans. This comment came up in a very brief mention of how Congress recently frustrated the tax plan of many parents who are saving for their children’s college education, by extending… Continue reading Taxation of Employer Provided Education: A Look At Section 127 Plans
Taxing Online Video Game Earnings
I came across this very interesting article about taxing online video game transactions. This type of issue does show the flaw or challenge presented by a tax system that is dependent upon the concept of “income” and the problem is likely to become a much more serious problem for the US Treasury. It is now… Continue reading Taxing Online Video Game Earnings
Planning for and Documenting Covenant Not To Compete Allocation
The recent Becker v. Commissioner, 92 T.C.M. 481 (2006), case shows why it is important for taxpayers to plan and document transactions at or near the time that the transactions take place. This is particularly true for larger dollar transactions. The transaction in the Becker case involved the sale of a family-owned business and a… Continue reading Planning for and Documenting Covenant Not To Compete Allocation
Should the IRS be Able to Rewrite Tax Laws that it Doesn’t Agree With?
Estate of Gerson shows how the IRS uses its ability to promulgate regulations and how the IRS positions cases for litigation in an effort to create pro-IRS tax laws. Facts & Procedural On Gerson’s Case Gerson is a generation skipping transfer tax case. Mr. Gerson created a revocable trust that became irrevocable upon his demise.… Continue reading Should the IRS be Able to Rewrite Tax Laws that it Doesn’t Agree With?
The Section 44 Small Business Disabled Access Credit
The Section 44 small business disabled individuals tax credit provides a tax incentive to comply with the Americans With Disability Act of 1990 (“ADA”). There is very little guidance for the tax credit. The recent Arevalo v. Commissioner, No.?05-61129 (5th Cir. 2006), case provides an opportunity to consider this tax credit. Facts & Procedural History Arevalo “invested”… Continue reading The Section 44 Small Business Disabled Access Credit
An Example of How Our Tax Laws Favor the Wealthy
In my tax practice, I have noticed that the tax laws for issues that face my wealthy clients are often much more friendly than the tax laws for issues that face my not so wealthy clients. The most recent Vines v. Commissioner case and the Cowan v. Commissioner cases provide examples. Facts & Procedural On… Continue reading An Example of How Our Tax Laws Favor the Wealthy
Part-Time Employee Not Entitled to Deduction for IRA Contribution
Taxpayers who participate in their employer’s retirement plan are not able to deduct contributions the taxpayer makes to their IRA retirement account. This is also true for taxpayers who are entitled to participate in their employer’s retirement plan, but choose not do so. In Colombell v. Commissioner, T.C. 2006-184, the court considered whether an employee… Continue reading Part-Time Employee Not Entitled to Deduction for IRA Contribution