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
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.
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?
Travel Expenses Allowed for Repetitive Pattern of Travel
The IRS frequently challenges travel expenses. These expenses have a higher substantiation requirement, which the IRS uses to disallow every expense no matter how reasonable or how certain it is that the expense was incurred. But what if it was exceedingly certain that the expense was incurred and there is a method for computing the… Continue reading Travel Expenses Allowed for Repetitive Pattern of Travel
Records Needed for Partial Asset Dispositions
Taxpayers often overlook “partial asset dispositions.” Their tax advisers do too. This may be due to it being a depreciation issue that seems unimportant. It may also be that the partial asset disposition is a relatively new concept. Regardless, partial asset dispositions can save taxpayers quite a bit in taxes (it is a timing issue,… Continue reading Records Needed for Partial Asset Dispositions
M&A Finders Fee Not Deductible for Acquirer
If a company acquires another company and pays a finders fee to the party who connected the two for the sale, is the finders fee deductible by the acquirer? This question touches on whether an expense is deductible if the real benefit is to another company. The court addresses this in Plano Holding LLC v.… Continue reading M&A Finders Fee Not Deductible for Acquirer
The Broad Reach of the Economic Substance Doctrine
Congress provides tax incentives to change taxpayer behavior. If a taxpayer changes their behavior to take advantage of the incentive, they have to do so carefully. The IRS and the courts can apply the economic substance doctrine to take away the tax benefit. This doctrine can apply to more transactions than what one would consider… Continue reading The Broad Reach of the Economic Substance Doctrine
Documenting the Sec. 199a Rental Real Estate Safe Harbor
We have previously considered the “trade or business” requirement for the Section 199a deduction. The government recently issued guidance to clarify when rental real estate activities can qualify for the deduction. While the guidance is needed, it adopts a record keeping requirement that effectively prevents most rental real estate activities from ever qualifying for the… Continue reading Documenting the Sec. 199a Rental Real Estate Safe Harbor
Avoiding Hobby Loss Limits for Long-Term Projects
Long-term projects often lose money. They often do so for several years. This is the result of a project that needs capital to build infrastructure or to develop a new market or to capture market share. Taxpayers may be disappointed to learn that the tax losses coming from these long-term projects in the early years… Continue reading Avoiding Hobby Loss Limits for Long-Term Projects
Bad Debt Deduction for Real Estate Lender for Non-Real Estate Loan
If a taxpayer regularly makes real estate loans from their personal accounts, they would be entitled to a bad debt deduction for loans that are not repaid. But what if they venture beyond real estate loans and make a single non-real estate loan? If the non-real estate loan goes bad, can they deduct the bad… Continue reading Bad Debt Deduction for Real Estate Lender for Non-Real Estate Loan