Short-term rental properties are more popular than ever. Online services like Airbnb have made this possible. But how are tax losses from short-term rentals handled? Can the taxpayer use the rental losses to offset their non-rental income for tax purposes? The court addresses one aspect of these rules in Eger v. United States, 18-cv-00199-DMR (N.D.… Continue reading Court Addresses Tax Losses from Short-Term Rentals
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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Court’s Take on How to Avoid the Interest Expense Limitation
Interest one pays is generally deductible for income tax purposes. For real estate owners who borrow against the value of their properties, the interest expense deduction is often one of their largest tax deductions. This tax deduction can be limited. The court in Lipnick v. Commissioner, 153 T.C. 1 highlights how one might avoid this… Continue reading Court’s Take on How to Avoid the Interest Expense Limitation
Taxpayer Cannot Recoup Attorney Travel Costs
If the IRS wrongfully denies your refund claim and you are successful in litigating the matter in court, you are entitled to recoup some of your court costs. But what about the taxpayer’s tax attorney’s travel costs? And what if the travel costs were necessary as the tax issue was complex and a tax attorney… Continue reading Taxpayer Cannot Recoup Attorney Travel Costs
Reporting Debt Discharged in a Court Settlement to the IRS
There are some circumstances where information has to be reported to the IRS, even though the information does not trigger a tax. But the potential problem can be that the information reporting triggers an IRS audit or other consequences. The Form 1099-C, Cancellation of Debt, form can have this effect. In PLR 201927005 the IRS… Continue reading Reporting Debt Discharged in a Court Settlement to the IRS
Voluntary Sale In Advance of Forced Auction an Involuntary Conversion?
A taxpayer can generally avoid paying income tax on gain from the sale of property if the sale is an involuntary conversion. This typically involves a government act that takes or destroys the taxpayer’s property. There are a number of different types of property and takings that can qualify? But what about a local TV… Continue reading Voluntary Sale In Advance of Forced Auction an Involuntary Conversion?
Recouping Tax on Marital Wages Repaid to Employer After Divorce
If a couple files a joint return and pays tax on the income they earn, but after they divorce it turns out that one of the spouses has to repay monies received in error, can the other spouse recoup their portion of the prior tax paid on the income? The claim of right doctrine may… Continue reading Recouping Tax on Marital Wages Repaid to Employer After Divorce
Non-Taxable Subsidy or Taxable Benefit?
Some payments are not subject to Federal income tax. State subsidies are an example. But what is the difference between a non-taxable subsidy and a taxable benefit? The court addresses this in Ginsberg v. United States, No. 2018-1788 (Fed. Cir. 2019), in the context of the New York state brownfield tax credit. Facts & Procedural… Continue reading Non-Taxable Subsidy or Taxable Benefit?
IRS Not Limited in Collecting Restitution Assessments
The IRS is authorized to assess criminal restitution for certain tax crimes. This process allows the IRS to collect the criminal restitution as if it was a tax. The law authorizing these collections is relatively new and evolving. The recent Carpenter v. United States, 152 T.C. 12, case highlights why it is important for those… Continue reading IRS Not Limited in Collecting Restitution Assessments
Can Gambling Losses be Deducted as Casualty Losses?
If a taxpayer cannot deduct gambling losses given the restrictions on gambling losses, can they deduct them as casualty losses instead? What if the gambling loss are attributable to prescription medications known to cause compulsive gambling? The court addresses this in Mancini v. Commissioner, T.C. Memo. 2019-16. Facts & Procedural History The taxpayer diagnosed with… Continue reading Can Gambling Losses be Deducted as Casualty Losses?
The Sec. 179D Government-Owned Building Allocation
Section 179D provides an incentive for building owners to install energy efficient systems. The IRS released CCA 2018-005, which addresses one of the controversial aspects of Sec. 179D–namely, the ability for government building owners to allocate the deduction to the designer of the energy efficient property. About Section 179D Section 179D was enacted in 2005,… Continue reading The Sec. 179D Government-Owned Building Allocation