Houston Tax Attorney: Tax Disputes Blog

Planning for Tax Deductible Entertainment Expenses

Houston Tax Attorney

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Entertainment expenses are deductible but the deduction is limited to 50 percent of the amount spent. There have been a number of disputes between taxpayers and the IRS as to what counts as a limited entertainment expense. The law was recently changed such that entertainment expenses are no longer deductible.  This change to full disallowance […]

U.S. Taxpayer With U.S. Residence Cannot Exclude Foreign-Earned Income

Houston Tax Attorney

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There are a number of tax issues that U.S. citizens and residents who live abroad have to consider.  One of these is whether they qualify to exclude their foreign-earned income in computing U.S. income taxes.  This exclusion has resulted in a number of tax disputes.  The Leuenberger v. Commissioner, T.C. Summary Opinion 2018-52, case addresses the […]

Documenting Tax Losses for Worthless Securities

Houston Tax Attorney

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Tax losses for worthless securities are often challenged by the IRS.  It particularly important to document the loss.  There are several elements taxpayers have to establish to secure the benefit of tax losses for worthless securities.  The recent Giunta v. Commissioner, T.C. Memo. 2018-180, case provides an opportunity to consider these elements. Facts & Procedural History The […]

Court May Explain How to Allocate Tax Basis to Intangible Assets

Houston Tax Attorney

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If the U.S. government allows a taxpayer to call a liability an asset and then acts to make the asset worthless, can the taxpayer take a tax loss for the loss of the so-called asset?  The Citigroup, Inc. v. United States, No. 15-953T (Ct. Cl. 2018) court case addresses this fact pattern.  The case gets to one […]

The IRS Isn’t Charged With Knowledge of Other Federal Agencies

Houston Tax Attorney

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The IRS only has to mail a notice of deficiency to a taxpayer’s last known address in order to assess or record a tax liability for the taxpayer.  This “last known address” rule is often the subject of disputes.  The Sadek v. Commissioner, T.C. Memo. 2018-174, case provides an example where information available to the […]

Donations to Pastor are Taxable Income, Not Gifts

Houston Tax Attorney

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The distinction between taxable compensation and non-taxable gifts comes up in a number of contexts and has led to a number of tax disputes.  Severance payments made to workers are an example.  The recent Felton v. Commissioner, T.C. Memo. 2018-168, court case addressed this issue in the context of segregated donations made by a congregation […]

Planning for Start-Up Businesses, Yacht Rental Example

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New businesses may not be immediately profitable.  To help mitigate the financial risk, many businesses are started by workers who have a day job.  If the business is not immediately profitable it can help the owner finance the business if the owner is able to use the tax losses from the business to offset the […]