Houston Tax Attorney: Tax Disputes Blog

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 […]

Income Earned by Child Taxed to Parent

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If a minor child earns income, is the income taxable to the parent or the child?  There have been quite a few tax disputes involving this question.  The Ray v. Commissioner, T.C. Memo. 2018-160 court case provides an opportunity to consider these rules. The Facts & Procedural History Mr. Ray the financial officer for a non-profit […]

Conservation Easement Denied for Private Golf Course

Houston Tax Attorney

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Tax benefits can cause investors to put money were they otherwise would not.  The conservation easement is one example.  Conservation easements reward investors with charitable deductions for putting money into projects that conserve real property.  The charitable deductions can be very large in relation to the amount invested.  The recent Champions Retreat Golf Founders, LLC v. […]

Line of Credit Standby Fees, to Deduct or to Capitalize?

Houston Tax Attorney

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Many businesses rely on a standby line of credit to cover their expenses, to weather downturns, and to grow.  But this credit can be expensive in terms of interest and fees. The fees can be problematic as they may not be deductible for federal income tax purposes at the time they are paid.  The IRS […]

Court Says Partnership is Worth Less, Not Entirely Worthless

Houston Tax Attorney

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The IRS often challenges tax loss deductions.  In many cases, it does so by challenging the year in which the loss is allowable.  It can be difficult to determine which year the loss should be taken.  When an asset is losing value over time, there is a time when the asset is worth less than […]

Intercompany Fee Arrangement Lacks Economic Substance

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If the employees and owners of a profitable C corporation set up a related entity and lease the employee-owner’s services back to the C corporation, can the C corporation deduct the payments?  Taking it a step further, what if the related entity is owned by a retirement plan so that most of the payments by […]