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Tax losses for worthless debts often trigger IRS audits. On audit, it is common practice for the IRS to disallow the losses based on the debt not being worthless, the amount of the loss not being correct, and that the taxpayer took the loss in the wrong tax year. Taxpayers can take steps to limit…
Tax Articles
About the Trust Fund Recovery Penalty
Employers are required to withhold Social Security, Medicare, and income taxes from wages paid to employees. The withholdings are credited to the employee’s Social Security, Medicare, and income tax accounts. If these taxes are not paid over to the IRS and the IRS is not able to secure payment from the employer or the business……
Airline Pilot Stationed Overseas Not Entitled to Section 911 Foreign Income Exclusion
U.S. income tax laws can be challenging for U.S. citizens who live outside of the U.S. This is particularly true for airline pilots who accept jobs overseas. The recent Acone v. Commissioner, T.C. Memo. 2017-162, case addresses the challenge of determining whether an airline pilot stationed overseas qualifies for the Section 911 foreign income exclusion.…
IRS Penalties for Late-Filed Forms 5471
The Dewees v. United States, 16-cv-01579 (D.D.C. 2017) case is a good reminder that late-filed Forms 5471 should include reasonable cause statements. These statements can be submitted under the IRS’s Delinquent International Information Return Submission Procedures to avoid penalties being assessed. The Facts and Circumstances in Dewees Dewees is a U.S. citizen who lived in…
About Filing Tax Returns Late
Statistics show thаt you are likely tо mіѕѕ a tax return fіlіng deadline аt some роіnt іn your lіfе. It happens. Life happens: wоrk, vасаtіоn, family circumstances, and even financial problems. These events can make it very easy to miss a tax filing deadline. When it happens tо уоu, here is what you need to…Continue…
What You Should Know About the IRS Offer in Compromise Program
If you owe the IRS you may be surprised to find out that the IRS may settle the debt for less than the amount owed. One way to do this is through the IRS offer in compromise program. Here is what you need to know about the offer in compromise if you back taxes to…Continue…
Tax Court Says Royalties Paid to Roth IRA Were Excess Contributions to IRA
The U.S. Tax Court recently issued another opinion involving a LLC owned by a self-directed IRA. The case is Block Developers, LLC v. Commissioner, T.C. Memo. 2017-142. The case invovles an IRA LLC that purchased a patent and then licensed the patent back to the prior owner, with the intent of the IRA LLC collecting…
Cash-Basis Taxpayers Can Deduct Reclamation Costs Under Sec. 468
Section 468 allows a current deduction for mining and solid waste reclmation costs even though the expenses may not be incurred for several years–if not decades–in the future. It has traditionally been thought that only accrual-method taxpayers can benefit from Sec. 468. The court recently dispelled this notion in Gregory v. Commissioner, 149 T.C. 2…
The Form 1045 Dispute & Possible Solution: Include a Detailed Cover Letter
The Form 1045, Application for Tentative Refund, is used to carryback losses, credits, etc. from the current year to prior years. In many cases it is used when a taxpayer was previously profitable and then incurrs a loss. The now unprofitable business can go back and recoup taxes paid in prior years and get a…
Have an IRS Dispute, What You Need to Know About IRS Appeals
If you have and IRS dispute brewing and you have not been able to resolve the matter with the IRS, you are probably going to have to ask the IRS Office of Appeals to consider the case. The IRS Office of Appeals is the administrative forum for resolving tax disputes. It provides taxpayers with an……
