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When it comes to fixing tax problems, procedural footfaults can make solving the problem even more difficult. Filing deadlines are an example. The Duggan v. Commissioner, No. 15-73819 (9th Cir. 2018), case provides an example. Facts & Procedural History In Duggan, the taxpayer was contesting the IRS’s decision to proceed with collections. He requested a…
Tax Articles
Court: IRS Cannot Apply New Law Based on Conduct Predating the Law
In Rafizadeah v. Commissioner, 150 T.C. No. 1 (2018), the court concluded that the IRS made a late assessment of tax and penalties. The case turns on whether the IRS can benefit from the longer six-year assessment period based on an information return filing that the law did not obligate the taxpayer to make at…
A Closer Look at Innocent Spouse Relief
Innocent spouse relief allows one spouse or ex-spouse to be relieved of liability for an income tax incurred during the marriage. This relief can provide a much needed lifeline to taxpayers who are divorced or contemplating divorce. Injured Spouse Relief is not Innocent Spouse Relief Before considering the innocent spouse rules, it is helpful to…Continue…
Family Cattle Operation Denied Tax Deductions
In Barnhart Ranch Co. v. Commissioner, No. 16-60834 (5th Cir. 2017), the court considered who was entitled to deduct expenses for cattle that were descended from cattle the taxpayers inherited and other cattle that were subsequently purchased. The case shows how important it is to implement an accounting system to capture income and expenses in…
Congress Provides Significant Relief for Back Taxes
There are winners and losers when it comes to the recent tax changes proposed by Congress. As it turns out, those who owe back taxes to the IRS may be in the winner category. The proposed changes will significantly increase the amount of income that is beyond the IRS’s reach. If the legislation is passed……
No Interest & Penalties on Restitution Assessments
The IRS can assess criminal restitution as if it is a tax tax. But can it assess interest and penalties on the restitution as it would a tax? The IRS policy is to do just that. The court addressed this in Klein v. Commissioner, 149 T.C. 341 (2017), concluding that the IRS policy violates the…
Valuation of Management Fees Paid by Related Parties
Related party transactions can raise difficult tax questions. This is especially true for management fees paid by one legal entity to another legal entity that has the same or similar owners or that are controlled by the same owners. As noted in the recent Wycoff v. Commissioner, T.C. Memo. 2017-203 case, related-party management fees often…
Making the IRS Pay for Unlawful Collection Activities
Taxpayers often feel helpless when it comes to the IRS. We hear this from clients when there is some real or perceived injustice involving the IRS. While the IRS and IRS employees have a lot of power, they are subject to the law. The law provides taxpayers with several remedies when they are harmed by…Continue…
Court Considers Medical Marijuana Company Substantiation
Medical marijuana companies face a number of challenges. The Section 280E limitation on business deductions is one example. There have been a number of court cases that address this limitation. The Feinberg v. Commissioner, T.C. Memo. 2017-211, case addresses a medical marijuana company’s efforts to substantiate cost of goods sold in light of the Section…
The IRS Levy, What You Need to Know
If you owe the IRS back taxes, you need to know about the IRS levy. This is the primary tool the IRS uses to collect unpaid taxes. About the IRS Levy The word “levy” is a legal term that refers to the process of taking property. Creditors are able to levy on property to satisfy…Continue…
