An author, teacher, advocate and trusted advisor, Lew Taishoff is a New York City-based attorney with 55 years of experience in corporate and individual tax and real estate matters. He is admitted to practice before the United States Tax Court. He was formerly, for ten years, an Enrolled Agent, examined and admitted to practice before the Internal Revenue Service. Lew Taishoff provides a high level of legal service to clients in the areas of tax and real estate. Individuals and businesses looking to buy, sell or lease property in the City as well as those trying to navigate the ever-evolving and complex tax landscape find experience, knowledge and dedication from Lew Taishoff.
You can learn more about Lew Taishoff at his website - https://taishofflaw.com/.
This month I’ve decided to change format. I’m grouping Tax Court thumbnails by category. Not every reader deals with every issue. But coverage is still useful even where only a few specialize. Click here to read the latest happenings!
The latest Federal Tax Court news, updates, and hot topics!
Lots going on at Tax Court in February, 2023. Here are my highlight picks…
January brought some new wrinkles. Even tax practitioners whose endeavors are far from Tax Court can find useful information there. My usual reminder: I cover Tax Court exclusively. Tax Court decisions get appealed routinely, and reversed sometimes, so check before citing as authority…
Much happening, even in August. This has hardly been a lazy hazy summer.
This roundup will spend a lot more space than usual on one story, because it’s the biggest of the year in Tax Court so far…
Much of what happens in Tax Court is run-of-the-mill. Once the tax general practitioner learns the jurisdictional limits and procedural moguls, s/he can advise clients whether to spend the sixty bucks and the certified mail fees when TAS, Examination or Appeals can’t deliver an acceptable result. Following the Court’s orders and opinions for a while should do that. I try to present the less-than-usual, below-radar points for generalists and specialists.
A very mixed bag this month: IRS shifting ground on the eve of trial, plenty of discovery, loyalty programs, the end of the road for meaningful Section 6751(b) supervisory approval, and arrival of a new Special Trial Judge. And, as always, a lot of questions.
What one Judge called “the wrinkled skin of tax law” is on display in US Tax Court again. This month was a technician’s bento box, a variety.
As always, much has happened in the tax courts this past month; let’s jump right in!
February was Discovery Month at Tax Court. The high-deficiency, high-profile conservation easement cases coming from IRS crackdown put a premium on the old continuing legal education staple “win your case at discovery.” But it doesn’t go so well for shotgun demands, nor for broad-spectrum claims of privilege. Of course, more was resolved than just discovery disputes, but I’ll get to those.
No dramatic developments this month, but some technical inputs worth noting. A good practitioner is always learning; it’s so much better to learn from other peoples’ mistakes than one’s own.
Month’s-end brought signs of things to come. Earlier we saw clarification of the non-jurisdictional limit in employee classification cases, a new IRS tactic in syndication conservation easements, and, as always, sharpeners for the practitioner’s toolkit.
The last month of 2023 featured more technical expositions than policy discussion. Practitioners will find insights worth their time. Generalists shouldn’t overlook some nuggets here. As always, Tax Court sees and deals with more varieties of income taxation than any other court.
New year, new rules, the changing features of United States Tax Court practice and procedure confront the tax practitioner (even those who don’t practice in Tax Court themselves), who must keep current among all the demands on our time, especially as the season opens. Let’s jump in.
Despite the five days off for the two Federal holidays this month, there’s plenty from Tax Court, for both specialists and general practitioners. No other Court gets as deep into the “wrinkled skin” of US tax law. As always, there’s something for (almost) everyone.
What seemed to be a slow month turned out to have some intriguing developments, a new online petition generator for self-representeds, and new Judges joining the Tax Court bench (at long last).
The dog days, the doldrums, the get-out-of-town days…they’re here. The United States Tax Court is not immune, as the blockbuster cases and newsletter headliners have largely vanished. Still, there are report-worthy stories, despite the call of seashore and mountain meadow.
Tax Court concludes tax season this year with a webinar on Practical Perspectives on Discovery, chaired by Judge Greaves, on April 16, 11:00 a.m. Eastern. With all the discovery jousting accompanying conservation easements and other high-dollar litigation, this is a must for all practitioners, so I’m headlining it. Information and registration on the Tax Court website.
Another active month, with plenty of variety and practice tips. And new Tax Court Rules announced…
Here’s the latest filings and tax court cases for July, 2023!
I’m new here, but I know enough not to try to do what everyone else does. I won’t try to cover the wider tax picture. I cover United States Tax Court on my blog, so here’s a brief round-up on what went on in Tax Court during the last month that I think is of interest to the tax planner and practitioner…
In a case that every tax professional should take note of, the prominent law firm Sidley Austin LLP finds itself defending against claims that it provided faulty tax advice over two decades ago, leading to massive IRS liabilities for a family. The plaintiffs, the Cáceres family, are seeking to recover $7 million after settling with the IRS, claiming Sidley’s advice on a complex asset liquidation set them up for disaster. The kicker? The lawsuit was filed over 25 years after the advice was given. So, how are the plaintiffs still able to pursue the case? It all boils down to a claim of fraud—and how that could toll the statute of limitations.
Yes, the IRS does forgive some tax penalties. The IRS refers to this forgiveness as penalty abatement. Abatement is the act or process of reducing or removing something. In this case it is removing or reducing a penalty. But penalty forgiveness is not a blanket offer that everyone qualifies for the way the radio ads make it seem. There is a process that the IRS has for requesting and granting abatement. It is up to the taxpayer to prove that they qualify for abatement. That’s where you come in.
The story of James J. Maggard has some interesting and possibly valuable lessons. The one that strikes me as particularly important is that it makes it crystal clear that disproportionate distributions contrary to a corporation’s governing documents will not blow its S election. That does not mean that disproportionate distributions are just fine and that you don’t need to address them. There is a practical lesson about being careful who you take on as fellow shareholders. And there is another slightly odd lesson, that almost makes me want to create a new law of tax planning: Don’t deliberately involve the IRS in your business disputes. Their job is not to help you.
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In a case that every tax professional should take note of, the prominent law firm Sidley Austin LLP finds itself defending against claims that it provided faulty tax advice over two decades ago, leading to massive IRS liabilities for a family. The plaintiffs, the Cáceres family, are seeking to recover $7 million after settling with the IRS, claiming Sidley’s advice on a complex asset liquidation set them up for disaster. The kicker? The lawsuit was filed over 25 years after the advice was given. So, how are the plaintiffs still able to pursue the case? It all boils down to a claim of fraud—and how that could toll the statute of limitations.
Yes, the IRS does forgive some tax penalties. The IRS refers to this forgiveness as penalty abatement. Abatement is the act or process of reducing or removing something. In this case it is removing or reducing a penalty. But penalty forgiveness is not a blanket offer that everyone qualifies for the way the radio ads make it seem. There is a process that the IRS has for requesting and granting abatement. It is up to the taxpayer to prove that they qualify for abatement. That’s where you come in.
The story of James J. Maggard has some interesting and possibly valuable lessons. The one that strikes me as particularly important is that it makes it crystal clear that disproportionate distributions contrary to a corporation’s governing documents will not blow its S election. That does not mean that disproportionate distributions are just fine and that you don’t need to address them. There is a practical lesson about being careful who you take on as fellow shareholders. And there is another slightly odd lesson, that almost makes me want to create a new law of tax planning: Don’t deliberately involve the IRS in your business disputes. Their job is not to help you.
Short-term rentals like AirBnb are becoming increasingly popular with taxpayers who invest in real estate. For many taxpayers, the appeal of these properties is the flexibility and cash flow potential. However, there may be an overlooked third tax benefit. In many situations these short-term rentals may not qualify as a rental activity to the IRS, and that may offer a big tax break. While many rental activities generate losses, this can leave taxpayers facing the frustrations of not always getting to deduct those losses right away due to the passive activity limitations.
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Taxpayers have been whipsawed by confusing rules for the $10,000 limit on deducting state and local taxes (SALT), the most politically charged piece of the Tax Cuts and Jobs Act (TCJA) of 2017. The cap has caused nearly 11 million individuals to lose an annual deduction worth $323 billion. But many owners of private businesses known as passthroughs can avert that financial pain. If you own your company and thus report your business income on your personal federal income tax return, here’s what you need to know.
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Millions of taxpayers in the United States are using crowdfunding websites like GoFundMe and Kickstarter to raise money for important needs, such as paying medical bills, paying legal fees, or funding a new business venture. Both the IRS and the courts have been surprisingly silent on the tax consequences of crowdfunding platforms. The good news is that established tax law provides a clear road map for answering most tax questions created by raising money from a crowdfunding website. By knowing these rules, taxpayers can use crowdfunding to raise cash and minimize their overall tax exposure.
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My client formed three limited liability companies (LLCs) to hold his rental properties. Without consulting me, he filed Form 8832, Entity Classification Election, to elect C corporation treatment, effective January 1, 2020, for these LLCs. I want the LLCs to be disregarded entities, which is the most tax-efficient structure for his situation. What is the best way to undo these elections?
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This information is particularly important if you are the owner/shareholder of your own corporation – C or S corp. You can set up payroll and designate tax-free reimbursements for you to be working at home – as well other tax-free money for you and for your employees. (We will discuss employees momentarily. Yes, it’s essential.) If being an employee is your main source of income – watch out! The short answer to employees claiming an office in home deduction this year is... There is no deduction!
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With so many people looking for more ways to make money outside their 9 to 5 jobs, many are turning to money making methods using technology including trading in cryptocurrency. For tax purposes, the IRS considers cryptocurrencies property, not as currency. Just like other property types, stocks, investments, or real estate, when you sell, swap, or otherwise dispose of your cryptocurrency for more or less than you acquired it for, you incur a tax reporting obligation. As an example, there would be a $1,000 capital gain if 0.1 bitcoin is bought for $2,000 in June of 2020 and then sold for $3,000 two months later. This profit must be reported on the tax return and a certain amount of tax is due on the gain, depending on the tax bracket of the taxpayer. In this example, the gain would be short term requiring the profit to be taxed at the filer’s ordinary tax rate. These rates range anywhere from 0-37%.
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My client plans to take about $15,000 in distributions in excess of his basis from his S corporation construction business. I know this generates tax for him. He’s in the 32 percent tax bracket and single. Does he also have to pay the 3.8 percent net investment income tax and the 0.9 percent additional Medicare tax on this amount? Is there a way for him to avoid taxes on this amount?
Read MoreYou have likely heard that owning rental real estate provides great tax benefits. This is true for a multitude of reasons, but there’s one benefit that is arguably the best of the bunch: The Small Taxpayer Allowance for Deducting Passive Rental Losses. Based on average household income levels, more than three-quarters of taxpayers can potentially qualify for this fantastic tax benefit that offers taxable income reduction of up to $25,000.
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