Tax Warrior Chronicles

New Tax Strategy for Foreign Investors in U.S. Partnerships

Posted on Wed, Sep 27, 2017

By: Yi Yang, CPA, MBA and Ronald Wiener, JD

 

A recent United States Tax Court case may allow foreign partners to legally avoid paying U.S. income tax on certain income from sale of its interest in a partnership (including LLC’s taxed as a partnership) that engages in a trade or business in the United States.  They may even be able to get refunds if they paid taxes to the IRS on such income in prior years.  This is the principal takeaway from the Tax Court’s 50-page opinion involving the tax treatment of a foreign partner’s disposition of its entire interest in a U.S. partnership.

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Paying IRS in Pennies is NOT a Good Idea!

Posted on Mon, Jan 30, 2017

By: Sherri Sorbello, CPA

 

Earlier this month, an angry Virginia man made headlines by paying his $2,987.14 Department of Motor Vehicles bill in pennies…nearly 300,000. We all know someone who has the same contempt for paying federal taxes. But, don’t even think about paying in pennies.  Not only will it anger the person who counts them, but there can be a penalty for paying your federal taxes in cash—even if paid on time and in full. As a Tax Warrior, I am driven to help our readers understand the facts around this policy.

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IRS Takes Hard Line on Substantiation Requirements: Contributions of Household Items

Posted on Mon, Oct 13, 2014

In recent years, the Internal Revenue Service (IRS) has taken a hard line regarding the substantiation of non-cash charitable contributions to reduce fraudulent appraisals and deductions.

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Mortgage Interest – Personal vs. Business Expense

Posted on Thu, Sep 11, 2014

Michael Hume and Dorsaye Dilani, TC Memo 2014-135

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Tax Court: Applying Prior Year Overpayments to Current Year Deficiency Not Our Call

Posted on Tue, Sep 02, 2014

So, you made an overpayment on your cell phone, cable or credit card bill.  It stands to reason that the overpayment will be credited to the following month’s bill…and in most cases, it will. However, this is not the case when it comes to federal taxes.  In a recent decision, the Tax Court held that it didn't have jurisdiction to apply amounts that a taxpayer argued were prior-year overpayments, and refund checks from prior years that the taxpayer hadn't cashed, against the tax deficiency for the tax year that was at issue in the case.

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Employee Business Expenses: What is Deductible?

Posted on Mon, Aug 25, 2014

Miller, TC Summary Opinion 2014-74

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Land Developer Can’t Use Completed Contract Method

Posted on Tue, Jun 03, 2014

The Howard Hughes Company, LLC, et al. v. Commissioner, (2014) 142 TC No. 20

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Interest on Unrecorded Mortgages Isn’t Deductible

Posted on Mon, Dec 30, 2013

If you own a home, the interest you pay on your home mortgage provides one of the best tax breaks available. However, many believe that any interest paid on their home mortgage loan is deductible. Sadly, as the Defrancis’ discovered in a recent Tax Court opinion, that assumption is wrong. In DeFrancis v. Commissioner, the Tax Court held that the couple could not deduct as qualified residence interest the interest they paid on a loan from the wife's mother that was secured by an unrecorded mortgage.  How can that be?

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“Real Estate Professional” - Rental Real Estate Losses

Posted on Fri, Sep 13, 2013

Guillermo Merino Jr., et ux. V.  Commissioner, TC Memo 2013-167

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No Basis Adjustment Allowed in NJ Until LLP Interest is Fully Liquidated

Posted on Tue, Sep 03, 2013

 

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