Personal Expenses V. Deductible Medical Expenses

Generally you can deduct expenses paid for medical care for yourself, your spouse and your dependents to the extent the total expenses for the year exceed 7.5 percent of your adjusted gross income and you itemize your deductions (Schedule A). IRS Pub. 502, Medical and Dental Expense, has valuable information on the topic. Medical care essentially according to…

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Personal Guarantee of Corporate Debt Does NOT Add to Basis (Investment)

Taxpayers who own shares in an S corporation are allowed pass-through losses to the extent of their basis (also commonly referred to as investment) under §1366(d) in their entity. Shareholders can obtain basis in a variety of ways such as direct investment, loaning the corporation money, contributing capital etc. However sharholders of S Corporations do not gain…

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2010 Small Business Jobs Act + Rental Property Owners + IRS Form 1099misc

The Small Business Jobs Act of 2010 is amazingly complex legislation. Some pundits estimate that the provisions offering tax relief will actually ‘cost’ up to $12 billion. These tax cutting measures were I believe intended to offer incentive to businesses to make investments in plant, property, more employees and equipment. Which can be great if you are…

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Trends in IRS Collection and Enforcement

According to a report filed by the Treasury Inspector General for Tax Administration there has been a 19 % increase of enforcement personnel serving in the Collection and Examination function of the IRS since Fiscal Year 2006. Whereas on average overall IRS staffing increased 4 percent during this same period, from 103,811 employees in Fiscal Year 2006…

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What is a Real Estate Professional?

In reviewing James F. Moss, et ux. v. Commissioner 135 TC No. 18 to be a real estate professional, a taxpayer must meet two requirements: (1) More than one-half of the taxpayer’s personal services must be performed in real property trades or businesses in which he materially participates; and (2) The taxpayer must perform more than 750 hours of service in real property…

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IRS Accuracy Related Penalties

Section 6662(a) and (b)(1) imposes a penalty equal to 20 percent of the underpayment of tax due to negligence or intentional disregard of the rules or regulations.  If your attitude toward the preparation of your tax returns appears to be cavalier you will definitely be held accountable for the penalty.  That is why it is very important to craft each…

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What is a Church?

The IRS developed 14 criteria to evaluate applications for church foundation status. If a church does not meet these criteria, it will not receive tax exempt status. The criteria are weighted with the four most important of these being: • A complete organization of ordained ministers ministering to their congregations. • The provision of regular religious services and religious education…

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Alimony Deduction

Back from vacation! Nashville, TN! Awesome town! In reviewing Paul T. Banach v. Commissioner – TC Memo 2010-33 – I learned that payments may be claimed as alimony under §215 if all four requirements of §71(b)(12) are met. Payment in cash will be considered alimony only if the: (1) payment is received by (or on behalf of) a…

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Innocent Spouse Determination

Here are my notes on reviewing Wendy W. Bozick v. Commissioner TC Memo 2010-61 regarding innocent spouse relief. The issues of disagreement are whether Wendy: • Knew her husband would not pay the tax liability. • Will suffer economic hardship if she is not relieved of the joint tax liability. • Benefited from the failure to pay the 2003 income…

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