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Tax Articles

Tax Audit Musings

If you chose to represent yourself in an IRS Examination realize the IRS Revenue Agent (RA) or Tax Compliance Officer (TCO) assigned your file is trained very thoroughly to advocate on behalf of the US Government. One method used quite often is to create a (false) sense of security in the personal interview setting or even…


IRS Regulations on Deduction and Capitalization of Tangible Assets

The IRS has issued final regulations affecting all taxpayers that acquire, produce, or improve tangible property. The final regulations define materials, supplies, de minimus, safe harbor and related repairs as well as the election to capitalize certain materials and supplies among other items. Particularly relevant to my friends in Colorado suffering devastating losses from the recent…


Individuals Exempt from the Affordable Care Act (Obama Care) Mandate

US citizens are required to carry minimum essential health insurance coverage beginning January 1st 2014. This is also commonly referred to as the ‘individual mandate’ and some people are exempt from this individual mandate including: Members of recognized religious sects that are exempt from self-employment tax. Members of health care sharing ministries. Individuals who are…


Investor or Trader

I have another new client who is a day trader and wow is he good at it! Even though he has another job he makes so much more money as a trader that this ultimately is his primary vocation. The following are a few things I’ve learned in helping this new client with his tax…


Affordable Care Act Final Regulations Regarding Minimum Essential Coverage Maintenance

The IRS released final regulations regarding minimum essential coverage maintenance required under the Affordable Care Act for individual taxpayers under IRC 5000A governing the shared responsibility payment. The document is 75 pages long and I’ll be reviewing it over the next couple of days but I’ve pulled five examples directly below to help taxpayers try to…


Small Businesses Receive IRS Letter 5036 – Under Reporting of Income

The IRS has over the last week or so started sending Letter 5036 to small businesses questioning the possible under reporting of income. The letter looks intimidating as it’s header states “Notification of Possible Income Under reporting” and starts with “Your gross receipts may be under reported.” Rest assured this letter is systematically generated.  Basically the IRS…


Sophy v. Commissioner – Reviewing Mortgage Interest Deduction Limitations

Taxpayers living in Vail Colorado contacted me most recently to represent them in an IRS audited covering tax years 2009, 2010 and 2011 relevant to several small items but specifically to the mortgage interest deduction claimed on Schedule A of form 1040. The taxpayers are domestic same sex partners each filing their own federal and…


Notes From the July IRS Stakeholder Liaison Meeting

The following is a compilation of the presentations given at the last IRS Stakeholder liaison meeting as prepared by IRS Senior Stakeholder Liaison Debra Rodgers complete with some very pointed questions and answers. Please pay particular attention to Nancy Carver’s remarks concerning implementation of DOMA when it comes to filing status for income tax reporting…


Transfers of Property to a Corporation Internal Revenue Code Section 351

According to IRC 1001 you generally recognize a gain or a loss when you sell or dispose of property. However, there are a number of exceptions, specifically transfers of property to a corporation. For example under IRC 351a no gain or loss is recognized if property is transferred to a corporation in exchange for stock…


Traders in Securities

If you are an individual who buys and sells securities you may qualify as a “trader in securities,” for tax purposes. This post attempts to explain how traders must report the income and expenses from being in the trading business. First though it is important to understand the meaning of the terms: “security,”“investor,”“dealer,”and“trader,” and the…


Income Tax Filing Status for Same Sex Married Couples

The following states recognize same sex marriages:  Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont, Washington, and District of Columbia.  In the most recent Supreme Court decisions that I blogged about earlier a great deal of disconnect surrounding the following sentence was brought forth and follow up I felt is…