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Tax Articles

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…


Tax Treatment of IRC 351 Nonrecognition Transactions aka Corporate Reorganizations

Check out the following 5 lessons I learned this week regarding IRC 351 nonrecognition transactions: 1. The basis assigned to stock received generally is the same as the basis in the property transferred to the corporation. If however you also receives boot from the corporation your basis must be decreased by the amount of any…


Tax Treatment of Liabilities Assumed by a Corporation IRC 357 – What is Boot?

According to IRC 357(a) if property transferred to a corporation in an IRC 351 nonrecognition transaction is subject to a liability, the assumption of that liability by the corporation generally is not treated as taxable “boot” for purposes of determining the amount of any taxable gain on the transaction. For example if you transfer computer programs and…


Requirements for Nonrecognition of Gain (or Loss) on Transfer of Property to a Corporation IRC 351

If property is transferred to a corporation by one or more people solely in exchange for stock in the corporation and immediately after the exchange the person or people engaged in the exchange are in control of the corporation then generally speaking subject of course to certain thresholds no gain (or loss) is recognized for…