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Tax Articles

The Self-Employment Contributions Act

The Self-Employment Contributions Act (SECA) imposes two taxes on self-employed individuals: an old-age survivors and disability insurance tax (OASDI) commonly referred to as Social Security tax, and a hospital insurance or Medicare tax (HI). These SECA taxes apply to net earnings from self-employment above a $400 minimum for the tax year. There is an annually-adjusted ceiling limitation on the amount subject to…


Determining Tax Basis and Holding Period

According to IRS Publication 544 holding period is generally speaking the length of time a capital asset is owned. It is important because of the tax benefits of long term capital gain or loss treatment according to IRC Sec 1223. If the capital gain property is held for more than 12 months, gain or loss is long-term…


Self Employed Health Insurance Insurance Deduction: Worksheet v. IRS Publication 535

If you qualify to take the deduction, use the Self-Employed Health Insurance Deduction Worksheet to figure the amount you can deduct. However use IRS Publication 535 instead if any of the following applies. You had more than one source of income subject to self-employment tax. You file Form 2555 or 2555-EZ. You are using amounts paid for qualified long-term…


Ranking Tax Debt in Bankruptcy

According to IRS Publication 908, Bankruptcy Tax Guide, generally the automatic stay rules prevent a creditor from taking actions to collect debts incurred before a bankruptcy petition is filed. However automatic stay rules do not universally apply. Exceptions include an IRS exam to determine tax liability, a demand for tax returns, IRS notice of deficiency issuance, assessing tax…


Exemption from IRS Filing in Bankruptcy

Here is the hard part, to qualify: 1. The corporation must have ceased business operations and must have neither assets nor income for the tax year. 2. The exemption request must be submitted to the local IRS Insolvency office handling the case. For the appropriate address to mail the request to call (800) 973-0424 The request…


What is a Dependent Qualifying Relative?

According to IRS Publication 501, Exemptions, Standard Deductions and Filing Information. a dependent qualifying relative can be any person who lives with you all year, is not a qualifying child of another taxpayer, and someone for whom you provided over half of his or her support whose gross income for the year is less than the exemption amount…


IRS Form 3949-A Information Referral – PROBLEMS

After it was learned that thousands of identity theft ‘Information Referrals’ reported on IRS Form 3949‑A were not being processed the Treasury Secretary General for Tax Administration (TIGTA) investigated and published a report (#2012-40-106) essentially stating that the “process for individuals to report suspected tax law violations is not efficient or effective.” It seems to in fact have…