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Tax Articles

Dwelling Unit vs. Primary Residence

Many taxpayers have both a dwelling unit and a principal place of residence.  Understanding the difference between the two is important for a wide variety of reasons.  The file that landed on my desk today involves such a matter.  The taxpayer has a dwelling unit in Texas (where there is no state income tax) and…


Medical Expense Deduction Allowed for Lactation Supplies

Under Internal Revenue Code §213 an expense is considered for medical care if it is paid for the diagnosis, cure, mitigation, treatment or prevention of disease. It is deductible on the taxpayer’s Schedule A, subject to 7.5 percent of adjusted gross income for the year. However under Reg. §1.213-1(e)(1)(ii), expenses incurred for items that are merely beneficial to the general health of…


Professional Gambler’s Loss Limited to Winnings. However….

IRC §165(d) stipulates that gambling losses shall be allowed only to the extent of the gains from such transactions. The IRS also cites Valenti v. Commissioner to deny professional gambler’s deductions for their net gambling losses in excess of winnings. However gambling-related travel expenses are not subject to the §165(d) limit because §165(d) applies to wagering losses calculated as the amount wagered less the amount…


Communicating with the IRS Requires Organized + Detailed Note Taking

When you call the IRS I suggest doing it as early in the work day as possible to minimize wait time.  Have a pen and pad of paper in hand and ideally be sitting in front of a computer.  Write your questions down in advance of picking up the phone and be calm yet alert. Be…


Burden of Proof

The IRS as many of you are painfully aware is often looked upon as accusing first without due process requiring the tax payer to shoulder the burden of proof in regards to his or her innocence relevant to the Internal Revenue Code.  In other words there is no such concept as ‘innocent until proven guilty’…


IRS Expanding Audits to Unrelated Tax Years and Tax Matters

According to the Treasury Inspector General for Tax Administration (TIGTA) the IRS needs to expand audits to other tax years and tax matters when large dollar amounts are involved in a preexisting audit making it all the more important to know exactly what you are doing when communicating with the IRS. A couple of general…


IRS Implications of Paying Yourself

Another fabulous question came my way today from a small business owner that is actually proving to be monetarily successful and wants to know how to pay herself while minimizing her tax burden. Basically the answer depends first on the type of business structure elected, sole proprietorship, partnership, corporation, S-corporation, or LLC.  The following is some text…