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Tax Articles

IRS Restrictions on Contacting Taxpayers

The Treasury Inspector General for Tax Administration (TIGTA) recently issued Report Number: 2011-30-090. In this report it clearly states that Internal Revenue Service (IRS) employees are required to stop an interview if the taxpayer requests to consult with a representative and may not bypass a representative without supervisory approval. Evidently this is not happening as diligently…


IRS Treatment of Marijuana Dispensary Expenses

If you are in the business of dispensing marijuana according to the United States Office of Homeland Security you are selling an illegal drug not a medicine like many individual states believe. Nevertheless Internal Revenue Code IRC 280(E) states that the expenses associated with selling illegal drugs are not deductible from revenue when calculating federal income for…


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’…