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Tax Articles

Abusive Tax Shelters

Abusive tax shelters of every nature are what I call scum bag lawyer schemes.  It is difficult to specifically define abusive tax shelters because new ones are constantly emerging.  Essentially they are arrangements usually designed by ‘promoters’ to circumvent tax laws or evade taxes.  They range from being clearly illegal to being carefully constructed to…


IRS Criminal Investigation Enforcement Trends

Hey everyone, check out what the Treasury Inspector General for Tax Administration is writing… “Criminal Investigation’s (CI) primary resource commitment is to develop and investigate legal source tax cases. The prosecution of these cases is key to supporting the Internal Revenue Service’s (IRS) overall compliance goals, enhancing voluntary compliance with the tax laws, and promoting…


IRS Guidance on Qualified Long Term Care Insurance Contracts

IRS Notice 2011-68 provides interim guidance on the federal income tax treatment of annuity and life insurance contracts with a qualified long-term care insurance (QLTC) feature. The guidelines address the application of certain changes to the federal income tax rules governing annuity and life insurance contracts as well. All taxpayers are invited to provide comments for final…


Ponzi V. Pyramid Scheme

A friend of mine asked me to blog today about my experiences from a tax perspective with Ponzi schemes and pyramid schemes. Both are for the most part perpetrated by clandestinely malcontent people that have inadvertently grown trustworthy, a “friend” or relative or fellow member of your spiritual congregation for example, or even a guy…


Personal Guarantee of Corporate Debt Does NOT Add to Basis (Investment)

Taxpayers who own shares in an S corporation are allowed pass-through losses to the extent of their basis (also commonly referred to as investment) under §1366(d) in their entity. Shareholders can obtain basis in a variety of ways such as direct investment, loaning the corporation money, contributing capital etc. However sharholders of S Corporations do not gain…


Trends in IRS Collection and Enforcement

According to a report filed by the Treasury Inspector General for Tax Administration there has been a 19 % increase of enforcement personnel serving in the Collection and Examination function of the IRS since Fiscal Year 2006. Whereas on average overall IRS staffing increased 4 percent during this same period, from 103,811 employees in Fiscal Year 2006…


What is a Real Estate Professional?

In reviewing James F. Moss, et ux. v. Commissioner 135 TC No. 18 to be a real estate professional, a taxpayer must meet two requirements: (1) More than one-half of the taxpayer’s personal services must be performed in real property trades or businesses in which he materially participates; and (2) The taxpayer must perform more than 750 hours of service in real property…


IRS Accuracy Related Penalties

Section 6662(a) and (b)(1) imposes a penalty equal to 20 percent of the underpayment of tax due to negligence or intentional disregard of the rules or regulations.  If your attitude toward the preparation of your tax returns appears to be cavalier you will definitely be held accountable for the penalty.  That is why it is very important to craft each…