First-Time Home Buyer Credit – Nievinski v. Commissioner

According to Cary A. Nievinski v. Commissioner TC Summary Opinion 2011-10 even though IRS Form 5405 and IRS Publication 4819 provide only general instructions and do not address all the rules and limitations applicable to the first-time home buyer credit, the apparent failure of some IRS

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Posted in Tax Court, Tax Credit, Tax Guidance & Preparation, Tax Problems & Requests

US Treasury SS-8 Determination of Worker Status for Purposes of Federal Employment Tax

In my dealings with the US Treasury Department regarding worker classification disputes I have learned that although in reality there may be shades of gray distinguishing between what constitutes an employee and what constitutes an independent contractor the US Treasury

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Posted in Appeals & Audit Resolution, Audit Reconsideration, Business Expense, Employee Business Expense, Employment Tax, FICA, Payroll Tax Problems, Self Employ, Small Business, Sub-chapter S, Tax Guidance & Preparation, United States Treasury, Worker Classification

Is Your Activity For Profit Allowing for Business Deductions – Rundlett v. Commissioner

You are allowed deductions for ordinary and necessary expenses incurred in the course of business under §162, but you must also keep adequate records to substantiate expenses which can at times seem esoteric if not convoluted. Deductible travel expenses for example under §274(d) are based

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Posted in Business Expense, Deductible Expense, Disallowed Expenses, Hobby, IRS Examination, Rental Real Estate, Tax Abuse, Tax Court, Tax Guidance & Preparation

Interest Deduction Determined Based on Use of Loan Proceeds – Ellington v. Commissioner

If you incur interest expense on loans you should use the tracing rules of Reg. §1.163-8T to determine whether the interest expense is for: 1. business 2. investment 3. passive activities. or is 4. personal in nature The regulation focuses on the

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Posted in Business Expense, Deductible Expense, Disallowed Expenses, Interest Expense, IRS Examination, Tax Court

IRS Guidelines for Determining Noncompliance – The Cohan Rule

As I understand the Cohan rule under the IRS' Guidelines For Determining Noncompliance, taxpayers are allowed a deduction for an estimated amount of expenses when it is clear the taxpayer is entitled to a deduction but is unable to establish the exact amount of

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Posted in Cash, Cash Transaction, Cohan, Tax Court, Tax Deductible Expenses, Tax Guidance & Preparation, Tax Problems & Requests

Subdivided Lots – Understand Intent of Purchase to Characterize Gain

Under §1221(a)(1), property held by a taxpayer primarily for sale to customers in the ordinary course of a trade or business is excluded from the definition of a capital asset. Accordingly, if you by acreage to subdivide, develop and sell, the transaction would not meet

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Posted in Capital Gain, Capital Loss, Rental Real Estate

IRS Offer-in-Compromise (OIC) Terms Now More Flexible

The IRS recognizes that many taxpayers are still struggling to pay their bills so the agency has been working to put in place common-sense changes to the Offer-in-Compromise (OIC) program to more closely reflect real-world situations. Generally an OIC is an

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Posted in Offer In Compromise

First Time Home Buyer Credit Repayment Tool

The First Time Home Buyer Credit (FTHBC) Account Look-up tool is now up and running on the IRS website. This tool provides information that helps taxpayers accurately report their FTHBC repayment obligations on their federal tax return. To access this

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Posted in Tax Credit

IRS Master File Codes 6209-8A

The first thing that I always do when investigating a tax dispute is pull the transcripts from the IRS for review. They can be really hard to read if you don't understand the Transaction Codes referenced. Transaction Codes are defined

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Posted in IRS Appeal, IRS Audit, IRS Centralized Insolvency, IRS Collections, IRS Criminal Enforcement, IRS Enforcement, IRS Examination, IRS Levy, IRS Lien, IRS Master File, IRS Mediation, IRS Penalties, IRS Penalty and Interest Abatement, IRS Transcript, Tax Guidance & Preparation

Employee Tool and Equipment Plans

Tool and Equipment Plans generally require employees to provide their own tools. Some plans purport to receive tax-favored treatment as “accountable plans” under the definition of adjusted gross income in Internal Revenue Code § 62(c). If you are expected to use

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Posted in Accountable Expense Plan, Business Expense, Deductible Expense, Disallowed Expenses, Employee Business Expense, Employment Tax, IRS Enforcement, IRS Examination, Tax Abuse, Tax Deductible Expenses, Tax Guidance & Preparation, Trust Fund Recovery Penalty
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