I learned 2 things this week about the Domestic Production Activity Deduction (DPAD) on IRS Form 8903: 1. Business activity alone is not the only factor used in determining qualification for the Domestic Production Activity Deduction (DPAD). The actual deduction reported on IRS Form 8903 (Line 22)...
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 publications to explain the “no-purchase-from-family” limitation of...
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 has some very specific positions....
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 on whether or not the...
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 use of the loan proceeds, not the item or items used...
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 the deduction. Specifically the IRS...
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 the definition of a capital asset...
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 agreement between a taxpayer and...
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 tool, go to: http://www.irs.gov/individuals/article/0,,id=252351,00.html Taxpayers need to...
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 in IRS Document 6209 - Section...