IRS Leaves Partnership Decision Up To Owners
The IRS recently advised a husband and wife, who together owned an unincorporated business, that their business would be treated as a partnership unless the couple elected for it to be disregarded (Private Letter Ruling 201411035). The tax law defines a partnership to include any multi-owner unincorporated organization through or by means of which a…
Nearing Retirement? Learn Required Minimum Distribution Rules
If you’re a participant in an employer-sponsored qualified retirement plan, like a 401(k) plan, the plan itself may dictate when you must begin taking distributions. If the plan is silent, distributions must begin by April 1 of the calendar year following the later of: The year in which you reach age 70 1/2, or The year in…
‘Momma Mia!’ ABBA admits to unusual tax planning
Bjorn Ulvaeus, founder of the Swedish rock group ABBA, has admitted that the quartet was looking to save “Money, Money, Money” in the late ’70s and early ’80s when they donned their trademark glittering hot pants, sequined jumpsuits and platform heels to take to the stage to perform hit songs like “Fernando” and “Dancing Queen.”…
Disregarded Entity Canceled Real Property Debt Can Be Excluded
The IRS has provided a safe harbor that applies to the treatment of indebtedness secured by 100 percent of the ownership interest in a disregarded entity that holds real property. The safe harbor will treat such indebtedness as indebtedness secured by real property for purposes of the income exclusion available under the cancellation of indebtedness…
Completed Amenities were Part of the Contract
The Tax Court concluded in a recent case that a developer of a planned residential community did not have to recognize income under the completed contract method of accounting until the common improvements were completed. Shea Homes and its related entities developed large planned residential communities. Shea contended that final completion and acceptance under the…
No Capitalization Required – In This Case
The IRS has concluded that amounts that a manufacturer paid to retailers to offset the cost of constructing display areas for the manufacturer’s products did not have to be capitalized. Under the facts presented in Chief Counsel Advice (CCA) 201405014, the manufacturer enters into an agreement to pay the retailers to maintain retail space that…
The IRS Wants to Know Your Name
Most of us would be happy if the IRS never knew who we are or where we live. But sometimes it’s a good idea to keep the government informed. If you or one of your dependents had a name change last year, you should notify the Social Security Administration (SSA) before you file your federal…
Student Denied Business Expense Deduction for Cost of MBA
Adam Hart may have seen himself as an established pharmaceutical salesman, but the Tax Court didn’t agree. Hart graduated from college in 2007. In 2009, he enrolled in an M.B.A. program with a concentration in finance. Hart deducted $18,600 as an unreimbursed employee business expense for his education costs paid during 2009. The IRS denied…
‘Trust But Verify’ May Apply Here
The Tax Court ruled on a case in December that involved falsified documents, deception and forgery – perpetrated by the wife. The wife’s tangled web included: Submitting falsified requests to withdraw funds from her husband’s IRAs Forging her husband’s signature to endorse the distribution checks Depositing the funds into a joint account that only she…
Lost Tax-Exempt Status? How to Get it Reinstated
Smaller organizations that lost their exempt status for failure to file the required annual returns for three consecutive years can now retroactively reinstate the tax-exempt status. Over the past few years, the IRS has attempted to inform organizations of their filing responsibilities and the consequence of failing to file. Nonetheless, many organizations have failed to…