Food goes bad. Medications, skincare products, and batteries all expire. But what about IRS’s written guidance? Can IRS guidance go bad? What if it is guidance for a particular taxpayer and about a specific transaction or seires of transactions? What happens when tax laws change after the IRS has issued its determination? Can businesses continue……
Tag: Business Tax
Tax Court Strikes IRS Timeline for Partnership Adjustments
The partnership audit regime rules are not all that new at this point. But what makes them new is that the IRS hasn’t fully implemented them, is often not following the new rules, and the disputes involving this have just started to trickle up to the courts. Practitioners are also at fault here. Many have……
Business Advances in Revenue-Sharing Deals Not Deductible
Government agencies and non-profits often enter into business arrangements with private companies that, ultimately, are structured as a percentage of revenue. This approach frequently replaces traditional fixed payments like rent or management fees. The typical example involves a building that a business owns and leases to a government agency or non-profit. The business collects a……
Can Judge-Made Doctrine Override Tax Deductions Allowed by Congress?
The tax code provides specific rules for when taxpayers can claim deductions for losses. These are rules enacted by Congress. There are other so-called “judicial doctrines” that allow the courts to override the rules set by Congress. There are several of these that frequently come up in tax disputes, such as the economic substance doctrine……
Tax Planning With Disproportionate Distributions from S Corporation
There are several rules one has to meet for a legal entity to qualify as an S corporation. One of the rules is the requirement that shareholders of S corporations get identical distributions. Because this is a qualification to be an S corporation, one might think that the consequence of violating this rule is that……
Strategic S Corp Conversion to Avoid Tax Basis Limitation
Time. We can’t stop it, but we can use it. We can use it to take advantage of compounding to grow our savings. We can use it to pay down debt to increase equity. And we can use it for tax planning. Time is one aspect of tax planning. It can help taxpayers avoid just……
Income Shifting to Reduce Tax for Real Estate Sale
Income shifting is a fundamental income tax planning concept. It involves strategically allocating income among related taxpayers to minimize the overall tax liability. This may be intended to use up tax attributes of one taxpayer (such as deductions or tax credits), take advantage of tax deferral options to delay paying taxes, or take advantage of……
What is a Partnership: State Law vs. Federal Tax Law
One of the nuances that come up in tax planning involves the interplay of state law and federal tax law. This brings in all of the nuances and challenges under state law to federal tax law. For example, one common nuance in business transactions arises when the parties to a business arrangement do not document……
Triggering Losses by Selling a Business: NQDC Example
Timing issues are one of the aspects of effective tax planning. There are scores of options for timing and tax deferral and recognition that depend on the taxpayer’s circumstances. For example, for corporate taxpayers, these timing issues may involve timing the receipt of income using the installment rules or the use of losses or foreign……