When taxpayers weave together various tax rules to produce a favorable outcome, the IRS will often cite various judicial doctrines to avoid the result or to unwind the transaction. This can include economic substance, the step transaction doctrine, etc. These doctrines allow the IRS to effectively reverse the tax treatment of transactions when multiple tax……
Tag: Passive Activity Losses
Restructured Business Fails Passive Activity Loss Rules
Successful businesses change over time. We often see this when a business gets ready for the founder or owner to exit the business. The business is often reorganized and maybe even divided up. Various tax strategies come into play to help facilitate the transfer, like the F Reorganization for S corporations. Other plans to minimize……
What is a Rental Activity?
The ability to generate current year tax losses is a strong incentive for high-income taxpayers to own real estate. Real estate often produces tax losses, but not economic losses. This happens because the current operating expenses plus tax depreciation result in a current year loss. At the same time, the property likely increased in value……