A researcher gets a grant award direct from an institution or university. The grant is not paid as wages, but is paid as a stipend or maybe as a scholarship. The payment might not be subject to income tax. Compare that to a grant is awarded to an institution and the institution pays a researcher……
Tag: Tax
Reporting Illegal Income to the IRS (It’s All About Choices)
Assume you commit a crime and receive a financial windfall. Then you get caught and have to repay the windfall in the form of restitution. Further assume that you have three options when it comes to reporting and paying tax on the illegal income: (1) you file tax returns to report the income and you……
Unwinding a Stock Sale using the Claim of Right Doctrine
If you sell stock for a large gain in one year, can you later go back and get credit for the tax paid in the earlier year using the claim of right doctrine? Is the claim of right doctrine a mechanism for unwinding a stock sale? The court addresses this in Heiting v. United States,……
Are Wages Paid to Foreign Researcher Taxable in the U.S.?
If a researcher comes to the U.S. on an Exchange Visitor J-1 Status visa and is paid wages for research, are the wages taxable income? The answer is “maybe” according to Baturin v. Commissioner, 153 T.C. 10 (2019). Facts & Procedural History The taxpayer is a Russian citizen. He earned $75,000 of wages for performing……
IRS Says Extra Legroom for Flight is “Necessary” to Fly
If you pay an airline for premium economy seating, is the amount you pay subject to the air transportation excise tax for the airline? The answer depends on whether the seating is necessary. Given the smaller spaced allotted for each passenger, one conclude that premium seating is necessary. The IRS determined that it is in……
Do Inaccurate eFile Forms Invalidate a Tax Return?
If a taxpayer signs an eFile form and there are defects in the information included on the form, does this invalidate the tax return that is eFiled? The IRS addresses this in CCA 201945027. This IRS memorandum addresses an eFile form where the person who signed the form for a partnership even though he had……
Paying Personal Expenses from Corporate Bank Account
Can you avoid paying tax by paying your personal expenses from your corporate bank account? Is avoiding tax that easy? No, our system doesn’t work that way. The Moacir Santos v. Commissioner, T.C. Memo. 2019-148 explains how the IRS handles these situations. Facts & Procedural History The taxpayer owns a engineering and paving company. It……
Recover Money Paid to the IRS in Error
What if the IRS gets it wrong and then fails to respond to the taxpayer for several years. Can the IRS then agree with the taxpayer, but argue that the taxpayer responded late? The informal claim doctrine can help in these situations. The Chenette v. United States, No. 19-cv-02998-JCS (N.D. Cali. 2019) case provides an……
Qualifying for the Foreign Earned Income Exclusion
As tax attorneys in San Antonio, we see a lot of U.S. citizens whose oil-related jobs require they spend significant time overseas. The wages earned overseas can escape tax in the U.S. This is due to the foreign earned income exclusion. But this exclusion generates quite a few tax disputes with the IRS, which is……