Our laws have long said that taxpayers are free to structure their legal affairs to minimize their taxes. Congress has even provided very specific provisions to accomplish this. Section 1202 stock is an example. This provision is intended to encourage start-ups to take business risks by rewarding those who are successful by allowing them to……
Tag: Tax
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……
Double Tax on Inter-Company Transfers
There are those who make things happen. They are usually the ones doing what it takes even when doing so is difficult, tiring, and draining. They are the ones that often make personal sacrifices and take risks to succeed. They are the ones that had the luck or grit to stick with something to see……
Is Military Pension Taxable (Answered)
There are a number of tax breaks afforded to those in the military. This includes collection holds on unpaid taxes owed by members of the military to laws that exempt certain income from tax altogether. The exemption from paying tax on military pay for injuries is an example. The recent Valentine v. Commissioner, T.C. Memo.……
Retired Pilot Taxed on Flights Employer Provided to Relatives
A fringe benefit is a perk provided to an employee. These benefits can make many forms. It may include a company car, company meals, or even insurance. These benefits may or may not be taxable for the employee. The Mihalik v. Commissioner, T.C. Memo. 2022-36, case provides an opportunity to consider these rules. The Mihalik……
Wages for Foreign Researcher Are Taxable
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……
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……