Real estate investors regularly pursue new ventures that require substantial upfront investments before generating any revenue. A successful investor might purchase land for a luxury resort, spend hundreds of thousands on architectural plans and permits, and begin construction on facilities designed to serve paying customers. These early expenditures represent legitimate business development costs, incurred with……
Category: Tax Law
What Makes a Tax Debt “Legally Enforceable” for Passport Certification?
The IRS has a number of tools it can use to collect unpaid taxes. This includes liens and levies, offsetting refunds, and, since 2015, requesting that the State Department deny or revoke a taxpayer’s passport. But what happens when a tax debt is old and seemingly beyond the collection statute of limitations? Can the IRS……
How Much Tax to Pay to Sue for a Refund?
Say you run a business. The IRS audits your tax return and determines that you do not owe tax. It comes back a few years later and, even though your business is the same, determines that you owe tax. The IRS hands you a large tax bill. You do not agree with that the tax……
Converting a House to Rental Use
One of the more popular ways to build wealth with real estate is to buy a house with a loan, move into it, fix it up, and then borrow against the higher value of the property to obtain a down payment for a second house. The trick is often to add sweat equity to increase……
Software Failures Can be Reasonable Cause for IRS Penalties
What one expects as data or information a business would commonly capture and maintain has changed dramatically over time. Readers who are older will appreciate this. The truth is that businesses tracked financial ins and outs and a few other items in the 1980s and leading up to the early 2000s. It was the addition……
Income Tax Due for Business Use of Employee Tax Withholding
Business owners facing cash flow challenges sometimes look to available funds to keep operations running. When those funds include employee tax withholdings that should be remitted to the IRS, the IRS has a number of tools at its disposal to recover the withheld but un-remitted funds. For the most part this includes pursuing the business……
Does the IRS Have Authority to Certify ACA Employer Penalties?
The IRS has been sending notices to businesses about Affordable Care Act (“ACA”) penalties. The penalties are often very large in amount and, in many cases, come as a complete suprise to the business owners. This is particularly true for growing businesses that are right around the cutoff for the headcount requirements. Businesses with 50……
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……
How to Identify Physical Injury from Vague Settlement Agreements
Business owners and independent contractors sometimes receive legal settlements to resolve disputes. While most settlement proceeds must be reported as taxable income, payments for physical injuries or physical sickness can be excluded under specific sections of the tax code. This exemption can significantly impact the amount of tax due. The tax consequences focus on the……