Read more about the article Nonqualified Disclaimers to a Charity as a Planning Technique
Charitable Issues / Estate Tax Issues / Tax Articles

Nonqualified Disclaimers to a Charity as a Planning Technique

After your exceedingly long discussion with Uncle Bill a few weeks ago regarding his FBAR filing requirements, there has been total radio silence between you and Bill—not that you mind it in the least bit. The first day of fall came and went, but apparently no one told Florida. It was 85° outside on September 22nd, and though a discolored oak leaf fell onto the hood of your car, you suspected that it was the gold-spotted oak borer (Agrilus coxalis) rather than the changing of the seasons. Little flatheaded bastards. In the bottom of the second inning of your eight-year-old son’s first baseball game of the year, your pocket begins to buzz, and sure enough, Uncle Bill’s name pops up on the caller ID.  You let the call roll to voicemail, and you are surprised five minutes later when the phone buzzes again letting me know that Bill has left…

2 Comments
October 3, 2021
Business Related Issues
All Articles / Business Related Issues / Tax Articles

Effect of the Build Back Better Act on Corporate and Partnership Taxation

On September 15, the House Ways and Means Committee voted to approve sweeping changes to the Internal Revenue Code through the Build Back Better Act, which proposals, if ultimately passed, will have a significant effect on the taxation of corporations and partnerships. We discussed the changes proposed to affect estate and gift taxation in an earlier article. In this article we explore the effect of the Build Back Better Act on corporate and partnership taxation. The most widely talked about proposal is the increase to the corporate tax rate, but the proposed legislation contains a number of other equally important changes, including a number of international corporate tax issues. However, this article will not touch on the international issues; instead, we’ll focus on the effect that the proposed changes will have on domestic corporations and partnerships. New Corporate Provisions Increase in Corporate Tax Rate The Ways and Means Committee proposed…

1 Comment
October 3, 2021
Income Tax Issues
Income Tax Issues / Memorandum Opinions / Tax Opinions

Estate of Morgan v. Commissioner
T.C. Memo. 2021-104

On August 23, 2021, the Tax Court issued a Memorandum Opinion in the case of Estate of Morgan v. Commissioner (T.C. Memo. 2021-104). The primary issues presented in Estate of Morgan were whether the petitioners (1) are entitled to deductions claimed on Schedule C for expenses incurred by Falcon, LLC (Falcon), and Falcon Legacy, LLC (Legacy); (2) are entitled to a net operating loss deduction attributable to an alleged NOL carryover from tax years 2010 and 2011; and (3) are liable for an accuracy-related penalty under IRC § 6662(a). Background to Estate of Morgan v. Commissioner The decedent-taxpayer was a homebuilder, which was not the best field to be in around 2008, during the recession. In 2009, a receiver was appointed for the petitioners’ homebuilding entities. The decedent formed a company in 2008 (Legacy) to search for new business opportunities. The decedent-taxpayer also continued to fly aircraft that he owned…

0 Comments
October 3, 2021
Income Tax Issues
Income Tax Issues / Memorandum Opinions / Tax Opinions

Wood v. Commissioner
T.C. Memo. 2021-103

On August 18, 2021, the Tax Court issued a Memorandum Opinion in the case of Wood v. Commissioner (T.C. Memo. 2021-103). The primary issues presented in Wood v. Commissioner were whether the petitioner is entitled to exclude from gross income, as “foreign earned income” under IRC § 911(a)(1), the wages she earned while employed as a contractor on a U.S. military base in Afghanistan; and (2) whether the petitioner is liable for a late-filing penalty under IRC § 6651(a)(1) for 2015. Background to Wood v. Commissioner The petitioner was a defense contractor in Afghanistan. She spent 22 days in the United States during 2012, 42 days during 2013, zero days during 2014, and 40 days during 2015 (including June 7-23). The petitioner returned to Texas in April 2016 when her employment ended due to a military drawdown in Afghanistan; however, she immediately began looking for other defense contracting work in…

0 Comments
October 2, 2021
Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Kidz University Inc. v. Commissioner
T.C. Memo. 2021-101

On August 12, 2021, the Tax Court issued a Memorandum Opinion in the case of Kidz University Inc. v. Commissioner (T.C. Memo. 2021-101). The primary issues presented in Kidz University Inc. v. Commissioner were whether the settlement officer: (1) properly verified that the requirements of applicable law or administrative procedure were met; (2) considered any relevant issues Kidz University raised; and (3) considered whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of Kidz University that any collection action be no more intrusive than necessary. Initial Impressions of the Kidz University Inc. v. Commissioner How in the hell does an institution of higher learning, shaping the fragile minds of our youth, think that it’s alright to use a “z” in lieu of an apostrophe and a damn “s” to form a freaking possessive? True, it’s a daycare conglomerate, and true, it’s based in Arkansas……

0 Comments
October 1, 2021
Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Wathen v. Commissioner
T.C. Memo. 2021-100

On August 11, 2021, the Tax Court issued a Memorandum Opinion in the case of Wathen v. Commissioner (T.C. Memo. 2021-100). The primary issues presented in Wathen v. Commissioner were whether the petitioner failed to report income, whether the petitioner is entitled to deductions on Schedule C, whether the petitioner is liable for the failure to file penalty for 2010 and 2011, and whether the petitioner is liable for the substantial understatement accuracy-related penalty. Background to Wathen v. Commissioner During the years in issue, the petitioner was a bankruptcy lawyer; he listed legal services as his principal business or profession on his Schedules C. During those years he lived and worked in Houston, Texas; he listed Houston as his home-address city on his Forms 1040 and as his business-address city on his bank accounts. In 2009, the petitioner’s bankruptcy practice expanded to Austin and San Antonio, Texas, and throughout the years…

0 Comments
September 30, 2021
Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Mohsen v. Commissioner
T.C. Memo. 2021-99

On August 11, 2021, the Tax Court issued a Memorandum Opinion in the case of Mohsen v. Commissioner (T.C. Memo. 2021-99). The primary issues presented in Mohsen v. Commissioner were whether the Tax Court possessed jurisdiction to decide the taxpayer’s claim for refund and whether the taxpayer’s unpaid income tax liability could be offset by a claimed (time-barred) credit. Filing Background to Mohsen v. Commissioner On April 15, 2002, the petitioner mailed the IRS a Form 4868 (Application for Automatic Extension of Time To File U.S. Individual Income Tax Return) for 2001. The petitioner attached to his Form 4868 a $43,000 check. The IRS applied this amount to pay petitioner’s tax liability for 2001, and the remainder was sent to excess collection. On or about August 25, 2003, the IRS prepared a substitute for return on behalf of the petitioner for 2001. On October 29, 2015, the petitioner untimely filed…

0 Comments
September 29, 2021