Taxing Lessons Case Summaries

Case — Trusts and Passive Activity Losses

THE QUESTION Can a trust meet the requirements for claiming the “real estate professional” exception to the passive activity rules? THE DISPUTE Taxpayer Says: The word “individual” in the regulation should be interpreted to include a trust. Internal Revenue Service Says: A trust is incapable of performing “personal services” because the regulation defines “personal services” to mean “any work performed…

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Taxing Lessons Case Summaries

Case — Prevailing Party Cost Recovery

THE QUESTION When can a taxpayer recover costs incurred in connection with an administrative dispute with the IRS? THE DISPUTE Taxpayer Says: The IRS should reimburse her for costs incurred in a dispute over her 2006 federal income tax return. Internal Revenue Service Says: The taxpayer was not the prevailing party in the dispute, and the reimbursement should be denied.…

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