Taxing Lessons From Court Decisions

Keeping Up With the Paperwork

Image source: openclipart.org Substantiation of expenses, tax forms, receipts–keeping up with your tax responsibilities requires a lot of paperwork. Sometimes that paperwork may not even appear to have anything to do with your taxes. In T.C. Memo. 2012-10, the taxpayer sent a letter to an insurance company requesting that her life insurance policy be cancelled. She heard nothing from the…

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Taxing Lessons From Court Decisions

What’s in a Number? The Age of Separation

Image source: openclipart.org In tax law, as you might expect, numbers matter. Age is one of those numbers. For example, once you reach age 70-1/2, you’re required to take minimum distributions from your traditional Individual Retirement Account. Here’s another age milestone in tax law–55. That’s the age when you can qualify for the separation-of-service exception to the 10% penalty on…

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Taxing Lessons From Court Decisions

Right the First Time

Generally, workers prefer to be classified as employees rather than independent contractors. One reason: Employees do not have to file a Schedule C (Profit or Loss from Business (Sole Proprietorship)), or pay self-employment taxes. The taxpayer in Schramm (T.C. Memo. 2011-212) chose the opposite course. As an adjunct professor of economics, he wanted to be treated as an independent contractor…

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Taxing Lessons From Court Decisions

Complexity and Tax Planning

Image source: www.wpclipart.com Whenever a tax planner begins using jargon you don’t understand, you either ask for clarification or you move on to another professional who can explain things more clearly. In Robucci (T.C. Memo. 2011-19), the taxpayer did neither. Dr. Robucci, a psychiatrist, went to his CPA-attorney-tax planner to find a way to minimize the self-employment tax he paid…

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Taxing Lessons From Court Decisions

Form vs. Substance – Deductible Expenses

When you pay tax-deductible expenses for someone who’s not your dependent, who gets the deduction? In T.C. Memo. 2010-286 (Lang), the question arose when a mother paid medical bills and real estate tax for her daughter, and the daughter deducted those expenses on her personal income tax return. The IRS said mom wasn’t responsible for the expenses, and therefore couldn’t…

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Taxing Lessons From Court Decisions

Of Chivalry and Attorney Fees

Image source: www.wpclipart.com Where else but at the tax court can you learn about The Sovereign Military Hospitaller Order of St. John of Jerusalem, of Rhodes, and of Malta, which was established in the mid-eleventh century, and qui tam litigation, which first showed up in the thirteenth century–all in the same case? Other than the history lesson, most of T.C.…

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Taxing Lessons From Court Decisions

Timely Filing

Image source: Public Domain via WikimediaCommons Generally, as long as you’ve properly addressed an envelope and included the right amount of postage, the timeliness of your tax filing is determined by the postmark date. (See Internal Revenue Code Section 7502 and related regulations.) When you use a private delivery service (PDS) such as FedEx, the postmark date is either the…

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Taxing Lessons From Court Decisions

Recordkeeping Redux, with Humor

Image source: Minh Nguyễn via Wikimedia Commons You can’t read many tax court decisions without coming to the realization that lack of good records is a continually recurring issue. Each petitioning taxpayer seems to believe his or her situation is special and will be the exception that will make the court overlook the strict substantiation requirements of section 274(d) (documenting the…

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