Taxing Lessons From Court Decisions

Decisions — Shams and Frauds

Image source: Thomas Rowlandson "Evading the Toll" [Public domain or Public domain], via Wikimedia Commons

In between the question of the interplay between the exclusion of gain on the sale of a home and the recognition of deferred gain from an installment sale gone south (DeBough, 142 T.C. No. 17), determining when a passive investment was disposed of so suspended losses can be deducted (Herwig, T.C. Memo. 2014-95), and three whistleblowers seeking anonymity while trying to get the IRS to pay up, this week’s tax court releases included two requests for partial summary judgment.

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Taxing Definitions

Definition — Enhanced Deduction

Image Source:  © Radu Razvan Gheorghe, Dreamstime Stock Photos

Donations of inventory are generally deductible at the lesser of fair market value or your basis in the inventory.

However, if your business is organized as a C corporation, you can claim an enhanced deduction for contributions of inventory or other property when the donations serve a specific purpose, such as helping the ill, the needy, and infants.

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Taxing Lessons From Court Decisions

Substantiation of Charitable Contributions

Image source: Public domain via Wikimedia Commons TC Memo 2010-45 (Friedman) demonstrates the importance of complying with recordkeeping requirements for charitable contributions (as found in Code Section 170(f)(8)(A) and Income Tax Regulation 1.170A-13). In this case, the taxpayer claimed noncash charitable deductions for equipment donations. The IRS disallowed the deductions because the taxpayer did not provide contemporaneous written acknowledgements from…

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