Category Archive for "Case Studies"

Lessons from Tax Court: Brothers Should Have Filed a Partnership Tax Return

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For federal income tax purposes, an unincorporated joint venture (or other arrangement under which several participants conduct a business or investment activity and split the income and expenses) is generally treated as a partnership. This general rule applies even if…

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How S Corporations Can Save on Federal Employment Taxes

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If you own an unincorporated small business, you may be getting fed up with high self-employment (SE) tax bills. One way to lower your SE tax liability is to convert your business to an S corporation. SE Tax Basics Sole…

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Lessons from Tax Court: Defaulting on Retirement Plan Loans May Cause Taxable Distributions

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In one decision, the U.S. Tax Court concluded that the IRS was correct in determining that a taxpayer who failed to make timely payments on loans from her employer’s qualified retirement plan defaulted on the loans and received deemed taxable…

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Tax Court Disallows Deductions for Costs to Expand General Knowledge

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Here’s part two of last week’s case study on Business Deductions for Education Costs: In another recent Tax Court decision, a married couple (a college professor and librarian) weren’t allowed to deduct as unreimbursed employee business expenses the costs of…

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Lessons From Tax Court: MBA Costs Can Be Deductible, But Don’t Get Carried Away!

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As an employee or self-employed individual, can you deduct the cost of getting an MBA? What about expenses incurred to improve your general knowledge? Two recent U.S. Tax Court decisions provide answers to these questions. But, first, here’s some background…

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IRA Owner Taxed on Attempted Loan Transaction

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In another decision, the Tax Court concluded that a multi-step transaction intended to result in a loan from the taxpayer’s IRA to a third party — to be held by the IRA as an investment — resulted in a taxable…

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Tax Code Case Study

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Be Careful When Using an IRA to Hold Alternative Investments Using an IRA to acquire and hold non-traditional investments can be problematic. Non-traditional investments include things like stock that is not publicly traded, real estate and precious metals. To hold…

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Case Study: Beneficial Capital Gain Treatment Allowed for Real Estate Developer

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In one pro-taxpayer decision, the 11th Circuit Court of Appeals concluded that more than $5 million of proceeds from selling rights to buy land and build a luxury condo project counted as lower-taxed long-term capital gain rather than higher-taxed ordinary…

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