Overview In Leyh v. Commissioner[1], the Tax Court held that the taxpayer’s time incurred while traveling from her home to rental properties to perform a variety of tasks with respect to 12 rental activities counted towards the test of whether the taxpayer was a real estate professional.[2] As a result, the taxpayer was considered a…
Overview The Tax Court determined that the extinguishment of the taxpayer’s debt took place in a closed tax year, even though FEMA issued a 1099-C[1] in an open tax year. As a result, the Tax Court held that the IRS was barred by the statute of limitations from assessing the taxpayer for the federal income…
Overview On Tuesday March 3, 2015, the Supreme Court handed down a unanimous decision in favor of the Direct Marketing Association, (“DMA”) in DMA v. Brohl (575 U.S. ____ )(March 3, 2015) and remanded the case back to the Tenth Circuit for further consideration. Although the decision did not come as a surprise, dicta in…
Is it possible to begin depreciating a building before the building opens its doors to customers? Although it seems unintuitive, the answer is yes. In the case of Stine LLC v. USA[1], a Louisiana federal district court held that the taxpayer’s retail building had been “placed in service” despite the fact that the retail stores…
Brief Background All persons engaged in a trade or business who, in the course of that trade or business, make payments of $600 or more to another person are required to report the payments to the IRS under section 6041 (e.g., Form 1099-MISC). [1] There are, however, exemptions under Treasury regulations.[2] Notably, returns of information…
Takeaway from Van Malssen v. Commissioner: In Van Malssen v. Commissioner, the Tax Court concluded that, for purposes of section 280A, travel days will only escape classification as personal use days if the principal purpose of the trip as a whole is to perform repairs and maintenance.[1] Overview of Facts in Van Malssen The taxpayers purchased a…
On October 17, 2014, the IRS released a field memorandum, FAA 20144201F, that discusses the ordering rule to be applied for the application of alternative tax net operating losses (“ATNOLs”) deduction to offset corporate alternative minimum taxable income (“AMTI”) when the taxpayer has made The Worker, Homeownership, and Business Assistance Act of 2009 – Section 13…
On Friday October 10, 2014, the U.S. Court of Appeals for the 8th Circuit overturned the Tax Court’s decision in Morehouse v. Commissioner and held, in a two-to-one decision, that CRP payments made to non-farmers constitute rentals from real estate for purposes of § 1402(a)(1) and are excluded from the self-employment tax (“SECA”).[1] What is…
On Monday August 18, 2014, the Maryland Court of Appeals released its decision in NIHC v. Comptroller of the Treasury.[1] The counsel for Nordstrom must have known that things were not going to go their way when the opinion’s opening paragraph analogized their client’s “intellectual property holding company” (”IPHC”) tax planning to the historically successful,…
On Monday July 14th, the Michigan Supreme Court held in a split decision that IBM had the right to elect to use the evenly weighted three-factor formula from the Multistate Tax Compact (“MTC”) to apportion its income in calculating its 2008 Michigan taxes. The Michigan Department of Treasury argued that the Michigan legislature’s enactment of…
