Entertainment Items Offered to Purchasers of Advertising Treated as Reductions of Purchase Price and Not Subject to §274 Limitations

January 02, 2015 by Ed Zollars, CPA

If a taxpayer purchases travel and entertainment items to give to customers who purchase specified amounts of advertising from the taxpayer, does the taxpayer treat that as a cost of sale or some other expense? And, regardless, does the taxpayer have to take into account the disallowance provisions of §274, such as the 50% disallowance of business entertainment?

Final Regulations Issued for Charitable Hospitals Community Health Needs Assessment (CHNA) and Other Provisions of §501(r)

January 01, 2015 by Ed Zollars, CPA

In Treasury Decision TD 9708 the IRS provided final regulations on the charitable health needs assessment (CHNA) requirements under IRC §501(r) for charitable hospital organizations that was originally enacted as part of the 2010 Patient Protection and Affordable Care Act.

2015 Filing Season to Start on January 20

December 31, 2014 by Ed Zollars, CPA

The start of the 2015 individual tax filing will not end up being delayed due to Congress’ December enactment of the extender legislation, the IRS announced in News Release IR-2014-119.

No Relief Under §7430 for Administrative Fees Where No Notice of Deficiency Issued and Appeals Ruled in Favor of Taxpayer

December 31, 2014 by Ed Zollars, CPA

IRC §7430 is a provision in the tax law meant to allow taxpayers to recover costs when the IRS acts unreasonably. However, not all unreasonable conduct by the IRS that results in costs to the taxpayer will find redress in the provisions of IRC §7430, as the taxpayer in the case of Milligan v. Commissioner, TC Memo 2014‑259 discovered.

Taxpayer Claimed American Opportunity Credit in Wrong Year, No Credit Allowed

December 31, 2014 by Ed Zollars, CPA

Most tax professionals are fully aware that a tax benefit must be claimed in the specific year it is allowed and, generally, a taxpayer cannot pick and choose which year a benefit should be claimed in. But taxpayers, even if they aren’t trying to game a system, may find it difficult to figure out which year a benefit should be claimed.

Ruling Outlines Proper Treatment of Earn-Out When Sale Eventually Determined to Be a Loss Event Due to Failure to Meet Earn-Out Milestones

December 29, 2014 by Ed Zollars, CPA

When a taxpayer sells a business the sales price often is both payable over time and, rather than being a fixed amount, ends up being a number based on the performance of the acquired business. The latter is most often referred to as an “earn-out” provision and most often extends over a period of years.

Taxpayer With Single Triplex Rental Found to Be Real Estate Professional and Met Material Participation Standard

December 29, 2014 by Ed Zollars, CPA

A taxpayer was able to persuade the Tax Court, if not the IRS, that he was a real estate professional who materially participated in the rental of a triplex next door to his home in the case of Smith v. Commissioner, T.C. Summary Opinion 2014-112.

Memo Analyzes Proper Deduction of Mortgage Interest Where There are Multiple Obligors on the Note

December 29, 2014 by Ed Zollars, CPA

Dealing with a home mortgage interest deduction when the property is held by more than one person and those individuals are paying on the mortgage but not filing a joint income tax return creates issues when preparing the tax returns for those individuals. While taxpayers often believe the rule is “we can split it however we want,” Chief Counsel Advice 201451027 reminds us that there are rules that apply in these situations.