By John G. Hodnette Since its enactment on March 30, 2010, in connection with the Affordable Care Act, Section 1411 has assessed an additional 3.8% income tax on individuals, estates, and trusts on the lesser of net investment income (“NII”) or the excess of the taxpayer’s modified adjusted gross income over the threshold amount. There are […]
By Keith A. Wood 1. Taxpayer Denied a Bad Debt Deduction even though the Borrower had Cancellation of Debt Income; Kelly v. Commissioner, 139 F.4th 854 (9th Cir. 2025). Between 2007 and 2010, Mr. Kelly loaned millions of dollars to his business entities. In December 2010, Mr. Kelly cancelled a portion of the debts his […]
By John G. Hodnette When an S corporation sells its assets, often part of the purchase price is paid via a promissory note issued by the buyer. These promissory notes are part of the purchase price and reported on the installment sale method in Sections 453, 453A, and 453B. Under that method, gain on the sale […]
By Kimberly B. Tyson Of the three forums for judicial review of a federal tax dispute, only the Tax Court is a pre-payment forum, meaning a taxpayer can have a tax case heard by the court before paying the tax. In 2024, approximately 80% of the 20,925 petitions filed in the Tax Court were by […]
By John G. Hodnette The 2017 Tax Cuts and Jobs Act included Section 67(h), which eliminated miscellaneous itemized deductions for tax years beginning after December 31, 2017. The 2025 One Big Beautiful Bill Act made that disallowance permanent. One such eliminated deduction is for unreimbursed employee expenses. They include expenses for transportation, travel fares, lodging away […]
By Chris Hannum It is with deep sadness that we share the news of the passing of Steven (“Steve”) Horowitz, a former Chair of our Section (1990–1991) and a respected presence in the North Carolina tax bar for more than five decades. His loss is felt across our professional community, especially by those who practiced […]
By Brian C. Bernhardt The Qualified Offer rules are part of the broader framework for resolving federal tax disputes. As a general rule, taxpayers who prevail in disputes with the IRS may recover reasonable administrative and litigation costs (“Fees and Costs”) only if the IRS’s position was not substantially justified. However, the Qualified Offer rules […]
By Chris Hannum Dear Tax Section Members, I am honored to serve as Chair of the North Carolina Bar Association Tax Section for the 2025-2026 year. Our Section continues to play an important role in advancing knowledge, promoting collegiality, and providing opportunities for professional growth in the field of tax law. Key Initiatives for 2025–2026 […]
By John G. Hodnette Section 7704 provides a partnership is a publicly traded partnership if interests in the partnership are (1) traded on an established securities market or (2) readily tradable on a secondary market or the substantial equivalent thereof. A publicly traded partnership is generally taxed as a C corporation. That means it is subject […]
By John G. Hodnette As discussed in my February 2025 blog post Eligible S Corporation Shareholders, corporations generally cannot own the stock of S corporations, even if the owner is itself an S corporation. However, where an S corporation is the 100% owner of another corporation, it can make an election for the subsidiary to be […]