By Keith A. Wood I. Thanksgiving Holiday Extends the Due Date for Filing Tax Court Petition; Sall vs. Commissioner, 161 T.C. No. 13 (2023). Mr. Sall received a notice of deficiency dated August 25, 2022, which was sent to Mr. Sall by certified mail on August 26. The 90th day after August 26 was Thursday, […]
By John G. Hodnette Section 1032 provides no gain or loss is recognized by a corporation on the issuance of its stock to a new owner, whether in exchange for cash or otherwise. Similarly, a shareholder’s acquisition of stock for cash is not a taxable event but is instead an investment creating a cost basis under […]
By Keith A. Wood I. 2023 Audit Statistics; Chances of Being Audited. The 2023 Internal Revenue Service Data Book released in April 2024 contains audit statistics for years 2013 through 2021, as of the fiscal year ended September 30, 2023 (FY 2023). For years before 2020, the statute of limitations had generally expired as of […]
By John G. Hodnette and Savannah Rankich A partnership may elect to adjust its inside basis under Sections 734(b) and 743(b) by making a Section 754 election with the partnership’s annual tax return. The basis adjustment occurs, however, only when there is (1) a distribution of partnership property or (2) a transfer of partnership interest. 754 elections […]
By John G. Hodnette Prior to the Tax Cuts and Jobs Act of 2017, transfers between spouses or former spouses incident to divorce were treated as either (a) nontaxable transfers under Section 1041 or (b) alimony or separate maintenance payments under Section 71. Under that prior regime, alimony payments under Section 71 were included in the […]
By Herman Spence III Jack Cummings received Tax Notes’ inaugural Award for Excellence in Tax Commentary on May 3 at the ABA Tax Section’s annual meeting. Jack is counsel in Alston & Bird’s Raleigh and Washington offices. The quality and quantity of Jack’s tax articles and other scholarly work are extraordinary. Many of us are […]
By John G. Hodnette Under the claim of right doctrine, a taxpayer who receives income under a claim of right that is free of restrictions must include the amount in income in the year of receipt. That is the case even if the taxpayer may, in a future year, be required to return to the payor […]
By Keith A. Wood I. No Reasonable Cause Penalty Defense where CPA did not Give Specific Advice about Erroneous Items; Johnson v. Commissioner, TC Memo 2023-116 Mr. and Mrs. Johnson hired a CPA to prepare their tax returns for 2015-2018. From 2006 to 2013, Mr. and Mrs. Johnson improperly claimed depreciation deductions on certain commercial […]
By John G. Hodnette Congress adopted new partnership audit rules as part of Bipartisan Budget Act of 2015 (“BBA”), replacing the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”). As part of that change, the role referred to as the tax matters partner has been replaced by the partnership representative. The partnership representative can take […]
By John G. Hodnette The allocation of income when the ownership of an S corporation changes is discussed in my previous article Section 1377(a)(2) Elections for S Corporations. That article explains the default method for allocations of income when an ownership change occurs as to an S corporation is the proration method. However, one can make […]