By John G. Hodnette Revenue Ruling 99-5 discusses the tax treatment of the purchase of some but not all of the membership interests in a wholly-owned LLC. Pursuant to Reg. § 301.7701-3(b)(1)(ii), unless electing otherwise, a domestic LLC with only one owner is treated as an entity disregarded as separate from its owner for income tax […]
By John G. Hodnette The tax benefit rule was originally established by case law but later codified as Section 111. It provides a taxpayer is not permitted to retain the tax benefit of a deduction when later events demonstrate she is not entitled to it. The rule prevents taxpayers from receiving the benefit of a […]
By John G. Hodnette Employers often issue incentive stock to employees to promote retention and performance. Restricted Stock Units or “RSUs” are one of many ways to do so. Unlike similarly named restricted stock, an RSU does not initially provide the recipient with any ownership in the corporation. Rather, they are a contractual obligation of […]
By Keith A. Wood I. Termination of S Corporation Status was Inadvertent where Shares were Owned by an IRA. In PLR 202319003, the IRS again demonstrated its willingness to grant amnesty to inadvertent S corporation terminations. The IRS waived an S termination where shares were issued to an IRA. The corporation elected to be an […]
By John G. Hodnette Section 1239 provides gain on the sale or exchange of certain depreciable property between related taxpayers is taxed at ordinary income rates rather than the more typical capital gain or unrecaptured 1250 gain rates. Section 1239 applies to property that, in the hands of the transferee, is subject to depreciation under […]
By John G. Hodnette The Tax Cuts and Jobs Act of 2017 made changes effective in 2022 for the R&D deduction under Section 174 as well as the interaction between that deduction and the R&D credit under Section 41, as provided in Section 280C. Although the changes generally reduce the deduction in the first year […]
Recent Cases Involving the Mailbox Rule, Time Limits for Filing Tax Court Petitions, and Equitable Tolling for Late Filed Petitions By Keith A. Wood Over the last few months, the Fourth Circuit Court of Appeals and Tax Court have issued several interesting decisions involving the common law mailbox rule and the limitations on the Tax […]
By Robert Gallagher Greetings to the NCBA Tax Section! I would like to welcome everyone to a new year of section membership and activities. On behalf of myself and the Tax Council officers (Reed Hollander – Vice Chair; Chris Hannum – Treasurer; and Stacey Brady – Secretary), we look forward to seeing and working with […]
By John G. Hodnette Taxpayers primarily focus on the ability to take a deduction. Another consideration, however, is the timing of the deduction. Section 461 provides the rules for when a deduction can be taken based on both the timing regime the taxpayer has elected and the facts and circumstances surrounding the deduction. Most taxpayers […]
By John G. Hodnette Generally, Section 6501(a) prohibits the IRS from auditing a tax return and assessing additional tax after three years from the filing date. Thus, the IRS has only those three years to initiate and conclude an audit and assess additional tax. In some circumstances, however, the statute of limitations extends for longer […]