By Keith A. Wood This is the second of three installments of this article. I. Contemporaneous Written Acknowledgment Rules for Charitable Contributions of Aircraft and Vehicles; Izen vs. Commissioner (5th Cir. 2022). Mr. Izen donated a 50% interest in an aircraft to a charitable organization. The Fifth Circuit Court of Appeals upheld the earlier decision […]
By Keith A. Wood This is the first of three installments of this article. I. Audit Statistics: What Are Your Chances of Being Audited? The 2021 Internal Revenue Service Data Book contains audit statistics for 2011 through 2019. Below are audit statistics for 2019 returns: A. Audit Rates for Individual Income Tax Returns. During FY […]
By John G. Hodnette In general, operating a business through an entity can provide limited liability in the event the entity is insolvent or goes out of business. Limited liability applies even to business taxes owed by an entity such as a C corporation. Some taxpayers have attempted to take advantage of that by causing […]
By John G. Hodnette Purchasers of a successful business have the reasonable concern that the prior owners will use their expertise to open a new business across the street that immediately competes with the one they just purchased. Noncompete agreements are key to ensuring that does not happen. How is the consideration paid for the […]
By John G. Hodnette A person who is both an employee and a partner in a partnership is not treated as an employee for tax purposes. Rev. Rul. 69-184 states “bona fide members of a partnership are not employees of the partnership [for employment tax purposes because a partner is] a self-employed individual.” An employee […]
By Herman Spence III Our colleague Wells Hall is now the chair of the ABA Tax Section. Congratulations Wells! Wells is an attorney with Nelson Mullins and a long-time mainstay of the North Carolina Bar Tax Section. Recently Wells publicly defended appropriate funding of the IRS. We appreciate Wells’ principled position, notwithstanding the temptation to […]
By John G. Hodnette An interest charge domestic international sales corporation (“IC-DISC”) is a special tax exempted domestic corporation that qualifies under Sections 991 through 994. The IC-DISC incentivizes (from a federal income tax perspective) exporting U.S. manufactured property. An IC-DISC is not the operating exporter but rather is a separate entity that receives a […]
By John G. Hodnette Among the tax-free reorganizations authorized by Section 368 is the F reorganization. Section 368(a)(1)(F) defines this type of reorganization as “a mere change in identity, form, or place of organization of one corporation, however effected.” This section prevents tax liability upon certain common changes in a business, including changes in a […]
By Wells Hall Bob Mendenhall, former Chair of the North Carolina Bar Association Tax Section, passed away on July 14, 2022, at the Charlotte Rehab Center, one day before his 68th birthday. His obituary is available here. When I spoke to Bob shortly before his death, he told me about his surgery to remove a […]
By John G. Hodnette As discussed in my January 12, 2022, blog post, Section 731(c) generally treats marketable securities as money in determining gain or loss on a distribution to a partner. Section 731(c)(3)(A)(iii) provides an exception in the case of marketable securities held by an investment partnership that are distributed to an eligible partner. […]