By Keith A. Wood This is the last of three installments of this article. I. Bookkeeper Falls Victim to Section 6672 Trust Fund Recovery Penalty; Kazmi, TC Memo 2022-13. In Kazmi, a bookkeeper was found liable for the Section 6672 trust fund recovery penalty. The facts of this case are particularly sad. The bookkeeper, Mr. […]
By John G. Hodnette The Tax Cuts and Jobs Act of 2017 capped the deduction available to individual taxpayers under Section 164 to $10,000 for 2017 through 2025. That deduction includes state income taxes, real property taxes, and personal property taxes. To benefit taxpayers who own partnerships or S corporations, many states have enacted elective […]
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 […]