After a 3-year hiatus, the Tax Section returns to beautiful Kiawah Island, SC for its annual meeting and CLE program, May 27-29, 2022. The 3-day program includes sessions on state and federal tax, tax policy, and planning, with added ethics and technology sessions. Speakers include well-known professionals from private practice, government, and education sectors. The […]
By John G. Hodnette Section 501(a) provides an exemption from income taxation for certain organizations. For decades, the IRS has provided a procedure allowing multiple organizations to receive tax exemption under the same umbrella central organization. Such group exemption process was instituted to relieve the IRS from the burden of individually processing a large number […]
By Keith A. Wood I. IRS Continues to Crack Down on S Corporation Disguised Wages. In Ward & Ward Company v. Commissioner, T.C. Memo. 2021-32, the Tax Court held payments from an S corporation law firm to its owner/shareholder were wages subject to self-employment tax rather than a Subchapter S distributions of profit. II. Court […]
By Keith A. Wood Tax Court Again Rules Emotional Distress is Not Physical Illness. In Tressler v. Commissioner, T.C. Summ. Op. 2021-33, the Tax Court held emotional distress damages are not excluded from income unless those emotional damages are attributable to a direct physical injury. Ms. Tressler brought a lawsuit against her former employer for […]
By John G. Hodnette Section 731(c) generally treats marketable securities as money in determining gain or loss on a distribution to a partner. Section 731(a)(1) provides no gain is recognized on a distribution to a partner except to the extent any money distributed exceeds the adjusted basis of the partner in the partnership interest. The […]
By Linda Nelson On November 1, 2021, the Chief Judge of the Office of Administrative Hearings, Donald van der Vaart, issued a memorandum announcing all OAH records of every tax case will be available to the public following an administrative law judge’s final decision. https://www.oah.nc.gov/ The promotion of transparency in North Carolina tax appeals began […]
By John G. Hodnette The most common penalties assessed by the IRS are the failure to file and failure to pay penalties under Section 6651. However, another common penalty is the failure to pre-pay penalty assessed pursuant to Section 6654 where a taxpayer who is required to make quarterly payments fails to make the payments. […]
By John G. Hodnette In 2017, North Carolina sales and use tax related to construction changed, creating a binary system. Although the Department of Revenue released Directive SD-18-1 to explain the new rules, they remain confusing to many service providers. Construction projects can be taxed under North Carolina sales and use tax in one of […]
By John G. Hodnette Holding real estate through an S corporation may seem like a good idea at first glance. Almost all professionals, however, recommend a partnership over an S corporation as the preferred vehicle to own real estate. S corporations and partnerships are both pass-through entities, meaning the income or loss generated by these […]
By John G. Hodnette For administrative convenience, federal and North Carolina law both provide that after a specific period of time, uncollected taxes are written off and released. This provides some relief for taxpayers who owe taxes for years long past as well as preventing tax agencies from fruitlessly pursuing old and cold liabilities. Section […]