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Tax Section

Claim of Right Doctrine of Section 1341

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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…

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Federal Income Tax Update

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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.…

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Partnership Representatives

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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…

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Allocation of Income When a Partner Leaves a Partnership

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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.…

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Deemed Asset Sales Under Rev. Rul. 99-5

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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. §…

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Tax Benefit Rule

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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…

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How Are Restricted Stock Units Taxed?

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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.…

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Federal Income Tax Update: Part 4

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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…

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Recharacterizing Gain on the Sale of Depreciable Property Between Related Parties

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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…

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Changes to R&D Deductions and Credits

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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…

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