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News, Articles & Resources

Category: Tax Controversies

S Corporation Shareholder Denied $8,000,000 Loss Deduction Due to Poor Structure of Loan

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An S corporation does not pay federal income taxes.  Instead, its income or losses pass through to its shareholders, and they report the income or loss on their federal individual income tax returns.  A shareholder can deduct losses, but only up to the adjusted basis of the shareholder’s stock and…

WHEN CAN STATES TAX TRUST INCOME? THE U.S. SUPREME COURT PROVIDES LIMITED GUIDANCE

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U.S. Supreme Court provides guidance (although minimal) on the interstate income taxation of Trusts. North Carolina Department of Revenue vs. Kimberly Rice Kaestner 1992 Family Trust, 139 S. Ct. 2213, 588 U.S.  (June 21, 2019).     When an individual owns several homes and travels between them, spending time in…

Is Registered Mail the Way to Go?

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Prior to 1954, the law treated tax documents as timely filed provided the document was physically delivered to the Internal Revenue Service (“IRS”) by the applicable deadline.  This rule left taxpayers with no recourse should timely mailing have occurred but through no fault of the taxpayers (e.g. postal service misplacing…

IRS Issues Fact Statement Sheet to Explain How it Contacts Taxpayers

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In order to help taxpayers avoid schemes and scams in which individuals (criminals) impersonate IRS employees, the IRS has released a fact sheet (FS-2018-12) explaining how the IRS contacts taxpayers. How IRS Generally Initiates Contact Most contacts are initiated through regular mail delivered by the US Postal Service. the IRS…

IRS Issues Notice Regarding SALT Workaround

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Earlier this month Governor Murphy signed a bill (S1893) allowing municipalities, counties, and school districts to set up charitable funds to pay for public services. Residents who donate to the funds can receive a credit for up to 90% of the amount paid toward their property tax bills and the…

Million-Dollar Penalty Upheld for Failing to Disclose Foreign Financial Assets

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In 2002, Letantia Bussell was criminally charged with concealing financial assets in offshore accounts.  Bussell was required to disclose her financial interest in an overseas account which she had to report in 2007 by filing a Report of Foreign Bank and Foreign Accounts (“FBAR”).  She failed to make the required…

Reform or Repeal – Regulations Identified as Imposing Undue Burden on Taxpayers

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The Secretary of the Treasury has identified eight regulations that it intends to modify or repeal as instructed by Executive Order 13789.  Under the Executive Order, the Treasury was given sixty (60) days to review all “significant tax regulations” issued on or after January 1, 2016 in order to identify…

International Reporting Failures Create Penalty and Statute of Limitations Problems

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An ever-growing number of businesses and individuals are going global. Familiarity with the U.S. tax forms that are necessary to properly disclose foreign assets and interests is thus paramount. Four critical forms – Foreign Bank Accounting Re-port (FBAR), 8938, 8621, and 3520 – are summarized, including applicable penalties. READ MORE…

A Whiff of Fraud?

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The New Jersey Tax Court recently addressed, for the first time, the State’s civil fraud tax penalty. The New Jersey Division of Taxation may impose a civil fraud penalty if any part of a state tax assessment is due to the taxpayer’s fraud. The penalty is 50% of the assessment…

Christie Vetoes ‘Home-Sharing’ Tax Bill

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UPDATE: On Friday, July 21, 2017, Governor Christie vetoed Assembly Bill No. 4587, which bill would have imposed State sales and use tax and hotel and motel occupancy fees on transient accommodations like those provided through Airbnb. In support of the veto, Governor Christie stated “I strongly believe that levying new…

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