Category: Tax Controversies
Tax Court Case Highlights New Jersey Inheritance Tax “3-Year Rule”
Much has been written about the pending repeal of the New Jersey Estate Tax in 2018. As is usually noted, the repeal of the estate tax does not have an effect on the New Jersey inheritance tax, which will remain in effect. The New Jersey inheritance tax will not apply…
PODCAST: When Civil Tax Cases Become Criminal
K&D associate, Patrick J. McCormick recently recorded a podcast, “When Civil Tax Cases Become Criminal“, with the Pennsylvania Institute of Certified Public Accountants on basics of criminal tax exposure. From the PICPA website: “Civil tax failures that elevate to criminal tax exposure is a scary thought for CPA practitioners. Patrick…
IRS Releases Notice 2016-66 To Further Contest Small Captive Structures
On November 1, 2016, the Internal Revenue Service released Notice 2016-66, identifying “micro-captive transactions” (including certain small captive insurance companies) as transactions of interest. Involvement in such transactions can, under Treas. Reg. § 1.6011-4, necessitate heightened reporting requirements, both for participants and for their advisors. More important from an overarching…
OVDP or Streamlined: Choosing an Offshore Disclosure Program
Patrick McCormick published a featured article in the July 11, 2016 edition of Tax Notes International, the most-cited international tax journal in the United States. The article, republished with permission from Tax Notes International, can be downloaded in PDF format using the link below. Click Here to download the full article! Patrick McCormick is…
Pending Legislative Update
A proposal to phase out the New Jersey estate tax passed Senate and Assembly committees on June 23. The proposal would increase the New Jersey estate tax exemption from $675,000 in 2016 to $1 million for 2017 decedents, $2 million for 2018 decedents and $3 million for 2019 decedents. After 2020, the State’s estate…
New Code Section 7345 Could Jeopardize Passports for Taxpayers with Significant Tax Debts
On December 4, 2015, President Obama signed into law the “Fixing America’s Surface Transportation Act” (officially labeled the “FAST Act”) – P.L. 114-94. The bill’s primary takeaway is a 5-year, $305 billion plan to modify and modernize American transportation systems. However, hidden within the bill is a new Internal Revenue Code section…
Tax Court Upholds IRS Allocation of NOL Among Members of Consolidated Group
Four members of Marvel Entertainment Consolidated Group had Cancellation of Indebtedness (“COD”) income totaling $171,000,000 under IRC Section 108. The Taxpayer took the separate entity approach in reducing the group’s net operating loss carryforward by the amount of COD income. The Taxpayer first allocated to the four members their share of the…
Tax Court Upholds Farmer’s Current Year Deduction for Packing Materials Used in Subsequent Year
Agro-Jal Farming Enterprises, Inc. is a family owned farming corporation that produces strawberries and vegetables (the “Taxpayer”). The Taxpayer deducted the amounts paid for the packing materials in the year they were purchased even though they were not used until the following year. The IRS claimed that the Taxpayer was…
IRS To Focus Criminal Investigations On Employment Tax Cases
Rebecca Sparkman, the Director of the IRS Criminal Investigation Division, said that criminal investigations will devote additional resources to employment tax cases. Employment tax cases are ones where the responsible person withholds income and employment taxes from its employees but does not remit the withheld funds to the United States Treasury. …
Reasonable Compensation for Personal Service Corporations
In Midwest Eye Center, S.C. v. Commissioner, T.C. Memo. 2015-53, the Tax Court held that $1 million of a $2 million bonus paid to the physician sole shareholder of a personal service C corporation was a non-deductible dividend distribution. Factual Background. The taxpayer, Midwest Eye Center, Inc. (“Midwest”), was a C corporation…