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News, Articles & Resources

Category: Tax Planning & Compliance

IRS Releases Inflation-Adjusted Amounts for 2020

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The income tax brackets, standard deduction amounts, and many other tax items are adjusted annually for cost-of-living increases. On Tuesday, November 6, 2019, the IRS released the adjustments that will apply for the 2020 tax year. Below is a highlight of some of those adjustments. Ordinary income. For married individuals…

Van Riper v. Director, Division of Taxation: New Jersey Supreme Court Hears Important New Jersey Inheritance Tax Matter

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On October 8, 2019, the Supreme Court heard oral arguments in the case of Van Riper v. Director, Division of Taxation, 2018 WL 4761357 (App. Div. October 3, 2018). This case involves an inheritance tax dispute in which the New Jersey State Bar Association (NJSBA) filed an Amicus (Friend of…

Interest Expense No Longer Characterized As Investment Interest

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The Tax Court, in the case of William C. Lipnick v. Commissioner, No. 1262-18, 153 T.C. No. 1 (2019), addressed the treatment of interest expense that was initially related to a debt-financed distribution. William Lipnick, the taypayer in the case, received interests in a partnership by gift and bequest from…

Penalty Relief for CBT Taxpayers

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The New Jersey Division of Taxation has announced penalty relief for taxpayers who made timely requests for an extended filing date for their 2018 New Jersey Corporation Business Tax Returns. Originally, the extended filing date for a 2018 calendar year corporation was October 15, 2019, the same due date as…

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…

Is My Client’s Small Business Subject to the Business Interest Expense Limitation?

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Beginning in 2018 the federal income tax deduction of business interest can be limited. The law provides a “small business” exception to this limitation.  However, businesses conducted in multiple related entities must be combined when determining if the small business exception applies. The limitation on business interest expense was originally…

Taxability of Refunds of Paid State and Local Taxes

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Internal Revenue Code (“I.R.C.”) § 164(a)(1) provides state and local property taxes and state and local income taxes are allowed as a deduction against income for the year within which such taxes are paid.  However, I.R.C. § 164(b)(b) limits the aggregate amount (the “SALT Limit”) of the deduction to $10,000.00…

Ninth Circuit Rejects IRS Argument as to What Constitutes Reasonable Third Party Notice in Summons Case

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I.R.C. Section 7602(c) prohibits the Internal Revenue Service from contacting any person other than the taxpayer with respect to the determination or collection of a tax liability of the taxpayer unless the taxpayer is provided reasonable notice in advance that third party contacts may be made. This prohibitive rule does…

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