The Seventh Circuit Court of Appeals upheld a Tax Court opinion that had denied former airline mechanic David Wilbert’s deductions for travel expenses incurred when he accepted assignments in various cities to keep his job under the airline’s employee “bumping” arrangement. Although the court was sympathetic to the taxpayer’s situation,
Advertisement
TOPICS / TAX
Business tax
Looking Through the QSub Election
The Tax Court denied a taxpayer’s claim that the interest expense deduction for IRC § 265 qualified tax-exempt obligations (QTEOs) held by a qualified subchapter S subsidiary (QSub) bank is exempt from IRC § 291(a)(3) financial institution preference item limitations. Petitioners Jerome and Doris Vainisi together owned 100% of an
FBAR Penalties Reduced for Six Months
The IRS has provided a framework for voluntary disclosure requests containing offshore issues, such as previously undisclosed foreign financial accounts and entities (March 23, 2009, memo from Deputy Commissioner Linda Stiff to the commissioners of the Large and Mid-Size Business Division and the Small Business/Self-Employed Division). The policy will remain
IRS Issues Proposed Regs on Determining Partners’ Distributive Shares
The IRS has issued proposed regulations on determining partners’ distributive shares of partnership items of income, gain, loss, deduction and credit when a partner’s interests vary during a partnership tax year (REG-144689-04). The proposed regulations also modify the existing regulations regarding a partnership’s required tax year. The proposed regulations provide
P&G Appeals Deduction Denial
In a case on appeal before the Sixth Circuit, household consumer goods manufacturer Procter & Gamble (P&G) and a related entity claim a refund of taxes paid on a foreign sales corporation (FSC) advance payment transaction (APT). The U.S. District Court for the Southern District of Ohio had denied the
Location Tax Incentive Not Federal Taxable Income
The IRS said in a coordinated issue paper that a location tax incentive paid or credited to a business by a unit of state or local government is not included in the business’s gross income but rather reduces its tax expense. A location tax incentive is a tax reduction by
Line Items
ANNUAL EMPLOYMENT TAX FILINGS ARE OPTIONALThe IRS issued proposed and temporary regulations under IRC §§ 6011 and 6302 (TD 9440) that no longer mandate annual filings by eligible employers in the reporting and paying of income taxes and Federal Insurance Contribution Act (FICA) taxes withheld from wages. The annual filings,
Taxes in Troubled Times
The IRS has acknowledged there’s plenty of pain to go around in the current economic downturn. Financially strapped taxpayers can take advantage of several relief initiatives and provisions that could lessen their tax bite. Those with investments posting a loss may be able to “harvest” it or at least reposition
Tax Considerations for Buying and Selling Property With a Burdensome Lease
An economic downturn like the current one can cause fixed lease obligations to become burdensome and trigger a significant negative impact on leasing in many markets. Real property and other business assets may have been leased in a sale-leaseback transaction, or the lessee may have simply desired use but not
Stimulus Act Eases Taxes for Individuals, Small Businesses
With the enactment of the American Recovery and Reinvestment Act of 2009 on Feb. 17, Congress delivered a smorgasbord of tax relief items to individual taxpayers and small businesses. While the specifics of those measures were the subject of whirlwind conference negotiations in Congress, the outcome reflects an attempt to
Capital Contributions Increase Stock, Not Loan Basis
Two brothers’ additional capital contributions to S corporations of which they were shareholders could not offset their ordinary income from payments for loans they made to the corporations, the Tax Court held. The court rejected their argument that their capital contributions restored the previously reduced basis of their shareholder loans.
Partner-Level Defense Rule Held Valid
The Tax Court upheld the validity of temporary regulations requiring a partner to raise partner-level defenses to penalties in separate litigation after resolution of unified partnership proceedings. Andrew Filipowski created New Millennium Trading LLC in 1999 to generate a deductible loss through the use of foreign currency options. In 2005,
Casting Doubt on the Accrual of Interest
Due to the recent turmoil in the credit markets, creditors and borrowers alike are evaluating the tax treatment of interest accruals related to troubled loans. Generally under Treas. Reg. § 1.446-2(a), interest is taken into account by a taxpayer according to the taxpayer’s regular method of accounting. Beyond the specific
IRS Reverses Position on Eligibility of Intangibles for Like-Kind Exchange Treatment
The IRS Office of Chief Counsel has announced a change in its position on the use of certain intangible property in IRC § 1031 like-kind exchanges (CCA 200911006). Previously (in Technical Advice Memorandum 200602034 and Field Attorney Advice 20074401F) the IRS had decided that registered trademarks, trade names, newspaper mastheads,
Service Gives Guidance on New 5-year Carryback of NOLs
The IRS issued guidance on how eligible small businesses may take advantage of the enhanced net operating loss (NOL) carryback provisions of the American Recovery and Reinvestment Act of 2009, PL 111-5 (ARRA). Under those provisions, eligible small businesses may carry back a 2008 NOL up to five years instead
Bill Would Limit Family Limited Partnership Discounts
In January, Rep. Earl Pomeroy, D-N.D., introduced HR 436, Certain Estate Tax Relief Act of 2009, which has been referred to the House Ways and Means Committee. The bill would continue the federal estate tax exemption at $3,500,000, and set the tax rate for estates exceeding that amount at 45%
International Tax Provisions Introduced and to Be Considered This Year
President Obama’s budget proposal for the 2010 fiscal year includes “certain international tax reform and enforcement measures,” but the only detail on this is the following one-line item from the associated revenue table: “implement international enforcement, reform deferral, and other tax reform policies.” This is estimated to raise $210 billion
IRS Lowers Interest Rates on Over- and Underpayments
The IRS announced that interest rates on tax overpayments and underpayments will drop by one percentage point for the quarter starting April 1 (Rev. Rul. 2009-7). IRC § 6621 establishes the interest rates on tax overpayments and underpayments. The rates are based on the federal short-term rate (most recently published
Appeals Court Finds $20 Million Bonus Reasonable
The Seventh Circuit Court of Appeals reversed a Tax Court decision that held that most of an executive’s $20 million compensation was unreasonable and therefore a nondeductible dividend (Menard, Inc., No. 08-2125 (7th Cir. 3/10/09), rev’g T.C. Memo. 2005-3). John Menard is founder and CEO of Menard Inc. In 1998,
Green Energy Incentives Among Recovery Act’s Tax Provisions
From fitting a home with energy-efficient windows to harnessing the power of waves and tides, activities that conserve energy or produce it from clean and renewable sources enjoy new or expanded tax credits in the American Recovery and Reinvestment Act of 2009 (ARRA). The next generation of electric vehicles gets
Features
SPONSORED REPORT
How to find the right CAS clients
The key to success with CAS is selecting the best clients. Tools like ideal client profiles (ICPs), buyer personas, and even artificial intelligence can help identify the businesses that best fit each CAS practice.
From The Tax Adviser
March 31, 2026
Current developments in taxation of individuals: Part 1
March 31, 2026
Current Developments in Taxation of Individuals: Part 1
March 6, 2026
