In a new decision, the Tax Court upheld heavy penalties imposed by the IRS on a U.S. expat taxpayer who failed to report his ownership in two foreign corporations. The decision certainly serves as a cautionary tale for expats – the IRS is serious about foreign reporting and the U.S. court system has its back.
Tag Archive for Tax Court
We previously posted on November 7, 2016 we posted “Swiss Bank Rats Out NYU Business Professor – Results in Fine of $100M & Up To 5 Yrs in Prison” where we discussed that a former client of Credit Suisse Group AG who pleaded guilty to hiding $200 million from U.S. tax authorities was sentenced to seven months in prison after a judge granted him leniency for cooperating with prosecutors, a Justice Department official said.
If you thought FBAR penalties were more bark than bite, a recent U.S. District court case is sure to change your mind.
In United States v. August Bohanec et ux, USDC CD Ca., No. 2:15-cv-04347 (December 2016), the Court found that the taxpayer’s failure to file the FBAR was willful and affirmed the IRS’s enhanced FBAR civil penalty, i.e., a fine equal to the greater of $100,000 or 50% of the balance in their unreported accounts.
A loss from a legitimate business activity is fully deductible against other income. If the loss exceeds income, it can be carried forward to offset business income in future years. If an activity is deemed a hobby by the IRS, a loss cannot be deducted. The IRS has many criteria for determining whether an activity is a hobby or a business [See the author’s article on hobby losses for details].
This article will discuss the requirements to claim a child as a dependent and the requirements for a non-custodial parent to claim an exemption. It also discusses the ”tie breaker” rule, voluntary release of the exemption by the custodial parent to the non-custodial parent, and a recent Tax Court decision that dealt with this issue.
The IRS has stringent rules regarding taxpayers. In the case of using your business car for work, you must be able track everything perfectly. If you don’t, the IRS will not allow you to deduct expenses.
If you plan on deducting the miles you drive to attract and meet prospective clients, you would have to keep an accurate record of your travel. This would include:
Seven defendants were sentenced for their roles in online fraud schemes involving counterfeit checks, “mystery shopper” websites and work-from-home scams. Funso Hassan, 27, of Ibadan, Nigeria, and Anthony Shane Jeffers, 44, of Maryville, Tennessee, each pleaded guilty on April 12, 2016, to one count of conspiracy to commit identity theft and theft of government property and one count of use of mail and an interstate facility to distribute proceeds of a racketeering activity.
On September 30, 2015, we posted Judge Denies Injunctive Relief for FATCA Implementation!, where we discussed that an Ohio federal judge said that Senator Rand Paul, R-Ky., and others do not have standing in a challenge to the offshore financial account tax enforcement measures enacted in the Foreign Account Tax Compliance Act and they were not likely to succeed on the merits in the case. The case is Crawford v. U.S. Dep’t of Treasury, S.D. Ohio, No. 3:15-cv-00250, 9/29/15.
According to Law360, A Minnesota federal judge has denied the IRS’ request to enforce a summons against a local criminal defense lawyer the agency accused of hiding tax-related information, agreeing with his Fifth Amendment objection citing the right against self-incrimination.
The Tax Court rejected the IRS proposed transfer pricing method of re-allocating income between a U.S. parent corporation and its foreign subsidiary. Also, it ruled against the Service’s attempt to collect $1.36 billion in tax deficiencies, finding that the assessment did not reflect the economic realities of manufacturing these medical devices in a case involving Medtronic’s intellectual property licenses necessary to produce and sell high-risk, heavily regulated implantable technology.
The United States Tax Court has concluded that a pro se taxpayer who was a U.S. citizen and permanent Israel resident was taxable on his capital gains. Although the taxpayer argued that such gain was excluded from U.S. tax under one provision of the U.S.-Israel income tax treaty, the court nonetheless ruled the income taxable under the treaty’s “saving clause.”
After moving to Israel in 2009, Elazar Cole, a U.S. citizen, became a permanent resident of Israel in 2010. As a result of moving to Israel, he qualified for a ten-year Israeli “tax holiday,” which exempted him from Israeli tax on non-Israeli-source capital gain income. Indeed, Article 15, paragraph 1, of the Convention between the Government of the United States of America and the Government of Israel with Respect to Taxes on Income, U.S.-Israel, Nov. 20, 1975 provides that “[a] resident of one of the Contracting States shall be exempt from tax by the other Contracting State on gains from the sale, exchange, or other disposition of capital assets.”
Tax Court Did Not Consider To Be A Valid Return
In Reifler, TC Memo 2015-199TC Memo 2015-199, the Tax Court recently held that a joint return not signed by the wife was not a valid return and, as a result, imposed the failure-to-file penalty. In so doing, it rejected the taxpayer’s arguments that the return was valid either because it substantially complied with the valid return rules or because the wife intended to file a joint return and tacitly consented to the filing of a joint return.
Signatures on a tax return not only verify that a return has indeed been filed by the person indicated on the front page of a Form 1040 but also certify that all the statements in the tax return are made under penalty of perjury and are true, correct, and complete to the best of Read more