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Tag Archive for Tax Court

No Gift Tax On Transfer Of Property To Trusts, Italian Ruling

Marco Rossi

In its ruling n. 21614 of October 26, 2016 Italy’s Supreme Court considered the issue of the application of the gift tax upon the transfer of property to a trust. The issue arises under the provisions of Law n. 262 of October 3, 2006, which reinstated the gift tax. Article 2 of Law 262, at paragraph 45 and 49, while providing on the scope of the newly reinstated gift tax, refers to “legal arrangements having the effect of creating constraints or limitation on the use, enjoyment and disposition of property”, for the final benefit of a person of for a specified purpose.

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Tax Court Upholds Penalties On Expat’s Failure To Disclose

Ephraim Moss

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.

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A Former Credit Suisse Client Gets a 7 Month Jail Sentence!

Ron Marini

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.

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Court Finds Couple Willfully Failed To File FBAR

Ephraim Moss

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.

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Hobby VS Business Loss – A U.S. Tax Court Case Ruling

Harold Goedde

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].

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Children’s Dependency Exemptions

Harold Goedde

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.

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How To Protect Yourself From The IRS On Travel Expense Mileage – Free Mile Tracking App

Kat Jennings

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:

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Seven Individuals Sentenced To Prison For Online Fraud Scams

William Byrnes

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.

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Courts Not Sympathetic To FATCA Challenges!

Ron Marini

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.

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Criminal Defense Lawyer’s 5th Amendment Privilege Trumps An IRS Summon

Ronald Marini

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.

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Tax Court Rejects Proposed IRS $1.36 Billion Tax Assessment

Ron Marini

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.

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U.S. Citizens’ Capital Gains Taxable Under U.S.-Israel Treaty

Ron Marini

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.”

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