Tag Archive for Tax Law

Tax Court In Brief: Case On Substantiation Of Expenses, And The Applicability Of Self-Employment Tax For Income Reported

Tax Court In Brief: Case On Substantiation Of Expenses, And The Applicability Of Self-Employment Tax For Income Reported

Freeman Law’s “The Tax Court in Brief” covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.

The Week of March 8 – March 12, 2021

Clarence J. Mathews v. Comm’r, T.C. Memo 2021-28 March 9, 2021 | Wells, J. | Dkt. No. 11829-14

Short Summary:  The case discusses the substantiation of expenses, and the applicability of self-employment tax for income incorrectly reported on a taxpayer’s tax return.

During 2011, Mr. Mathews (the taxpayer) worked for a trucking company. He also was a Minister of the Beulah Missionary Baptist Church. On his tax return, he reported his wage and pension income, but also included a Schedule C, Profit or Loss and stated that his profession was that of a Minister, reporting income and expenses mostly related to car and truck, repairs and maintenance and meals & entertainment.

Read More

Written by | Posted in Freeman Law • Self-Employment Tax • Tax Law

Business Vehicle Trade-Ins Under The New Tax Law

The Tax Cuts and Jobs Act (“TCJA”) has resulted in many changes in the tax laws. One little-noticed change affects trade-ins of vehicles uses for business. Let’s go over the tax changes for business vehicle trade-ins.

Old Tax Law: Tax-Deferred Exchange of Trade-In Business Car

Until 2017, you could do a tax-deferred exchange of a business vehicle. This was also called a Section 1031 exchange. With such an exchange, there would be no tax due on the sale of your trade-in. Read More

Written by | Posted in Tax Cuts Jobs Act • Vehicle Trade-Ins

New Law Includes A Mixed Bag Of Benefits And Limits To Tax Breaks For Businesses

The Tax Cuts and Jobs Act (TCJA), which was signed into law on December 22, will broadly impact businesses of all sizes.

The bill significantly reduces the income tax rate for corporations and eliminates the corporate alternative minimum tax (AMT). It also provides a large new tax deduction for most owners of pass-through entities and significantly increases individual AMT and estate tax exemptions. And it makes major changes related to the taxation of foreign income.

You may even be able to utilize some enhancements on your 2017 tax return. Read More

Written by | Posted in 2018 Tax Law • Tax Cuts and Jobs Act

New Tax Law Cracks Down On Home Mortgage Interest

For years, taxpayers have been able to deduct home mortgage interest on their primary and second homes as an itemized deduction, subject to certain limitations. The interest deduction was limited to the interest on up to $1 million of acquisition debt and $100,000 of equity debt.

Acquisition debt is debt incurred to purchase, construct or substantially improve a taxpayer’s principal or second home. So when you purchased your home, that original loan was acquisition debt, and if you later borrowed additional money that you used to add a room, pool, etc., that loan was also acquisition debt. However, if the total of all of your acquisition loans exceeded the $1 million limit, then the interest on the excess debt over $1 million was not deductible as acquisition debt interest.  Read More

Written by | Posted in Mortgages

Entity Classifications Under The New Tax Act

Welcome to 2018 and your new 2018 Tax Laws. If you are not aware, there is a new Tax Law that will affect all of you in our Professional care this year.

We know, understand and respect that each of your company’s DNA is unique. There are no simple answers to complex questions. Lately, the U.S. business media is abuzz with ideas and recommendations relative to the “best” corporate structure. While these are generic and generalized suggestions, some might have merit; there is little value without considering all the factors surrounding a business including, but not limited to: Read More

Written by | Posted in 2018 Tax Law

A Brief Overview of the Judicial Reasoning That Has Thwarted Foreign Asset Protection Trusts

Hale Stewart, Tax Advisor

As I have documented previously, there are several cases where courts have ruled against the grantors of a foreign asset protection trust, thereby nullifying the asset protection benefit. In this post, I want to briefly sum up the judicial reasoning used by the courts to thwart these trusts.

Read More

Written by | Posted in Foreign Income • Tax Law

Canadian Tax Help – Income Sprinkling Proposed Tax Changes

What are the proposed tax changes on sprinkling income using private corporations?

The Canadian government is proposing restrictions on income sprinkling to family members through dividends and capital gains. This targets private companies using shareholdings or a trust to split income among family members. Read More

Written by | Posted in International

Canadian Tax FAQs – Proposed Canadian Tax Changes

What are the proposed tax changes to private corporations that the Canadian government made in July 2017 and what do these changes mean for my company?

On July 18, 2017, the Canadian government proposed tax changes in an effort to remove tax advantages that small business owners have and address aggressive tax planning strategies involving the use of private corporations. These proposed changes are open for discussion until October 2, 2017, before being formally submitted for legislation. Read More

Written by | Posted in International

Minnesota Sales Tax Exemption For Capital Equipment

In 2015, Minnesota sales & use tax law changed to provide taxpayers with an upfront sales tax exemption on eligible capital equipment purchases. To claim this Minnesota sales tax exemption at the time of purchase, taxpayers should present a fully executed Minnesota sales tax exemption certificate.  If Minnesota sales tax is paid at the time of purchase, taxpayers may still submit subsequent refund requests. Note that purchases of qualifying capital equipment made before July 1, 2015 are eligible for Minnesota sales tax refunds as well as long as they are within the 42-month open statute of limitations allowed under Minnesota’s sales & use tax law. Read More

Written by | Posted in Sales And Use Tax

Kanye West And Captive Insurance—There Is A Connection

My knowledge of popular culture is at best limited – and quickly declining. I know who Kanye West is. That’s it. But despite my less than literate knowledge of popular culture, this story from the Washington Post perfectly illustrates why he should have had a captive: Read More

Written by | Posted in Captives

U.S. Expat Mistakes: Part II

I have been on many online forums, message boards, and groups for U.S. citizen expats over the past few years. Most posts you see are ones with frantic U.S. citizens overwhelmed with U.S. tax rules & regulations they have to keep up with. This, in addition to keeping up with their resident country’s tax laws, must drive one crazy. These forums provide quick answers; no wonder they are so popular! Read More

Written by | Posted in Expatriate

Determining Tax Residency In The United States

John Richardson

The advent of the OECD Common Reporting Standard (CRS) has illuminated the issue of tax residency and the desire of people to become tax residents of more tax favorable jurisdictions. It has become critically important for people to understand what is meant by tax residency. It is important that people understand how tax residency is determined and the questions that must be asked in determining tax residence. Tax residency is NOT necessarily determined by physical presence.

Read More

Written by | Posted in Citizenship
« Older Entries