In Castigliola v. Commissioner, a law firm claimed that the member managers of their professional limited liability company were “limited partners” under IRC Section 1403 and so not subject to self employment taxes on distributable shares of income over and above guaranteed payments paid to the attorneys as their compensation. The Tax Court found that the attorneys management power over the entity was not limited and therefore they could not be considered as limited partners under IRC Section 1403. The case follows a number of others holding that partners in limited liability companies were not “limited partners” for purposes of section 1403 and subjecting all of such partners’ income to self employment taxes. If you have questions about how this case might effect your limited liability company, we can help.
The following Tax Court Memorandum decision underscores the importance of substantiating auto and travel expenses. The court noted that in Rogers v. Commissioner, T.C. Memo. 2014-141, 108 T.C.M. (CCH) 39, 43. “Section 274(d) imposes relatively strict substantiation requirements for deductions claimed for (among other things) “listed property.” Under section 280F(d)(4) listed property includes any “passenger automobile.” No deduction is allowed under section 274(d) unless the taxpayer substantiates, by adequate records or by sufficient evidence corroborating her own statements, the amount, time and place, and business purpose for each expenditure. Sec. 1.274-5T(a), Sec. 1.274-5T(b), and Sec. 1.274-5T(c).”
In the case of Carolyn F. Whitsett v. Commissioner, Tax Court Memo 2017-100, the United States Tax Court found that the taxpayer, Carolyn F. Whitsett, relied in good faith on her accountant and was not liable for negligence related penalties when her CPA reported capital gain due to a stock redemption in the wrong tax year and failed to file a return. (see memorandum below) If the IRS has assessed a penalty against you and you would like help finding out if it may be abated, please give us a call at 404-255-7400 or email us at firstname.lastname@example.org.
WASHINGTON — Beginning June 15, taxpayers requesting letter rulings, closing agreements and certain other rulings from the Internal Revenue Service will need to make user fee payments electronically using the federal government’s Pay.gov system.
The IRS recently highlighted a reminder that a tax credit is available for those who hire long term unemployed workers. There are 10 categories of qualified hires, including if the employee has been unemployed for 27 weeks and has taken unemployment for a portion of that time. Businesses should remember to take advantage of the credit when looking to hire qualified workers. For more information regarding this or any other business or tax related issue, please contact us at 404-255-7400 or email@example.com.
A new option for small companies (less than $5 million in receipts) exists to apply up to $250k of research credit against payroll tax liabilities rather than income tax liability. For start ups the new option offers an opportunity to take credits that would otherwise be deferred if the company did not have taxable income to offset the credits.
For more information regarding this or any other small business legal concern please contact us at 404-255-7400 or firstname.lastname@example.org.
The IRS recently acquiesced in result only in the case of Scott Singer Installations v. CIR, TC Memo 2016-161. Mr. Singer had loaned his wholly owned corporation funds to stay afloat during hard times. The corporation made advances to Mr. Singer for payment of certain personal expenses. The taxpayer contended the advances for personal expenses were repayment of loans whlle the IRS argued they were compensation. The court found the payments were in fact loans because the taxpayer had acconted for them as such on his personal returns and it concluded there was a general expectation of repayment of amounts loaned. This case again shows the importance of documenting related party loans and properly accounting and reporting them. Loans should be documented, bear adequate interest, and collateralized. The IRS will only respect a loan as such if the taxpayer does as well.
For more information regarding this or any ther tax related concern please contact us at 404-255-7400 or email@example.com.
The IRS recently issued Notice 2017-29, which extends the deadline for participants in syndicated conservation easements to make their discosure (as required in Notice 2017-10), from June 21, 2017 to October 2, 2017. Notably, it does not extend the May 2nd deadline for material advisors and participants under Treas. Reg. 1.6011-4(e)(1). If you have questions about the new IRS scrutiny on conservation easements and the listed transaction/tax shelter rules, we can help. For more information please contact us at 404-255-7400 or firstname.lastname@example.org.
In this document, the IRS provides guidance on recent changes to Section 179 expense and bonus depreciation. Importantly, the 179 expense is increased for inflation to $510,000 and bonus depreciation is 50% for 2017 but decreases to 40% in 2018 and 30% in 2019. The latter change obviously provides a tax advantage for businesses to place qualifying prorperty into service in 2017 rather than 2018. For more information regarding this document or any other tax concern, please call us at 404-255-7400 or email@example.com.