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IRS Tax Court Memo 2017-62: Castigliola v. Commissioner

wins-imageIn 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.

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IRS Tax Court Memo 2017-099: Katrina E. Taylor and Avery Taylor v. Commissioner

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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).”

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IRS TaxCourt Memo 2017-100: Carolyn F. Whitsett v. Commissioner

wins-imageIn 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 info@hoffmanestatelaw.com.

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IRS News Release 2017-102: Electronic Payment of User Fees for Letter Rulings, Closing Agreements and Certain Other Rulings

business lawWASHINGTON — 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.

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Another Reason to Have a Valid General Power of Attorney (GPOA)

douglas mcalpineMost married couples file their tax returns as Married Filing Jointly (MFJ) which is generally tax advantageous when compared to the other alternative which is Married Filing Separately (MFS).  It needs to be noted though, that filing jointly is an annual election by both spouses and cannot be used if one spouse does not agree to sign (a frequent issue during divorce proceedings).

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What Assets Pass Under My Will?

cassandra f. ceronThe foundation of most Georgia estate plans is a Will. Your Will is the legal document that dictates how your probate assets are distributed upon your death. But what are your probate assets? The easiest way to answer this question is to first define non-probate assets.

Non-probate assets are assets that pass outside of the probate estate to a named beneficiary (or beneficiaries) and independently of your Will. These are assets that pass by operation of law or under the terms of a contract.

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IRS Advance Release 2017-92: Work Opportunity Tax Credit (WOTC)

Joe Nagel Website PictureThe 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 info@hoffmanestatelaw.com.

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IRS Advance Release 2017-93: Startups Can Choose New Option for Claiming Research Credit

business lawA 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 info@hoffmanestatelaw.com.

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IRS Action On Decision 2017-4: Scott Singer Installations, Inc. v. Commissioner

Joe Nagel Website PictureThe 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 info@hoffmanestatelaw.com.

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