Tax Blog/Blawg

Section 1031 “like-kind” exchanges have long been a useful tool for family and closely held business planning. For example, business enterprises have been able to exchange commercial or industrial buildings for larger facilities without incurring current tax liability. Similarly, individuals who have owned and operated rental property but no longer are able or wish to manage such property have utilized Section 1031 to exchange their property for “net leased” replacement property, thereby obtaining a dependable stream of rental income and deferring taxation of ...

I suspect that the answer of most readers will be "why would I want the IRS to find me in any event?" In fact, I can recall one client who actually asked me to have him removed from what he described as "the IRS mailing list."

Believe it or not, while it's always nice to be left alone, there are situations where it is important that the IRS have your correct address. For instance, what if there's a refund you're due, and the IRS is about to send you a check? Similarly, if you are in an audit or owe the IRS money, there are a variety of notices that the Internal Revenue Code requires the IRS to send to your "last known address," and if it sends them to that address, but you do not receive them, you will miss the opportunity to respond, as the law does not require that you actually receive the documents for them to be effective.

In any given year, a person is likely to send one or more of a fairly standard variety of items to the IRS. Tax returns, payments, responses to inquiries, and claims for refund are the most frequent but certainly not an exhaustive list. I've even known of some people who have sent "thank you notes" to IRS employees who seem to have gone above and beyond the call of duty to assist them. That said, how do you know the IRS actually received what you sent? This is not an idle question, as the IRS' failure to timely receive some of those items can result in serious problems for a taxpayer, ranging from ...

Wish you had planned your transaction differently for tax purposes?  In limited circumstances, the courts may allow a taxpayer to claim tax consequences consistent with a transaction’s economic substance even if inconsistent with its form.

In tax litigation involving structured transactions, when the form of a transaction produces favorable tax results for the taxpayer, the IRS often trots out various economic substance / form over substance-type theories to ignore or recast the form a transaction.  Conversely, when an alternative form of a transaction would produce more ...

With the new Democratic Administration coming in as well as concerns for the next round of assistance for folks hurt by the pandemic, we are hearing more support for an increase and expansion of the Earned Income Tax Credit.  Although basically in favor of this, I have some mixed emotions.

As far as the “good” is concerned, I think it’s terrific that Congress is taking into consideration the needs of the working poor, the families where there are one or two persons working 1 to 3 jobs, just to make ends meet, and usually falling short.  Without trying to demonize the folks who are not ...

There are few limits to human ingenuity.  We are witnessing this inventiveness as multiple vaccines roll out across the globe to tackle the Covid-19 pandemic.  Similar worldwide efforts may someday result in technologies to address climate change, and in particular the presence of atmospheric carbon gases which are widely-regarded as the cause. 

For now, it remains unknown what types of technologies will ultimately supply the cure.  Possibilities range from alternative energies that do not release carbon gases (the trick is finding such an energy that is reliable, abundant and ...

The two happiest days in a boat owner’s life are the day they purchase the boat and the day they sell it, or so the old adage goes.  The same saw may apply to the purchase of private jets, as they are massively expensive to maintain and operate, particularly if the owner hires others to deal with the many hassles of ownership.  Nevertheless, due to the pandemic, there has been a spike in private air travel.  Many wealthy individuals opt for chartering jets or joining private jet membership clubs like Net Jets, Blue Sky Jets, and Wheels Up.  But for some, there’s nothing like owning your own ...

Congress late last night passed legislation modifying the Paycheck Protection Program (the “PPP”). The Consolidated Appropriations Act, 2021 (the “Act”) provides $900 billion for COVID-19 related relief, which also includes $285 billion for the restart and expansion of the PPP, is expected to be signed by the President this week. First-time borrowers looking for an initial PPP loan and certain eligible borrowers with existing PPP loans have through March 31, 2021 to apply for the next round of PPP loans (once the SBA starts accepting applications). 

Borrowers with ...

Taxpayers should never be taxed on income they don’t receive.  But it happens.  It occurred in a recent decision, Koopmann v. United States, No. 09-CV-333 T (Fed. Cl. Sept. 30, 2020), and there are lessons that may be learned from what went wrong for the litigant in that case. 

In Koopmann, the taxpayer retired from United Airlines in 2000, and was covered by United Airlines' non-qualified deferred compensation plan.  About two years after the taxpayer’s retirement, United Airlines filed a Chapter 11 bankruptcy petition, which ultimately resulted in an approved reorganization plan ...

Hardly a day goes by when some politician or editorial person doesn’t suggest that we don’t need the IRS or should simply do away with it. Most of them come in connection with suggestions for changing the tax system to something like a national retail sales tax. What these people fail to understand, and this writer is not challenging the sincerity of their views, is that without the IRS, our tax gap would explode geometrically.

We call our system a “voluntary” one, but we remain short of “volunteers”: there are simply too many people and businesses who don’t get around to ...