Category Archives: Tax Court

How Not to Deduct 85,491 Miles

Posted on April 30, 2013 by Russ

Having resided in Southern California, I know you can put a lot of miles on your car in that area. One engineering teacher learned the hard way from Tax Court that a written mileage log is essential if you want … Continue reading →

Posted in IRS, Tax Court | Tagged | 1 Comment

The Goal of Profit Making Businesses Is to Make Profits

Posted on February 21, 2013 by Russ

I resisted the urge this morning to make another pun; besides, Tony Nitti already did with his headline, “Former NFL Tough Guy Bill Romanowski Gets Laid Out By Tax Court.” Yesterday, the Tax Court decided two cases related to horse … Continue reading →

Posted in Tax Court | Tagged , | 1 Comment

Will the Third Time be the Charm for Appeals?

Posted on February 5, 2013 by Russ

The IRS Office of Appeals describes its mission as, [T]o resolve tax controversies, without litigation, on a basis which is fair and impartial to both the Government and the taxpayer in a manner that will enhance voluntary compliance and public … Continue reading →

Posted in IRS, Tax Court | Tagged | Comments Off on Will the Third Time be the Charm for Appeals?

Is the IRS Time-Barred From Imposing a Penalty on a Frivolous Amended Return?

Posted on September 17, 2012 by Russ

The IRS is allowed to impose a penalty on the filing of a frivolous tax return (Internal Revenue Code Section 6702(a)). Today, the Tax Court looked at a taxpayer who filed a normal tax return, but then filed an amended … Continue reading →

Posted in Tax Court | Tagged | 1 Comment

A Penny Saved, Lots of Dollars Lost

Posted on September 11, 2012 by Russ

The old cliche is, “A penny saved, a penny earned.” In real life, though, sometimes when you save some pennies you lose lots and lots of dollars. So was the case for two taxpayers who filed a case in Tax … Continue reading →

Posted in IRS, Tax Court | Tagged , | Comments Off on A Penny Saved, Lots of Dollars Lost

“I Don’t Need Proof: Since I Worked for the IRS and am a CPA, You Should Just Accept my Deductions.”

Posted on August 16, 2012 by Russ

The title to this piece is not a literal quote…but it’s effectively what today’s petitioner told both the IRS and the Tax Court. Needless to say, that’s not a good strategy. Bobby Perry worked for the IRS for a few … Continue reading →

Posted in Tax Court | 2 Comments

What a Drag

Posted on August 9, 2012 by Russ

A successful entrepreneur and life-long drag racing afficianado starts a drag racing business. The business isn’t profitable. The records, according to the entrepreneur, went down the drain when Hurricane Katrina destroyed their facility. The IRS alleges that the whole thing … Continue reading →

Posted in Tax Court | Tagged , | 1 Comment

Bad News for Medical Marijuana Dispensaries (and Espcially for the Vapor Room)

Posted on August 2, 2012 by Russ

Yet another important case came up while I am on vacation. Martin Olive operates the Vapor Room, a medical marijuana dispensary in California. He was audited, and the IRS held: – That the dispensary underreported gross receipts; – Could only … Continue reading →

Posted in Tax Court | Tagged | 2 Comments

The Tax War Against Medical Marijuana

Posted on July 15, 2012 by Russ

Think what you may about medical marijuana (legal in about 17 states), there is a certainty for federal income tax purposes: Marijuana is a Class I narcotic so deducting expenses on a tax return for a marijuana dispensary is a … Continue reading →

Posted in California, IRS, Tax Court | Tagged | Comments Off on The Tax War Against Medical Marijuana

Funding an S-Corp from an S-Corp: Distribute, Don’t Loan

Posted on June 7, 2012 by Russ

Joe Kristan has an excellent update that is a must-read for owners of multiple S-Corporations. The Tax Court validated a traditional S-Corporation planning technique: You can distribute basis from one S-Corporation to another. There are some caveats (aren’t there always?), … Continue reading →

Posted in S Corporation, Tax Court | Comments Off on Funding an S-Corp from an S-Corp: Distribute, Don’t Loan