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Receiving an LT11 (or a Letter 1058) Final Notice of Intent to Levy from the IRS can be overwhelming, especially when it arrives unexpectedly. This notice is a critical warning that the IRS intends to levy your assets if the outstanding tax liability is not addressed promptly. A levy is the IRS’s legal authority to…
In Lamprecht v Commissioner, TC Memo 2022-91 (link to case), a John Doe summons tolled the statute of limitations and allowed the IRS to assess a 20% accuracy related penalty more than 6 years after the Taxpayers’ original income tax returns were filed. The IRS was able to assess the penalty even though the Taxpayer…
On January 15, 2019, the IRS issued a revised IRS Lapsed Appropriations Contingency Plan. Under the revised plan dated January 15, 2019, the IRS is set to recall over 2,000 IRS collections employees, including employees to field calls from taxpayer’s that received collection notices. The recall is based upon authority that provides a limited exception…
Overview In Judge v Comptroller, No. 17-IN-00-0724 (Sept. 25, 2018)(link), the Maryland Tax Court overturned the Maryland Comptroller’s finding that Petitioner was personally liable for Maryland income tax withholdings for the period after the Petitioner was no longer involved in the business operated by a Maryland limited liability company (“LLC”). Background At issue was the…
In Hirsch v. Commissioner (here) the Tax Court held that the taxpayer’s “tax home” for purposes of the foreign earned income exclusion (I.R.C. section 911) was in the New York metropolitan area, despite the fact that the taxpayer resided in Israel, because regulatory restrictions on his professional practice limited his ability to communicate with clients…
Flume v. Commissioner (here) revolved around one noteworthy issue: did the taxpayer’s reliance on the advice of his tax return preparer spare the taxpayer from $110,000 in penalties for the taxpayer’s failure to report foreign investments on Form 5471? The taxpayer argued that he relied on the expertise of his tax return preparer to guide…
In Goldsmith v. Commissioner, T.C. Memo. 2017-20 (link) the Tax Court held that the payments from the shareholder’s S corporation were not wages. The Tax Court reasoned that the payments to the taxpayer constituted a non-taxable return of capital. The court reached this conclusion even though the taxpayer did not draw a salary for the…
Takeaway: When calculating insolvency for purposes of the insolvency exclusion of cancellation of indebtedness income, a pension plan may or may not be considered an “asset”. The determination depends on whether the taxpayer has an ability to utilize the equity in the pension plan (e.g., through a lump-sum distribution, loan, sale, etc.) as a means…
On Tuesday November 24, 2015, the IRS released Notice 2015-82 (the “Notice”). The Notice increased the de minimis safe harbor limit, for businesses without “applicable financial statements”, from $500 to $2,500. As a result of the Notice, many small businesses will now be able to expense certain items that would have otherwise been depreciated over…
Overview How can a corporation have a loss for tax purposes if it does not have any bank accounts, credits cards, or other lines of credit and it does not keep any books or records? The taxpayers in Rochlani v Commissioner found out the hard way.[1] Business Formation and Operations In 2006, Mr. Rochlani (the…
