The U.S. Tax Court rejected a grandmother’s charitable contribution deductions of more than $85,000 for clothing she gave to Goodwill. The taxpayer bought heavily discounted clothing from a clothing store, often using customer “reward points.” She then deducted the full retail price on her federal tax returns. For example, she’d buy an item originally priced […]

The IRS has updated automatic accounting method changes to reflect the Tax Cuts and Jobs Act (TCJA). Revenue Procedure 2018-40 provides procedures by which a small business taxpayer may obtain automatic consent to change its method of accounting to a new method established under the TCJA. The method increases the availability of the cash method […]

The IRS announced it intends to issue proposed regs on ABLE accounts to comply with the Tax Cuts and Jobs Act (TCJA). ABLE accounts are state-run programs for the benefit of blind or disabled persons. Contributions are nondeductible, but account earnings grow tax-deferred. Distributions equal to the total of qualified expenses are tax-free. Under the […]

The U.S. Treasury Dept. has issued proposed regulations on the new 100% depreciation deduction that is part of the Tax Cuts and Jobs Act. The deduction lets businesses write off the full cost of most depreciable business assets, such as machinery, equipment, computers and furniture, in the year they’re placed in service. The proposed regs […]

The U.S. Senate approves additional funding for the IRS. The Senate has passed The Interior, Environment, Financial Services, and General Government Appropriations Act, 2019, which provides $11.26 billion for the IRS. This is an increase of $186 million above 2018 funding levels. Of this amount, $77 million is dedicated to implement tax reform. The bill […]

Married taxpayers who file a joint tax return are “jointly and severally liable” for the tax due on the return. However, spouses may be eligible for “innocent spouse” relief if they can prove they didn’t know about an understatement of tax. In one new case, the U.S. Tax Court ruled that a husband was granted […]

When taxpayers use their residences to conduct business or store business inventory, they may qualify for home office tax deductions, under certain conditions. The owner of a smog inspection business was required to maintain records for 3 years. He used his nearby personal garage to store the records and extra smog equipment and claimed tax […]

A business arrangement didn’t rise to the level of a partnership. The U.S. Tax Court ruled that a husband and wife, who had a loose business arrangement with another couple, failed to prove the existence of a partnership under the criteria established by the court. The two couples formed a mortgage business that the court […]