Tax court and the 90 day letter

Have you ever received a notice from the IRS before? These notices are generated typically due to a difference in interpretation between taxpayers and the IRS. A notice from the IRS can send you straight into “fight-or-flight” mode, and you better choose “fight”! A common notice is the CP3219N, a Notice of Deficiency. It is …

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Clarifying the 2021 changes to the R+D credit

Research (R+D) tax credits are quite lucrative, often bringing six figure and larger cash benefits to Architectural and Engineering (A+E) firms. R+D tax credits protect and improve cashflow by reducing tax liability dollar-for-dollar and in some cases providing refunds of tax previously paid. R+D credits can apply to both federal and state tax liabilities effectively …

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90 Days, the IRS and Tax Court – your probationary period

If you have received a notice of deficiency from the IRS, you probably already know that procrastination is not your friend when it comes to this notice. The IRS issues a statutory notice of deficiency, sometimes referred to as the 90 day letter, if there has been a redetermination of your tax liability. The redetermination …

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Favorable rulings do happen in international tax

I’m sure you all stay updated on your international tax court cases… oh wait, you don’t? That’s weird. The tax court recently ruled in favor of a company known as Grecian Magnesite Mining. Court Case: Grecian Magnesite Mining v. Commissioner, 149 T.C. 3 (2017). To give you a brief synopsis, Grecian Magnesite Mining (referred to …

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Hypothetical buyers and imaginary scenarios

Giustina (*) case dealt with the value of an approximate 41% limited partnership interest in a partnership that held timberland. Giustina Land & Timber Co. Limited Partnership (GLTC) owned more than 47,000 acres of timberland at the time of death of Natale Giustina. GLTC had operated continuously since its formation in 1990. Profits were generated …

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Tax Court Differs on Treatment of Built-In Capital Gains

When valuing a controlling or non-controlling interest in a C corporation that owns only marketable securities, a common method to apply is the net asset value method under the asset approach. Under this method, the fair market value of liabilities is subtracted from the fair market value of assets. Included in the liabilities is a …

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Tax Court Rule Changes

Many are aware of the last minute tax “extender” provisions passed in December 2015. But you may not be aware of the numerous other tax provisions passed in conjunction with this legislation. One of them being relative to Tax Court rule changes. First, you normally don’t want to find yourself in Tax Court. It can …

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The IRS and Section 2036

The IRS continues to look at family limited partnerships (FLPs) and whether or not they have been formed for a sufficient business purpose. Section 2036 of the IRS Code provides that the gross estate should include the value of any property to the extent a transfer has been made but the decedent has retained 1) …

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You Sure You Want to Get Married?

The Ninth Circuit Court of Appeals overturned a Tax Court case which had disallowed two California domestic partners from each deducting mortgage interest up to the $1.1 million limit. The Tax Court held that the $1.1 million mortgage interest deduction limitation applied on a per residence basis. Noting that the statute was ambiguous as to …

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The Importance of Adequate Tax Records

Failure to generate and keep adequate tax records to support a certain position can have costly results as detailed recently in Tax Court Memo 2015-95. In this case, a husband and wife purchased an oceanfront condo as a seasonal home never intending it to be their primary residence. A few years later, an unfortunate family …

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