Business-connected deficiency interest not deductible
Article Abstract:
The IRS did not allow claimant in the Allen case a refund of interest paid on an income tax deficiency originating from a business transaction because the deficiency was a personal interest. The claimant was a real estate developer and the majority shareholder in the business, a general contracting firm. He personally transferred his personal properties into the corporation to improve its finances. The corporation reported the income but the IRS deemed that the income should instead be reflected on the taxpayer's personal return. He then deducted the interest he paid on the deficiency which he claimed arose from his business activities. However, the IRS viewed the interest as personal in nature and did not honor the deductions.
Publication Name: Practical Tax Strategies
Subject: Law
ISSN: 0040-0165
Year: 1999
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Tax practitioner privilege: a safety net with many holes
Article Abstract:
Section 7525 of the IRS Restructuring and Reform Act of 1998 is designed to give tax practitioners, such as certified public accountants, confidentiality privileges similar to attorney-client privileges on tax advice. However, limitations have been placed on Section 7525, it may only be used in non-criminal tax matters before the IRS and in non-criminal tax proceedings in US federal courts. It is also not applicable in written communications between an authorized tax practitioner and a representative of a corporation for tax shelter purposes. Tax practitioners have to be aware that the privileges extended to them under Section 7525 is limited to tax advice matters only.
Publication Name: Practical Tax Strategies
Subject: Law
ISSN: 0040-0165
Year: 1999
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A 'simple' strategy for employees with outside earnings
Article Abstract:
Retirement planning using SIMPLE (savings incentive match) plans for highly-compensated employees (HCEs) is discussed. SIMPLE plans are available to small businesses and self-employed persons in cases where no qualified plan exists, and are useful for HCEs with self-employment income. The need to examine the interaction with other plans is discussed.
Publication Name: Practical Tax Strategies
Subject: Law
ISSN: 0040-0165
Year: 1999
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- Abstracts: Courts split on individuals' deficiency interest deduction. Tax court rejects stock aggregation; accepts minority discount
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