Today in Tax Court

Episode 18 - Roots v. Commissioner

$3 million for a lodge that has bats and mice living in the walls.
Another $4 million to sue the builder and architect who built it all.
And all the taxpayer gets in the end is lost deductions and a 20% penalty which could have been avoided.
Today is all about classifying streams of income - passive, active, or capital - and how that can seriously change your tax owed.
Enjoy.

Episode 17 - History of US Income Tax [Special Edition]

How did we get here? You can learn all the strategy tips you want, but how did our current framework come into existence?
Over the last 150 years of our country, layers of tax law and reform have passed. In this episode, we take a broad overview of the major pieces of tax reform - through the lens of small business and their owners.
From our country's first income tax in 1861, to repeal, to constitutional amendment all the way to Trump 1.0 and 2.0. Hope you enjoy it.

Episode 16 - Norwich Comm. Group v. Commissioner

What happens when your accountant does your accounting AND signs the audit report? Nothing good.
In this case, the taxpayer overpaid tax on $7+ million of income and nearly lost the ability to get a deduction for the correction!
We take a deep dive into inside baseball of public accounting, accounting for mortgage originators, and how the taxpayer won this case. Enjoy!

Episode 15 - WT Art Partnership v. Comm; Pierce v. Comm.

Valuations gone wild - a $26 million Chinese art piece + Udder Covers LLC for $18 million.
How does the IRS think about valuations? What methods do they accept?
What makes a good valuation stand out from a bad one?
When do you need valuations? Gifting, donating?
How do you time these tax events well?
We take down all of these and more - enjoy.

Episode 14 - Nwafor v. Commissioner

Midwit meme meets Tax Court.
How a taxpayer used one-sided journal entries to reduce income and inflate expenses to the tune of $200,000+.
bUt ThE wOrK iS wOrTh sO MuCh mOrE! is a common reply when I tell people they can't write off X, Y, or Z as "donations" when they didn't pay tax on the income.

Episode 13 - Cantor Fitzgerald v. Commissioner

After the 9/11 Terror Attacks, millions of dollars in business aid flowed from various government agencies.
This case walks us through some of the more common arguments of what is taxable and not taxable income - even when it was in the form of disaster relief grants.
We also work through some of the other common types of ways people receive cash but don't have to include it in income.

Episode 12 - Hubert Ent. v. Commissioner

Did someone say HoldCo?
What happens when your HoldCo crushes it and now you want money out of it? If it's a C-Corp it's tricky.
Today's case walks through to common issues:
- Getting money out without being double taxed
- Shielding income via accelerated depreciation
Have a listen and enjoy!

Episode 11 - Weston v. Commissioner

The Tax Court refuses to subsidize "poor investment decisions" of the taxpayer.
When Mr. Weston invested $2.1 million of his own life savings into real estate in Indiana that went belly-up, he takes a buckshot approach to try to deduct it.
(1) Business Expense
(2) Business Loss (Worthless)
(3) Theft
All fell on deaf ears of the Court and Mr. Weston got stuck having to delay the deductions as basis or losses in later years.
A great episode on where and how business expenses can and should be deducted. Enjoy!

Episode 10 - Langlois v. Commissioner

2 for the price of 1 - Langlois v. Commissioner and Clark v. Commissioner
Langlois was a power line worker who dabbled in landscaping and a hair salon side hustles. But the IRS disallowed like $100,000 in deductions for essentially bad recordkeeping.
Clark was a movie memorabilia seller who tried to sneak one past the IRS by not paying self employment tax on his income. It didn't work.
Enjoy - and drop a rating for the show!

Episode 9 - Ogden v. Commissioner

One of my favorite topics - Operating Agreement tax allocation language!
Maybe one of the biggest things to get right when talking about partnership tax returns is the allocation of income and loss. It's not as straight forward as many think it is.
In Ogden v. Commissioner (from 1985), the taxpayer had the majority of her loss taken away after the Court saw the operating agreement didn't have the right language.
Enjoy!