Today in Tax Court

What happens when you have an investment loss? Is it ordinary? Capital? Deductible at all?
 
Today we walk through a recent case that leaves us with more questions than answers on "why" the loss got so big - but definitive foundations on what parts of this is deductible.
 
Theft losses are tricky - so always talk to a pro!

From Articles of Confederation to the Constitutional Amendment - how the US ended up with a permanent income tax is a wild ride.
In this episode, we run through how the US was originally funded with tariffs, what that did to divide the country, and the iterations of the income tax before arriving at what we have today.

What happens when you run a ranch at a loss for 14 years and use it against your profitable S-Corp?
Sometimes, you get caught.
We run through the 9 factor test used by the courts to determine if your weekend getaway qualifies as legitimate business expenses or an expensive hobby!
Check out the Plug on YouTube for the video!

A BIG win for taxpayers who deferred $30 million(!!!) in gain on real estate via a Tenancy in Common (TIC).
We get into what is a 1031, what is a TIC, and why I think this is one of the coolest cases I've done an episode on.
Enjoy!

$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.

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.

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!

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.

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.

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.