Court Decision Affects Real Estate Purchase Price And Depreciation

Recent Tax Court Decision Rebuffs Allocation of Purchase Price to Depreciable and Non-depreciable Real Estate by Taxpayer In a recent Tax Court decision, Nielsen v. Commissioner, T.C. Summ. Op. 2017-31 (May 8, 2017), the court found that the taxpayer’s allocation of the purchase price of rental real estate between land and buildings was unreasonable. Instead,…

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Research Tax Credit

Documentation Requirements By Functional Areas For Research Credit

Substantiating Research Credit Expenditures by Functional Area Two of our recent articles have focused on different aspects of the research credit under Internal Revenue Code (IRC) §41 which rewards taxpayers for engaging in qualified research activities by providing a tax credit equal to a percentage of certain eligible expenses. The first article focused on the…

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IRS Partnership Audit Regulations Reissued

IRS Reissues Centralized Partnership Audit Regime Regulations In November of 2015, Congress passed and Pres. Obama signed into law the Bipartisan Budget Act. Section 1101 of the legislation introduced a new audit regime for partnerships to replace the former rules instituted under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). Back in October…

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The Tax Rate Debate

As the summer wears on the Trump Administration and Congress are coming close to initiating their push for major tax reform legislation. If this task is accomplished, it will likely be the most significant change to the Internal Revenue Code (IRC) since the tax reform package passed and signed into law in 1986 during the…

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Property Transfer Taxation

IRS Changes Transfer of Property Rules

Temporary IRS Regulations Change Rules for Transfers of Property by U.S. Persons to Partnerships with Related Foreign Partners Internal Revenue Code (IRC) §721(a) provides, as a general rule, that a taxpayer does not recognize built-in gain on the contribution of appreciated property to a partnership. Rather the partnership assumes a carry-over basis in that property.…

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Tax Deductions

Start Up Expense Deductions and Amortization Explained

To deduct, or not to deduct, that is the question: Whether ‘tis nobler to write-off thy business expenses or suffer the slings and arrows of the outrageous fortune of capitalizing and amortizing said expenses under IRC §195   Internal Revenue Code (IRC) §162 allows those carrying on a trade or business to deduct ordinary and…

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Disguised Sale Transaction Regulations

Look! It’s a Bird, It’s a Plane, It’s a Disguised Sale: IRS Releases Final Regulations Pertaining to Disguised Sale Transactions between Partners and Partnerships   On October 14, 2016, the Internal Revenue Service (IRS) released Treasury Decision 9787 finalizing regulations pertaining to “disguised sale” transactions between partners and partnerships. Background Under general principles of partnership…

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Triple Net Lease Implications for Texas Franchise Tax

Triple Net Leases: Implications for Texas Franchise Tax The state of Texas imposes a franchise tax (also known as the “margin tax”) based on total revenue less an adjustment on taxable entities. Taxable entities include partnerships (both general and limited, but not general if all partners are natural persons), LLPs, corporations, banking corporations, savings and…

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Dallas Business CPA

New IRS Regulations For U.S. Disregarded Entities

New IRS Regulations expand Reporting Requirements for U.S. Disregarded Entities   Final regulations put in place by the Internal Revenue Service (IRS) now treat a U.S. disregarded entity, such as an LLC, wholly-owned by a foreign person as a domestic corporation separate from its owner for purposes of reporting, record maintenance and associated compliance requirements…

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IRS Offers Safe Harbor from Penalty Provisions for Informational Returns

  Internal Revenue Code (IRC) §§6721 and 6722 impose penalties for any failure to file or furnish a timely, accurate, and complete information return or payee statement (i.e., 1099s for dividends or interest, W-2s, etc.). The penalty equals $250 for each delinquent statement or return not to exceed $3 million in total. A taxpayer can…

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