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Who qualifies as a real estate professional for tax purposes?

Leave a comment Business Expense, Business Expenses, Deductions, Expenses Deductions, Ordinary and Necessary Expenses, Taxable Income

Issue

Who qualifies as a real estate professional for tax purposes? More specifically, how does a taxpayer establish that he or she materially participate in rental activities, so that the rentals become non-passive, and any losses can be used without limitation?

Related Tax Rules and/or Regulations

Internal Revenue Code Section 469

Facts

Escalante earned income from teaching and his ownership of rental properties that he managed himself. His teaching contract required him to work a minimum of six hours per scheduled work day. As is customary with this type of contract, it contemplated that there would be a substantial number of hours spent outside the classroom engaging in tasks and activities like lesson planning, grading papers, parent-teacher consultations, and faculty meetings.

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Is there a business deduction for expenses incurred in marijuana related enterprises?

Leave a comment Business Expense, Deductions, IRC Section 61, News, Ordinary and Necessary Expenses, Qualified Expenses

Issue

Is there a business deduction for expenses incurred in marijuana related enterprises?Is there a business deduction for expenses incurred in marijuana related enterprises?

Related Tax Rules or Regulations

Internal Revenue Code Section 61

Internal Revenue Code Section 280E

Prior to 1982, an illegal business was able to reduce its revenue by the cost of any product it sold (Cost of Goods Sold, or COGS), as well as other ordinary and necessary general and administrative (G&A) business expenses like rent, packaging, utilities, travel expenses, and even the cost of a small scale used to weigh the controlled substances sold by the taxpayer. In 1982, the IRS enacted Section 280E which dictated that businesses that trafficked in controlled substances, as defined by the Controlled Substance Act, could no longer deduct its expenses.

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PAYROLL TAX: THE TRUST FUND RECOVERY PENALTY

Leave a comment Business Expense, Civil Liabilities, Civil Penalties, Representation, Trust Fund Recovery Penalty

Employers must deduct taxes fromPAYROLL TAX: THE TRUST FUND RECOVERY PENALTY their employees’ wages. Employers must make tax deposits and payments on time or they are subject to a Trust Fund Recovery Penalty (“TFRP”). To avoid the TFRP, employers must make sure that all employment taxes are collected, accounted for, and paid to the IRS when required . There are three parts or types of payroll or employment taxes withheld from the employee and reported on form 941, filed quarterly:

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DEDUCTING TRAVEL EXPENSES RELATED TO YOUR JOB

Leave a comment Business Expense, Business Expenses, Deductions, Ordinary and Necessary Expenses, Travel Expenses

Everyone at one time or another has wondered about deducting their work-related expenses from their income in order to pay lower taxes. Especially those expenses related to travel, whether these trips and excursions are to and from work or out-of-town. Federal law, specifically the Internal Revenue Code (“Tax Code”), allows individuals to deduct qualifying business expenses. What, if any, of a working taxpayer’s expenses related to travel are deductible as a business expense under the Tax Code?

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Top Ten Biggest Tax Breaks

Leave a comment Business Expense, Business Expenses, Capital Gains, Charitable Contributions, News, Representation, Social Security Benefits, Taxable Income, Veterans Benefts

A lot of speeches have been given of late about tax cuts,  tax breaks, deductions, etc.  So, who gets  the biggest tax breaks?  According to New  York Tax Attorney at Thorgood Law Firm, the Top Ten tax breaks are:

  1. $181 billion – Employer contributions towards workers’ medical insurance premiums and medical care
  2. $165 billion – Various retirement plan contributions and earning not taxed
  3. $101 billion – Mortgage Interest deduction
  4. $84 billion – Lower tax rates on long-term capital gains and qualified dividends
  5. $69 billion – Deduction for state and local taxes
  6. $46 billion – Deduction for charitable contributions
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