Blog - Archives for March, 2011.



Tax Court rejects IRS's attempt to hold entrepreneur liable for unpaid taxes of sold business

Posted On: Thu 24th Mar, 2011 at 02:58pm

The Tax Court has held that an entrepreneur who sold a substantial portion of the assets of a wholly-owned business wasn't liable as a transferee for the business's taxes. He deposited a portion of the sale proceeds into an interest-bearing account in his own name, and provided a promissory note to the business in the same amount, then sold his stock in an unrelated transaction in which a portion of his promissory note to the business was extinguished in exchange for the redemption of a portion of his stock. The overall facts of the case showed that the transactions were entered into separately and that they weren't fraudulent. Douglas R. Griffin, TC Memo 2011-61

"Loans" from wholly owned corporations were unreported constructive distributions

Posted On: Thu 24th Mar, 2011 at 02:56pm

The Tax Court has concluded that a husband and wife failed to report constructive distributions from their respective wholly owned corporations, rejecting their claim that these amounts represented shareholder loans. The taxpayers took funds from their corporations' operating accounts (via checks, withdrawals, and transfers) to pay their own and their children's living expenses. Knutsen-Rowell, Inc., et al., TC Memo 2011-65

Disaster-affected businesses allowed to defer gain on involuntarily converted inventory

Posted On: Thu 24th Mar, 2011 at 02:54pm

In a Technical Advice Memorandum (TAM), IRS has determined that inventory held by a corporation that was involuntarily converted in a federally declared disaster constitutes property held for productive use in a trade or business for purposes of Code Sec. 1033(h)(2). Although inventory arguably isn't ΓΆ

Can you elect to step-down from 100% to 50% bonus depreciation?

Posted On: Thu 24th Mar, 2011 at 02:53pm

The 2010 Tax Relief Act included the best terms ever for bonus first-year depreciation, namely a 100% writeoff of qualifying property in the placed-in-service year. However, not all businesses will find it desirable to use the bonus depreciation rules to front-load their depreciation deductions to the maximum amount possible. It's clear you can elect out of bonus depreciation entirely, but can you elect to step-down from 100% to 50% bonus depreciation? For now, at least, the answer is uncertain, as the recently released Blue Book and IRS Instructions to a tax form offer contradictory guidance.

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