Estimated Tax Tip Savings: A hidden tax law precedent allows you to increase your second-home deductions by thousands of dollars. The taxpayers who created this strategy 23 years ago boosted their tax deductions by more than $1,700. At today’s costs, you can do 3-10 times better.
Dorance and Helen Bolton found themselves in the teeth of the IRS’s draconian vacation home deduction limits, but they did a wonderful thing.
They came up with a creative technique to increase their tax deductions by 49 percent. More important for us, they created a Tax Court precedent that you can now use to get the same great result for your property.
Here’s the most amazing thing—you’ll find no mention of this strategy in the tax regulations or IRS documents. Even after 23 years on the books, this remains a hidden technique you would not know about unless you read old court cases and tax treatises. (You have better things to do—that’s why we researched it for you here at the Tax Reduction Letter.)
Even though the IRS does not publicize it, this is a legal technique, ruled proper and strongly endorsed by the Tax Court. (The court described the tax-calculation method that the IRS still uses as “overkill with a vengeance.”)
Although the IRS does not appear to allow the Bolton method in its publication, the IRS is required by law to follow it because it is ... Log in to view full article.