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By month:April 2006

How the Business Condo Escapes the Tough Tax Rules

The properly used business condo does not run up against the vacation-home, passive-loss, or entertainment-facility rules.

Big Price for Bad Records

Making a lot of money is no excuse for keeping bad records. Top off the bad records with failing to give adequate documentation to your CPA and you add to your misery index with negligence penalties. The taxpayer in this court case had to shell out about $5 million in taxes and over $1 million in penalties.

Terminated Insurance Salesman Subject to Self-Employment Tax on Renewal Commissions

In this court case, the taxpayer was self-employed when he made the original sales. The original sales produced the renewal commissions. Thus, the taxpayer was self-employed with respect to the renewal commissions.

Bad Records Destroy Deductions

The law requires the taxpayer to maintain records sufficient to establish his income and deductions. In select circumstances, estimates provide a rational basis for deductions. With respect to vehicle, entertainment, meals, travel, and gifts; estimates are out and neither the court nor the IRS may grant your deductions without the prescribed records.

Three New Rulings Where Home-Sale Profits Are Protected by Hardships

Wow! In one day, the IRS released three private letter rulings that provide a roadmap to the $250,000 (single) and $500,000 (married) home-sale profit exclusions for taxpayers who fail, because of hardship, the 2-out-of-5-year tests for ownership and use.

Deducting Golf

The discussion on the golf course does not make the golf deductible. What makes the golf deductible is the connection of the golf to the business discussion in a business setting.

Pencil Okay for Calendar

Both the IRS and the courts have approved pencil as adequate for tax entries.

Home Office

A marketing activity in the administratively qualified home office does not destroy the office in the home deduction.


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