By month: February 2007

The Value of Documents When You’re Arguing with the IRS

IRS auditors do most of the audits. They are not accountants (IRS agents are accountants); they might be wrong about tax law. It’s your responsibility to know the law and use it to prove your point. This article tells you how to use court rulings and documents that enforce your rights in your tax-law partnership.

Build Proof That You Filed Your Tax Return

Answer this question: Could you prove that you filed last year’s tax return? Is your proof credible enough that it will stand the scrutiny of the IRS?

AICPA Proposes Revenue Ruling on Health Insurance for S Corporation Owners

Many S corporation owners are improperly deducting their health insurance on page 1 of the 1040. The American Institute of CPAs submitted a proposed revenue ruling that it would like the IRS to issue concerning health insurance for the S corporation owner. The proposed revenue ruling does nothing to alleviate the problem in the headliner; instead, it would formalize the problem.

IRS Issues New Rules for Fixing Depreciation

Revenue procedure 2007-16 allows you to make a change in depreciation after you sell, trade, or abandon property. The new procedures make some prior procedures obsolete and make revisions easier.

IRS Releases Fees for 2007 Private Letter Rulings

Getting the IRS to give you an advance ruling on a transaction or deduction can be very worthwhile. It now costs money, but it might be worth getting the opinion you seek. If your ruling does not fit into the three major categories they list, your fees may vary. The highest fee is $50,000 for a pre-filing agreement.

S Corporation Loses Child Care Deductions

Tax court and the IRS establish that child care is not an ordinary and necessary expense and, thus, is not deductible. This ruling, though sloppy (we show you why), establishes a precedent. However, under section 129 in the tax law, the employer may provide child care benefits.

Tax Lawyer Fails Deductions

William Lenihan, a well-educated tax lawyer, lost every deduction he claimed on both his Schedule C consulting business and his Schedule E rental businesses because he did not keep good records. Know the law! Keep good records!

Reasonable Mileage

The law contains no reasonableness test for mileage. There are very specific rules for recording mileage. We recommend that you keep a mileage log for three consecutive months to prove your business-mile percentage.

Home Office as Administrative Office

You cannot qualify for the home office deduction if you have two administrative offices, one at home and one at your other office. Also, the rules only apply to you, not your staff.

Subaru Outback As a Truck

There are very specific regulations regarding what qualifies as an SUV for the $25,000 expensing. Does a Subaru Outback qualify?


[ View / Print full text of all articles in this issue ]