Tax Court Feed

By now, most Americans have wrapped up their annual tax-filing duties. And it's probably safe to say that a lot of folks are feeling a lot poorer after fulfilling their tax responsibilities. Some individuals, however, have tried to use a religious vow of poverty to avoid taxes altogether. In these egregious tax evasion cases, they haven't been successful. Poverty vow was a poor tax argument: Take the case of Timothy Dale Jackson. The 50-year-old orthopedic surgeon from Pass Christian, Mississippi, claimed to have taken a vow of poverty with a Utah-based church. Jackson said that his monetary sacrifice exempted him... Read more →

The hubby and I enjoy fine art. Most of our vacations include trips to museums. We even own a few original pieces by artists other than my grandmother, although I must say her work, like the Texas bluebonnet field below, is among my favorites. Her landscapes and more lighthearted pieces are very valuable to us. But Vera K originals and the handful of other paintings we own by more famous painters won't one day produce any big estate tax issues. Estate tax issues with art values: Wealthier art patrons, however, often find that their collections could produce tax problems for... Read more →

The best day in auto racing is two-thirds over, with the checkers having waved for the Formula 1 race along Monte Carlo's streets and at the Indianapolis 500. We race faces now await the green flag for NASCAR's longest race of the season, 600 miles that will end under the lights at Charlotte Motor Speedway. One of the reasons I like watching races is that I get glimpses of incredible pieces of engineering. That's especially true of the F1 vehicles. I seen some of these magnificent autos, both the racetrack and regular road versions, on trips the hubby and I... Read more →

Every tax filing season we hear the stories. Folks claim, often successfully, a variety of wacky tax deductions. There's the bodybuilder (No, not Arnold, but c'mon, what a great poster shot! I had to use it!) who was allowed to write off body oil as a business expense. The exotic dancer whose breast implants were deemed deductible stage props for her job. (Did you really think I'd go there with the image choice for this post?) The gas station owner who gave his customers free beer and then legally deducted the brewski promotion as a business expense. As all my... Read more →

When is fair market value not the appropriate valuation for tax purposes? When the Internal Revenue Service says it isn't. The value controversy is part of the tax fight now underway between heirs of New York art dealer Ileana Sonnabend and the IRS. Included in Sonnabend's estate is the Robert Rauschenberg work "Canyon." The piece, described as a sculptural combine, contains a stuffed bald eagle. That's right, the symbol of the United States. Sonnabend got an informal OK from Uncle Sam to hold onto "Canyon" even though the 1940 Bald and Golden Eagle Protection Act and the 1918 Migratory Bird... Read more →

Receiving one of the various 1099 forms usually means that you also received taxable income. Note the word "usually." A recent Tax Court ruling in the favor of one debtor underscores the importance of knowing credit and tax laws. And that ruling is why 1099 is the latest By the Numbers figure. The specific 1099 involved in the Tax Court case was Form 1099-C, issued when a taxpayer has unpaid debt forgiven by the creditor. This information form is filed because such amounts generally are taxable income. Read on to find out what happened to one man who got a... Read more →

First Golfer proposes end to golf course charitable tax deduction

President Obama is a golfer. And I suspect like a lot of duffers this weekend, he's watching The Masters tournament being played at Augusta, Ga. But Obama also is a golfer facing a $777 billion dollar federal deficit in the first half of fiscal year 2012. So his love of a good walk spoiled apparently was set aside in the drafting of the Fiscal Year 2013 budget. Obama's latest financial blueprint for the country includes a provision to eliminate charitable deductions for golf course easements. Under current law, explains the Green Book (aka the General Explanations of the Administration’s Fiscal... Read more →

Admit it. You bought a Mega Millions lottery ticket. Heck, as you can see from the photo below, we've been buying them for a few weeks. And yes, I am making a to-do list if our numbers come up in the $540 million drawing. Hey, someone has to win. It might as well be me (and the hubby). Taxes and gambling: I know you know that Uncle Sam considers lottery winnings, like other forms of gambling, taxable income. And when a jackpot is this big -- nearly $390 if you take the cash value option -- there's no question that... Read more →

Starting a business is a big move. It also can pay off at tax time thanks to the many deductions an owner can claim as he or she works to make it a success. But a businessman or woman better make sure that those tax breaks truly are for a business that's started with the intention of turning a profit. One business operator didn't convince the IRS or a Tax Court judge of his commitment to making money and he ended up owing $3,955.55 in added taxes. The core issue before Tax Court Judge Carolyn P. Chiechi was whether Theodore... Read more →

IRS follows tax court ruling and allows sex change costs as medical deductions

Someone alert Chaz Bono's accountant. Sonny and Cher's son might want to file an amended tax return since the IRS has decided that it will allow some sex change costs to be deducted as medical expenses. The IRS decision basically follows a U.S. Tax Court ruling last year in O'Donnabhain v. Commissioner. In that case, the Court held that the cost of hormone therapy and sex reassignment surgery qualified as deductible medical expenses. The IRS originally had disallowed the $5,679 medical expense deduction claimed by Rhiannon G. O'Donnabhain, who was born Robert Donovann, on her 2001 taxes as a cosmetic,... Read more →

California's statewide tax amnesty for owners of offshore accounts closes Oct. 31. That Halloween date also is the deadline for Cook County, Ill., which includes most of the city of Chicago and many of its nearby suburbs. But taxpayers who owe in Denver and Los Angeles have a bit more time to pay up and avoid many of the usual associated penalties. California's offshore voluntary compliance initiative: Encouraged by the Internal Revenue Service's success in collecting taxes from hidden offshore accounts, California tax collectors decided to get in on the act. Through Oct. 31, the Golden State is now allowing... Read more →

Tax Court grants innocent spouse relief to gambler's ex-husband

I love it when real life taxes coincide with my tax scribblings. Take the latest Weekly Tax Tip. It dealt with innocent spouse issues. And what just happens to pop up on the tax radar a few days later? A U.S. Tax Court ruling granting a husband innocent spouse status because he didn't know the full extent of his wife's gambling winnings. Leonard Harbin filed a petition with the Tax Court seeking relief from joint and several liability for his and his now ex-wife's taxes. The Internal Revenue Service disagreed, saying that Harbin didn't qualify for innocent spouse relief because... Read more →

Given the troubles caused by the many, many natural disasters this year, a lot of folks have been beseeching a higher power. I totally understand that. Whatever gets you through the tough times. But remember to ask the Internal Revenue Service for help, too. As I noted last week at my other tax blog, the federal tax code can offer some tax relief for disaster victims. And speaking of the convergence of taxes and religion, last week over at I also raised the question of whether it's time for the clergy housing tax break to go. That topic was... Read more →

Some nut jobs, folks who need lives, conspiracy theorists believe Kenneth Lay is living the good life on some faraway tropical island. They just don't buy that Lay, the former chief of Enron, died just weeks after being found guilty in May 2006 of 10 counts of fraud and conspiracy related to the collapse the energy company he founded. Lay's death meant that he didn't have a chance to appeal his convictions, so they ultimately were thrown out. And the erasure of the jury verdict meant that Lay's family (and if you go along with the fake death theory, the... Read more →

Many of you are at the same point in your lives as I am. As you're joining the "of a certain age" club, you also have an older parent whom you're helping out in any way you can. That's what New Jersey resident Anthony Olivo was doing. He provided nearly full-time care to his mother from 1994 to 2003, basically giving up his legal practice during those years. Following his mother's death, Olivo became administrator of her estate. He filed a tax return for the estate and claimed a deduction of $1.24 million as a debt he said the estate... Read more →

It usually pays to be judicious when it comes to taxes. But when taxpayers didn't exercise enough prudence, their tax actions entered the judicial realm in a couple of cases discussed last week at my other tax blog. Let's start with the U.S. Tax Court case in which the judge informed a couple that their tax professional's error is no excuse for their request to waive the penalty that was assessed in connection with the mistake. The couple had made $3.4 million on an investment transaction. Their accounting/law firm neglected to add that money to their income. The IRS noticed... Read more →

Professional golfer Retief Goosen, fresh off a Tax Court case in which he received a split decision on how Uncle Sam taxes his U.S. earnings, wants to make sure everyone knows that he's in good standing with the IRS. The tax case was never a matter of tax avoidance, Goosen told Golf Digest/Golf World magazine. Rather, the PGA and European tours champion agreed to be the tax guinea pig so that international professional athletes and entertainers know exactly what U.S. tax officials expect. "Now that the judge has given us a guideline, a new law, how to file, we can... Read more →

Two summer recreational staples are involved in this week's Follow-up Friday, although at much more intense levels than you and I participate. Let's start with golf. You might recall that a couple of professional golfers were fighting with the Internal Revenue Service over how to classify their earnings and just how much they owe Uncle Sam for what they made on U.S. golf courses. Retief Goosen, a South African by birth and a current resident of England, has received a ruling from the U.S. Tax Court, and it's not what he had hoped to hear. The Court determined that Goosen,... Read more →

A taxpayer's out-of-pocket expenses while doing volunteer work with a qualified charity generally are tax deductible, as long as the individual can prove the expenditures if the IRS asks. That's the costly lesson a cat lover learned when she claimed more than $12,000 in expenses incurred on behalf of a nonprofit that works with feral felines. The U.S. Tax Court subsequently slashed many of the allowable charitable deductions that were in excess of $250. The reason for the dramatic tax deduction reduction? Insufficient record keeping. Cat lady's case: Jan Elizabeth Van Dusen claimed $12,068 as a charitable contribution deduction on... Read more →

Retief Goosen and Sergio Garcia are going about their business at Augusta National, hoping to don a Masters' green jacket on Sunday. Both were doing pretty well in today's first round. Meanwhile, the professional golfers' tax attorneys are doing their jobs, trying to convince the IRS that the players' endorsement money was properly reported as royalty income, not payment for personal services. The difference is important. Personal services income is for wearing logo apparel, appearing in advertisements and making appearances for the sponsor at events. The rest of the money is royalties, essentially payment for the professional athlete's image and... Read more →