Home office deductions restricted by Supreme Court

Article Abstract:

The Supreme Court has overruled two key decisions made by the Tax Court and the Fourth Circuit on the tax deductability of home office expenditures. Interpreting the provisions of Section 280A(c), the Supreme Court, in its 'Soliman' decision, ruled that eligibility for deductions under Section 280A(c)(1) needed to be determined through a subjective analysis that considers the specific facts and circumstances of each situation. The 'Soliman' decision has no immediate impact on deductions claimed under Section 280A(c)(2) and Section 280A(c)(3). The court's ruling does narrow the scope of eligibility by applying stricter standards for claims under Section 280A(c)(1), which states that deductions can only be claimed if a taxpayer's residence is proven to be the principal venue of a business. It does not, however, place any new restictions on a taxpayer's right to file for deductions under the other provisions of Section 280A(c).

Tax deductions, United States. Supreme Court, Home offices

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TAMRA significantly changes gift and estate planning for non-citizen spouses

Article Abstract:

Gift and estate taxation of property passing from U.S. citizens to spouses who are not U.S. citizens was changed significantly by the Technical and Miscellaneous Revenue Act of 1988 (TAMRA). The effects of TAMRA in such cases are described, covering qualified domestic trusts (QDT), gifts to non-citizen spouses, and marital deductions. Four special concerns in taking advantage of the TAMRA changes are outlined: probate property passing to a QDT; annual exclusion for present interests; termination of joint tenancies; and ambiguities concerning QDTs.

Taxation, Accounting and auditing, Estate planning, Aliens

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Establishing a program to provide for college costs requires careful planning after TAMRA

Article Abstract:

Many of the traditional income-shifting methods used for college education cost planning have been eliminated, but section 135 of the Technical and Miscellaneous Revenue Act of 1988 allows an exclusion of recognition for some interest income when it is used to pay for higher education costs. Methods of planning for such costs are described.

Planning, Finance, Universities and colleges, College costs, Higher education costs

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