Business-connected deficiency interest not deductible

Article Abstract:

The IRS did not allow claimant in the Allen case a refund of interest paid on an income tax deficiency originating from a business transaction because the deficiency was a personal interest. The claimant was a real estate developer and the majority shareholder in the business, a general contracting firm. He personally transferred his personal properties into the corporation to improve its finances. The corporation reported the income but the IRS deemed that the income should instead be reflected on the taxpayer's personal return. He then deducted the interest he paid on the deficiency which he claimed arose from his business activities. However, the IRS viewed the interest as personal in nature and did not honor the deductions.

Cases, Interest deductions, Tax deductions

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Tax practitioner privilege: a safety net with many holes

Article Abstract:

Section 7525 of the IRS Restructuring and Reform Act of 1998 is designed to give tax practitioners, such as certified public accountants, confidentiality privileges similar to attorney-client privileges on tax advice. However, limitations have been placed on Section 7525, it may only be used in non-criminal tax matters before the IRS and in non-criminal tax proceedings in US federal courts. It is also not applicable in written communications between an authorized tax practitioner and a representative of a corporation for tax shelter purposes. Tax practitioners have to be aware that the privileges extended to them under Section 7525 is limited to tax advice matters only.

Analysis, Tax consultants, Tax administration and procedure, Accountants, Confidential communications

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A 'simple' strategy for employees with outside earnings

Article Abstract:

Retirement planning using SIMPLE (savings incentive match) plans for highly-compensated employees (HCEs) is discussed. SIMPLE plans are available to small businesses and self-employed persons in cases where no qualified plan exists, and are useful for HCEs with self-employment income. The need to examine the interaction with other plans is discussed.

United States, Employee Benefits & Services, Methods, Taxation, Compensation and benefits, Human resource management, Retirement planning, Executives, Executive compensation, Employee benefits

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