IRS Provides Additional Guidance on Qualified Opportunity Zones

Posted by Kim Chen on July 31st, 2019

The IRS has released guidance that amplifies Notice 2018-48 , which lists the population census tracts that the IRS designated as Qualified Opportunity Zones (QOZs). Specifically, the agency has added two additional census tracts in Puerto Rico that have been designated as QOZs under IRC Sec. 1400Z-1(b)(3). Also, the IRS has published a Frequently Asked […]

Horse Breeding Activity Not For Profit, Losses Disallowed

Posted by Kim Chen on July 25th, 2019

Donoghue, TC Memo 2019-71 A married couple’s losses from their horse breeding activity were disallowed. The taxpayers failed to show they had a profit motive for the activity. Background. Taxpayers carrying on a trade or business can deduct ordinary and necessary expenses paid or incurred while carrying on that trade or business. (Code Sec. 162) […]

Payment To Ex-Husband Under Divorce Agreement Was Deductible Loss

Posted by Kim Chen on July 19th, 2019

Mihelick, (CA 11 6/18/2019) 123 AFTR 2d ¶2019-791 The Court of Appeals for the Eleventh Circuit has reversed a district court decision and held that a payment a divorcee made to her ex-husband pursuant to their divorce agreement was a deductible loss under Code Sec. 165(c)(2) and, therefore, qualified for treatment under the claim of […]

Should cloud computing setup costs be expensed or capitalized?

Posted by Kim Chen on July 13th, 2019

Moving to the cloud? Under current accounting rules, when a cloud computing (or hosting) arrangement includes a software license, it’s capitalized over the term of the contract. If not, the setup costs are expensed as incurred. Businesses told the FASB there’s no difference between on-site software applications and those managed in the cloud. So, starting […]

Tax Court Fined Independent Contractor $1,000 For Frivolous Argument

Posted by Kim Chen on July 7th, 2019

Staples, TC Memo 2019-75 The Tax Court imposed a $1,000 frivolous argument penalty under Code Sec. 6673 on an independent contractor who argued that his independent contractor commissions were not taxable income, but loans. The Tax Court warned the taxpayer several times that the argument was frivolous and a penalty might be imposed if he […]