Month: January 2017

Income Tax

INCOME TAX UPDATES

IRS NOT ALWAYS CORRECT

In Center vs. Commissioner, 1995 TCM 311, the Tax Court ruled that an IRS Notice of Deficiency is not entitled to a presumption of correctness, if the IRS does not produce any evidence in support of its determination. In Center, the taxpayer did not provide any proof of his income during the year at issue. He had not filed a tax return. The IRS took the earnings from a prior year and used the consumer price index to compute the alleged income for a subsequent year. The taxpayer denied he had made that much money. The taxpayer petitioned the Tax Court saying that the amount of income was wrong.

Continue reading “INCOME TAX UPDATES”

ASSET PROTECTION SOUGHT BY BIG SIX ACCOUNTING FIRMS

Offshore Asset Protection Trusts are becoming the rage of the nineties. The setting up of an Asset Protection Trusts involves the initial structure of a trust in an offshore jurisdiction. Properly drafted this gives one protection against creditors and eliminates the creditors abilities to attach assets.

For those of you who are a bit skeptical on the usage of offshore trusts and entities, please be aware that recently reported in the Business & Economics Section of the European, a European-based weekly newspaper, that London-based, Price Waterhouse and Ernst & Young have been consulting with the Island of Jersey to promote new laws allowing limited liability partnerships to become part of the Jersey legal systems. This would limit the partners from those UK firms that have set up limited partnerships on the Island of Jersey to only be liable for the amount of their interest in the firm. Current United Kingdom law indicates partners that they are personally liable for any claims against the partnership.

Continue reading “ASSET PROTECTION SOUGHT BY BIG SIX ACCOUNTING FIRMS”

PERSONAL INJURY LAWYERS GET TAX BREAK

In James F. Boccardo vs. Commissioner, 56 F.3d 1016 (9th. Cir. 1995) the 9th Circuit Court of Appeals modified well established case law and benefited personal injury lawyers. The 9th Circuit Court of Appeals held that all preparation and trial costs paid by the Boccardo personal injury firm, were deductible in the year paid, even through the cases might be settled years down the road. It might not seem like a big change for the public, but there are many ramifications for allowing the deductibility of expenses that might later be repaid. This article will analyze the Boccardo case and its meaning.

Continue reading “PERSONAL INJURY LAWYERS GET TAX BREAK”