Blog Archives

Marijuana Dispensary Income Tax Guidance Update: IRS Memo 201504011

Business Entity Selection and the Tax Consequences of Converting

As many of you know who follow my tax musings via this blog, I recently led a team of people that shepherded a Marijuana Dispensary through the IRS Examination and Appeals functions. The dispensary in question was owned and operated

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Posted in Amortization, Business Expense, Cash Transaction, Disallowed Expenses, IRS Appeal, IRS Audit, IRS Enforcement, IRS Examination, Marijuana

IRS Form 1099-misc Filing Requirements Defined as per IRC 6041

I was talking with a taxpayer the other day who registered as an LLC with Colorado Secretary of State. She developed an intriguing business model that is doing remarkably well according to the financial statement. As part of a tax

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Posted in Business Expense, Business Income, Cash, Cash Transaction, Employee Business Expense, Employment Tax, Entity Classification, FICA, Income, Independent Contractor, Payroll Tax Problems

Tax Treatment of Liabilities Assumed by a Corporation IRC 357 – What is Boot?

According to IRC 357(a) if property transferred to a corporation in an IRC 351 nonrecognition transaction is subject to a liability, the assumption of that liability by the corporation generally is not treated as taxable "boot" for purposes of determining the amount

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Posted in Abusive Tax Shelter, Basis, Boot, Capital Gain, Capital Loss, Cash Transaction, Deductible Expense, Distributions, Tax Guidance & Preparation

Trafficking under IRC § 280E

Business Entity Selection and the Tax Consequences of Converting

The Internal Revenue Code is a complex beast.  In the lunacy of it all I've been asked to define 'trafficking' as it relates to 26 USC § 280E - Expenditures in connection with the illegal sale of drugs which states as follows: "No

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Posted in Appeals & Audit Resolution, Asset Classification, Business Expense, Cash Transaction, COGS, IRS Mediation, Marijuana, Net Operating Loss, NOL, Tax Abuse, Tax Court, Tax Guidance & Preparation, Tax Problems & Requests

IRS Guidelines for Determining Noncompliance – The Cohan Rule

Business Entity Selection and the Tax Consequences of Converting

As I understand the Cohan rule under the IRS' Guidelines For Determining Noncompliance, taxpayers are allowed a deduction for an estimated amount of expenses when it is clear the taxpayer is entitled to a deduction but is unable to establish the exact amount of

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Posted in Cash, Cash Transaction, Cohan, Tax Court, Tax Deductible Expenses, Tax Guidance & Preparation, Tax Problems & Requests

Reporting Large Cash Transactions – IRS Form 8300

Businesses that receive more than $10,000 in cash in one transaction (or several related transactions) must file IRS Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business. According to Program Manager Technical Advice (PMTA) 2010-012. Reg. §1.6050I-1(c)(1) and

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Posted in Cash Transaction, IRS Audit, IRS Collections, IRS Examination, IRS Penalties, IRS Penalty and Interest Abatement

Cash Audit Technique Guide

The purpose of this audit techniques guide (ATG) is to provide guidance for the examination of income in a cash intensive business. This guide can be used during all phases of the examination but is not all-inclusive The accurate reporting

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Posted in Audit Technique Guide, Cash Transaction

The easist way for investment ‘traders’ to report transaction gains and losses to the IRS

According to the instructions for Schedule D (page 6), instead of entering the details of each transaction separately on Schedule D or D-1, you can attach a statement containing all of the same information as Schedules D and D-1 as

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Posted in Capital Gain, Capital Loss, Cash Transaction, IRS Examination, Stock Options, Tax Guidance & Preparation

Keeping Good Tax Records: IRS Publication 583

The Perturbing New Treatment of Patents Under the Tax Cut & Jobs Act (TCJA)

In a tax emergency, would you be ready? Well– good tax records not only help you prepare your tax return. They also help you answer questions if your return is selected for examination or prepare a response if you are

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Posted in Business Expense, Cash Transaction, FBAR, IRS Appeal, IRS Audit, IRS Collections, IRS Enforcement, IRS Examination, Paying Taxes, Tax Deductible Expenses, Tax Guidance & Preparation
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