Disallowed Expenses Archives - John R. Dundon II, Enrolled Agent
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Disallowed Expenses

05 May

Posted at 00:00h in Business Expense, Deductible Expense, Disallowed Expenses, Employee Business Expense, Meal Expense, Tax Court, Tax Deductible Expenses, Taxable Income, Uncertain Tax Position

As per usual I'm swimming in areas where the tax code is seemingly at odds. The latest matter across my desk regards meals and entertainment (M&E) expense. These are the two questions at hand: Specifically at what point does a meeting expense incurred under IRC section 162...

26 Jan

Posted at 00:00h in Amortization, Business Expense, Cash Transaction, Disallowed Expenses, IRS Appeal, IRS Audit, IRS Enforcement, IRS Examination, Marijuana

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 by a taxpayer who in...

12 Nov

Posted at 00:00h in 1031 Exchange, Appeals & Audit Resolution, Business Expense, Business Income, Deductible Expense, Disallowed Expenses, IRS Examination, Material Participation, Passive Activity, Rental Real Estate, Self Rental, Sub-chapter S, Tax Court, Tax Guidance & Preparation

Schumann v. IRS: Reg. 1.469-2(f)(6) - The Nuanced Relationship Between Passive Losses & Self Rental Gains. Back to my friends that I previously wrote about who misunderstood passive activity and material participation. They are a married couple filing jointly and own a very successful business together structured...

24 Oct

Posted at 00:00h in Back Taxes Owed, Business Expense, Disallowed Expenses, Employee Business Expense, IRS Appeal, IRS Audit, IRS Collections, IRS Enforcement, IRS Penalties, IRS Penalty and Interest Abatement, Tax Abuse, Tax Court, Tax Guidance & Preparation, Tax Preparer

In Wole Odujinrin v. IRS Commissioner the petitioner, a hematology oncologist who represented himself, did not have adequate substantiation to support his petition and was not entitled to claim a net operating loss. He was also liable for an accuracy-related penalty under IRC 6662 - the expensive...

20 Aug

Posted at 00:00h in Debt, Disallowed Expenses, IRS Appeal, IRS Audit, IRS Examination, Marriage, Mortgage, Paying Taxes, Tax Filing Status, Tax Guidance & Preparation

Taxpayers living in Vail Colorado contacted me most recently to represent them in an IRS audited covering tax years 2009, 2010 and 2011 relevant to several small items but specifically to the mortgage interest deduction claimed on Schedule A of form 1040. The taxpayers are domestic...

25 Jun

Posted at 00:00h in Audit Technique Guide, Business Expense, Disallowed Expenses, Employment Tax, IRS Enforcement, IRS Examination, Payroll Tax Problems, Tax Guidance & Preparation, Tax Problems & Requests, Taxable Income, Uncertain Tax Position

According to IRS administrative guidelines to its examiners concerning Rev. Rul. 2012-18, published in the 2012-26 Internal Revenue Bulletin, when performing a tip examination (aka audit), IRS examiners must ensure that service fees or charges are properly characterized as wages and not tips. If the payment is...

03 Jun

Posted at 00:00h in Business Expense, Deductible Expense, Disallowed Expenses, Hobby, IRS Examination, Rental Real Estate, Tax Abuse, Tax Court, Tax Guidance & Preparation

You are allowed deductions for ordinary and necessary expenses incurred in the course of business under §162, but you must also keep adequate records to substantiate expenses which can at times seem esoteric if not convoluted. Deductible travel expenses for example under §274(d) are based on whether or not the...

30 May

Posted at 00:00h in Business Expense, Deductible Expense, Disallowed Expenses, Interest Expense, IRS Examination, Tax Court

If you incur interest expense on loans you should use the tracing rules of Reg. §1.163-8T to determine whether the interest expense is for: 1. business 2. investment 3. passive activities. or is 4. personal in nature The regulation focuses on the use of the loan proceeds, not the item or items used...

18 May

Posted at 00:00h in Accountable Expense Plan, Business Expense, Deductible Expense, Disallowed Expenses, Employee Business Expense, Employment Tax, IRS Enforcement, IRS Examination, Tax Abuse, Tax Deductible Expenses, Tax Guidance & Preparation, Trust Fund Recovery Penalty

Tool and Equipment Plans generally require employees to provide their own tools. Some plans purport to receive tax-favored treatment as “accountable plans†under the definition of adjusted gross income in Internal Revenue Code § 62(c). If you are expected to use your own tools and equipment on...

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