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Fort Worth Tax Law Blog

Charitable deductions: IRA donations and conservation easements

On July 17, 2014, the House passed legislation called the “America Gives More Act of 2014" (H.R. 4719).

The bill contained “tax extenders” for two charitable tax breaks that could expire, but are normally renewed for one or two years at a time. In addition, there were two new ideas. One would provide an extension until April to make charitable gifts. The other simplifies the excise tax rates for private foundations.

While these provisions still need to pass the Senate, we will explain the provisions in more detail in this post.

 

Discharged debt: Does a co-signer owe taxes?

In general, the Internal Revenue Service treats a cancellation or discharge of debt as income. You may wonder how you are to pay tax on the cancelled portion of a loan, if you did not have the money to pay the debt in the first place. 

Only the debtor who benefited from a loan claims the cancellation of debt as income. When an individual co-signs a loan, he or she may receive no actual benefit and simply be a guarantor. The Treasury distinguishes between a debtor and guarantor, which means a co-signor probably does not need to include the discharged debt in gross income.

There are several exceptions that we will cover in this post.

Lawyer Gets 15 Years for Biggest Tax Fraud in U.S. History

Paul M. Daugerdas, a Chicago-area attorney and accountant, has been labeled by the government as history's most prolific and unrepentant tax cheat. The judge overseeing Daugerdas' case referred to the attorney as having "incredible greed."

Walgreen Seeks Lower Tax Rate Abroad

Walgreen Co's Chief Executive Greg Wasson said on Tuesday that the company is exploring the idea of moving outside the U.S. as it considers buying the remaining shares it doesn't already own in European pharmacy Alliance Boots GmbH.

Can a valuation date lead to estate tax savings?

The proverb goes that nothing is certain but death and taxes.

Even after death, your estate may need to pay taxes on the property transferred to loved ones. All the items receive a fair market value and become part of the “Gross Estate.” Property is a broad term. Some of the things included are real estate, business interests, securities held in retirement plans and cash in savings and checking accounts.

If the decedent died in 2014 with an estate valued at more than $5,340,000, an estate tax return must be filed. For 2013 and 2014, the estate tax rate is 40 percent. The value of a stock varies over time, so how is its value determined?

Dog ate my hard drive: No excuse in IRS audit

When homework was completed with a pen and paper, the excuse that the dog ate your homework was plausible. It could happen, although it has always been unlikely. As everyone moves to digital, the excuse becomes the dog chewed up the flash drive or maybe the external hard drive.

Recently, the director of the Internal Revenue Service, John Koskinen, appeared before Congress to explain why emails requested as part of an investigation were not available. The excuse was a computer crash. Tapes backing up the data had also been "recycled." While Congress grills Koskinen about the missing records, this leads to the question of what happens if you lose tax records and later receive an IRS audit notice.

Hobby loss: tax deductions and human nature

In his influential book "The Wealth of Nations," published in 1776, the Enlightenment thinker Adam Smith wrote about how human beings like to "truck and barter."

Of course, the "truck and barter" diction seems a bit dated today. But the phenomenon Smith pointed to remains as timely as ever. Humans enjoy engaging in commerce and trade with each other.

Sometimes they do this for profit and sometimes they do it for fun. But should there be a tax deduction for activities that seem more like a hobby than a genuine revenue-seeking proposition?

You guessed it! In this post, we will discuss some of the basics of the classic tax law issue of "hobby loss."

IRS Changing Terms for Offshore Account Holders

U.S. taxpayers hiding assets abroad should take note of the Internal Revenue Service's plan to sharply increase penalties for such acts, while those who unintentionally fail to disclose offshore accounts will experience much more leniency.