January - 2018

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Tax Blog

Washington State Sales Tax for Online Businesses like Amazon

Washington State Sales Tax for Online Businesses like Amazon

Pending the outcome of the threatened legal battle similar to the one when Colorado issued their new tax law, the sales tax on internet sales will look something complete similar to what Colorado has just this last year began to be able to collect. The current rule throughout the United States is that you must collect sales tax on internet sales to customers in those states where your business has a physical presence. The physical presence rule is based on a 1992 Supreme Cour

Real-time Record Keeping Helps with Passive Activity

Real-time Record Keeping Helps with Passive Activity

A taxpayer and his spouse lost their argument in Tax Court and could not deduct passive activity losses (PALs) from several activities they are involved in. In court the taxpayers failed to shift burden of proof to the IRS, and were liable for the accuracy-related penalty. The three activities the couple were involved in was a medical center, a ranch, and a rental real estate. The husband was a limited partner in the medical center, but claimed he materially participated in i

Is Your Ranching Activity for Profit?

Is Your Ranching Activity for Profit?

Rebuffing the IRS, the Tax Court found that a taxpayers’ ranching activities was an endeavor to be engaged in for profit. The taxpayer persuaded the court that his actions in cattle raising, hay cultivation and horse breeding were one activity, and he held genuine motives to generate a profit, despite a history of losses. The court cautioned, however, that it was not declaring the taxpayer’s ranching as for-profit “ad infinitum.” The taxpayer’s failure to rein-in future loss

Court Opinion: Foreign Taxes Paid Were Compulsory

Court Opinion: Foreign Taxes Paid Were Compulsory

Coca Cola Company and Subsidiaries win a small victory in Court prior to the start of the New Year. The Tax Court, in a division opinion, ruled that the taxes paid to a foreign country (Mexico) by the subsidiary of the multinational beverage company were compulsory levies. The Mexican subsidiary calculated its royalty payments based on “transfer-pricing” agreements with the Mexican federal tax authority, which gave rise to legitimate foreign tax credits without the taxpayer r

Extension Given for Entities with Missed Deadlines under the Surface Transportation Act of 2015

Extension Given for Entities with Missed Deadlines under the Surface Transportation Act of 2015

Again the IRS has granted an extension relief for partnerships and certain other entities that missed new deadlines under the Surface Transportation Act of 2015. The IRS explained that fiscal-year filers whose tax years began in 2016 but did not end until 2017 are granted expanded relief as long as the named entities missed the new March 15, 2017 deadline for filing a 2016 tax-year return or a timely request for an extension by that date, as long as they filed a return or ext

Standard Mileage Rate Deduction Increased for 2018

Standard Mileage Rate Deduction Increased for 2018

The IRS released the 2018 optional use standard mileage rates used in the calculation of deductible costs in operation of an automobile. This deduction applies to vehicles in the operation for business, medical, moving and charitable purposes. Beginning January 1, 2018, the standard mileage rates for the use of a car, van, pickup or panel truck will be: 54.5 cents per mile for business miles driven (up from 53.5 cents in 2017); 18 cents per mile for medical and moving expense

Primary Tax Benefits with Donor Advised Funds

Primary Tax Benefits with Donor Advised Funds

Recapping on what the donor advised fund or DAF is, the IRS website states that, a donor advised fund is a separately identified fund or account that is maintained and operated by a section 501(c)(3) organization, which is called a sponsoring organization. Each account is composed of contributions made by individual donors. Once the donor makes the contribution, the organization has legal control over it. However, the donor, or the donor's representative, retains advisory pri

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