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 Court decision in Quill Corp. v. North Dakota, which addressed the obligations of mail order businesses to collect sales tax on out-of-state sales. The decision was extended to include online retailers. Physical presence mea

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 it because he provided more than 500 hours in services per year. The couple’s rental real estate was argued as not being passive because they were real estate professionals who provided at least 750 hours of service per y

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 could bring the taxpayer back before the court a second time. Meaning a continual loss claim would be suspicious to the court and review of the individual’s motive would be scrutinized. The background of the taxpayer is

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 required to do more. The point at which foreign taxes are sufficiently “determined” to justify taking a foreign tax credit is not as exhaustive as the IRS would argue, according to this case in which almost $260 million i

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 extension request by the old April 18, 2017 deadline. The IRS explained that many entities required to file partnership returns filed their returns or took other actions by the old due date. If not for the Surface Transport

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 expenses (up from 17 cents in 2017); and 14 cents per mile for miles driven for charitable purposes (permanently set by statute at 14 cents). The Tax Cuts and Jobs Act (HR1) indexes for inflation the rate for charitable miles.

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 privileges with respect to the distribution of funds and the investment of assets in the account. A donor advised fund (DAF) provides five primary tax benefits to the donor: Income Tax: You receive an immediate income tax d