2021 – 03/18 Taxpayers engaged in business with the intent to profit can generally deduct related expenses on their tax returns. In the absence of a profit motive, the IRS may deem the activity to be a hobby and disallow loss deductions. In one case, a married taxpayer owned a brokerage firm. He also engaged in horse roping and deducted the related losses on his joint tax return. The IRS called the activity a hobby and denied the deductions, due to a lack of profit motive. The taxpayer failed to keep complete records, use a budget, or operate in a businesslike manner. The U.S. Tax Court agreed, noting that “team roping was never going to be a stable source of income” for the taxpayer. (TC Memo 2021-25) Click here for more details.
Similar Posts
IRS Tax Return Backlog
2022 – 05/23 The Treasury Inspector General for Tax Administration (TIGTA) has issued an audit that evaluates whether the IRS timely and accurately processed individual paper and e-filed tax returns during the 2022 filing season. As of March 4, 2022, the IRS received 54.7 million tax returns and issued $129.2 billion in refunds. The audit…
New COVID-19 relief law extends employee retention credit
2021 – 03/17 Many businesses have retained employees during the COVID-19 pandemic and enjoyed tax relief with the help of the employee retention credit (ERC). The recent signing of the American Rescue Plan Act (ARPA) brings good news: the ERC has been extended yet again. The original credit As originally introduced under last year’s CARES…
Drive more savings to your business with the heavy SUV tax break
2020 – 12/14 Are you considering replacing a car that you’re using in your business? There are several tax implications to keep in mind. A cap on deductions Cars are subject to more restrictive tax depreciation rules than those that apply to other depreciable assets. Under so-called “luxury auto” rules, depreciation deductions are artificially “capped.”…
Quarterly Estimated Tax Payments Due January 18th
2022 – 01/06 The IRS has issued a reminder about checking your 2021 tax liability to avoid being subject to estimated tax penalties, which apply if you underpay your taxes. Taxpayers who paid too little tax during 2021 can still avoid a surprise tax-time bill and possible penalty by making a quarterly estimated tax payment…
IRS: COVID Affect
2021 – 09/23 How has the COVID-19 pandemic affected the IRS and taxpayers? IRS Commissioner Charles Rettig answered that question in an overview on the IRS’s website. He noted that “despite our best efforts, pandemic-related issues are still causing us to experience record levels of activity that continue to affect operations, including the processing of…
Many factors are involved when choosing a business entity
2021 – 11/08 Are you planning to launch a business or thinking about changing your business entity? If so, you need to determine which entity will work best for you — a C corporation or a pass-through entity such as a sole-proprietorship, partnership, limited liability company (LLC) or S corporation. There are many factors to…