Archive - May 2014
Real Estate Investor Argument - Continuing Travails in Allen v U.S.
When it rains, it pours. Just a few weeks after the Tax Court’s decision in Boree, the US District Court for the Northern District of California held against the taxpayer in Allen et al. v. United States, No. 3:13-cv-02501 (May 28, 2014). In a much familiar fact pattern the taxpayer acquired real estate, tried to develop it and sold it down the road. He claimed capital gains but the IRS and the District Court disagreed. As with many other cases that end all the way up in court, the taxpayer struggled with evidence regarding material issues. Also, as with many other small cases (in this...
May 30, 2014 read more
Boree v. Comr: Tax Planning Left on the Back Burner, Sometimes it Comes to Bite You
I see this over and over. The reality is that to business people, particularly in M&A, tax is an afterthought. This is more so true for smaller investment funds and investors. Larger entities with more extensive experience, while dreading dealing with tax, at least know what’s at stake. In ordinary income v. capital gain differential situation with penalty exposure, a mishap easily would bite over 20-30% into your profitability. That’s a large percentage! This is what Mr. Boree is learning from experience right now. I am talking about the newest real estate case of Boree v. Comr....
May 15, 2014 read more
Net Investment Income Tax and US Territories – Confusion and Inequality Abound
Filing season is done for taxpayers without extensions and will soon be approaching for those with extensions. One item on the menu that is new is the NIIT. That item slices a 3.8% cut off the investor’s revenue and forwards it promptly to Uncle Sam. Amid confusion regarding trusts, S corporations, real estate, netting losses and so on, apparently there is some confusion regarding the application of the NIIT to US territories. We were not aware of that confusion until today when we reviewed one USVI law firm’s plea to Office of International Tax Counsel to clarify the NIIT...
May 14, 2014 read more