News

October 06, 2024

This week, experts examined the proposed corporate alternative minimum tax regulations, carbon capture tax credits, and more.

October 04, 2024

Rivian Automotive Inc. has applied for a federal loan to fund construction of a new electric vehicle plant in Georgia, a project that had stalled after a cash crunch and change in strategy.

October 04, 2024

The week in state tax news: A California law will produce some transparency on the sales tax-sharing deals some cities have with big retailers. Meanwhile, more states join the IRS Direct File program, bringing the total to 24 for the 2025 filing season; a few states show interest in tax payments by cryptocurrency even though the option hasn't taken off at all in Colorado and Utah; and Pennsylvania lawmakers advance a bill to change the state's tax appeals process.

October 04, 2024

Pittsburgh's fee on visiting athletes and entertainers comports with the Pennsylvania Constitution because it results in a "rough uniformity" of tax burdens on residents and nonresidents, the city told the state high court.

October 04, 2024

A taxpayer's bankruptcy filing does not automatically stay a whistleblower case filed by the taxpayer pursuant to 11 U.S.C. §362(a)(8), held the U.S. Tax Court. Petitioner, a whistleblower, engaged in a transaction with a target taxpayer in 2012 and filed a whistleblower claim in 2015, alleging that the target incorrectly reported the transaction. After the IRS Whistleblower Office (WBO) denied the claim in 2022, Petitioner filed a petition for review of the reward denial. Petitioner subsequently filed for bankruptcy in 2023, and the IRS filed a proof of claim for unpaid taxes for pre-petition tax years. Petitioner argued that the automatic stay under 11 U.S.C. §362(a)(8) should apply because (1) the whistleblower claim and his tax liability arose from the same transaction and facts, or (2) the potential for setoff of his whistleblower award against his tax liability meant the case concerned his tax liability. The court rejected these arguments, finding that the automatic stay applies only if a case concerns the tax liability of a debtor-taxpayer, and the court's decision in a whistleblower case would not affect the whistleblower's tax liability. The court reasoned that it cannot make factual findings about the target's tax liability or its tax treatment because its jurisdiction in whistleblower cases is limited to reviewing the WBO's award determination for abuse of discretion; therefore, the court cannot affect Petitioner's pre-petition tax liability even if the claim involves the same underlying facts as the tax liability. The court also held that the potential for setoff does not warrant an automatic stay because §362(a)(7) separately stays the IRS's setoff rights, and the IRS must seek relief from the stay from the bankruptcy court before exercising any setoff. [Carter v. Commissioner, 163 T.C. No. 6 (Oct. 3, 2024)]

October 04, 2024

Christopher DeVocht, a carpenter from Vancouver Island, Canada, says he started out like a lot of day traders. After work, he’d read about trading on forums. His favorite things to trade were options on Tesla Inc. stock.

October 04, 2024

The IRS announced that Direct File will be available for the 2025 tax filing season in double the number of states than last year’s pilot, and will cover a wider range of tax situations. The free e-filing service was available in Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington State, and Wyoming. For the 2025 filing season, more than 30 million taxpayers in those 24 states will be eligible to use Direct File. Additional states could still join Direct File in 2025, and several states have expressed interest or announced that they will participate in Direct File in 2026. [IR-2024-258 (Oct. 3, 2024)]

October 04, 2024

Taxpayer was ineligible to deduct rental activity expenses from renovated group home, the U.S. Tax Court held. In 2017, Taxpayer, employed during the day as an engineer, rented rooms of a single-family home that he renovated into a group home. For that tax year, Taxpayer timely filed a Form 1040, where he reported an adjusted gross income (AGI) of $199,974, failed to report the $6,000 of rental income he received, and claimed a net loss for rental real estate expenses of $41,733. After determining that Taxpayer was ineligible for the loss deduction claimed, the IRS issued him a notice of deficiency. Taxpayer timely petitioned, arguing that he was entitled to the deduction. In preparation for trial, Taxpayer created a log, substantiated only in part by contemporaneous records, in which he claimed 1,628 hours of time spent on the group home. Noting that deductions for rental activities are generally disallowed as passive activity losses unless an exception applies, the court disallowed the deductions. First, Taxpayer was not a “real estate professional” under I.R.C. §469(c)(7)(B) because, even assuming the accuracy of his logs, he worked fewer hours at the group home than he did from his full-time employment as an engineer. Second, Taxpayer was ineligible for the “active participation” exception under §469(i) because his AGI exceeded $150,000. The court also sustained §6662(a) penalties for Taxpayer’s underpayment of tax. [Warren v. Commissioner, T.C. Summ. Op. 2024-20 (Oct. 3, 2024)]

October 04, 2024

Power of attorney is a regulatory requirement that can be waived, not an explicit reason to dismiss a case with other merits, the US Court of Appeals for the Federal Circuit said Friday.

October 04, 2024

Sri Lanka’s new president held his first meetings with officials from the International Monetary Fund since taking office and initiated steps to move forward with the nation’s debt restructuring, while getting confirmation that terms agreed with the nation’s bondholders are comparable with an official creditor deal.