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Bad debt deduction

Tax Court – No theft loss or bad debt deduction for taxpayer’s seemingly bad investment

Tax Court – No theft loss or bad debt deduction for taxpayer’s seemingly bad investment

Riley, TC Memo 2016-46 The Tax Court has held that a taxpayer’s investments in and loans to a rather questionable business venture of an acquaintance did not qualify for a theft loss deduction because she didn’t prove that her acquaintance made false representations. The taxpayer also did not qualify for a bad debt deduction because […]

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Court of Appeals affirms: no bad debt deduction for taxpayer’s advances to family-owned business

Court of Appeals affirms: no bad debt deduction for taxpayer’s advances to family-owned business

Shaw v. Comm., (CA 9 11/18/2015) 116 AFTR 2d ¶2015-5471 The Court of Appeals has ruled that an individual who made a series of advances to a family-owned business couldn’t take a bad debt deduction for them because she failed to show that they were bona-fide loans or that they became worthless during the tax […]

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Corporate executive not entitled to deduction for unpaid loan to bankrupt company

Corporate executive not entitled to deduction for unpaid loan to bankrupt company

Cooper, TC Memo 2015-191 The Tax Court, siding with IRS, has determined that a taxpayer couldn’t deduct the amount of an unpaid loan that he made to a construction company owned by an acquaintance that later filed for bankruptcy. The Court found that the taxpayer, who was employed full-time in an executive role and had […]

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Stock Loss Due to “Pump And Dump” Scheme Doesn’t Yield a Theft Loss Deduction

Stock Loss Due to “Pump And Dump” Scheme Doesn’t Yield a Theft Loss Deduction

Greenberger v. U.S., (DC OH 06/19/2015) 115 AFTR 2d ¶2015-844 A district court has held that a taxpayer couldn’t claim a theft loss deduction for exchange-listed stock that became worthless due to the “pump and dump” fraud of company executives. The taxpayer bought his shares on the open market through his brokerage account, and there […]

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IRS: bank bad debt writeoffs that meet regulatory, etc. rules meet tax writeoff rules

IRS: bank bad debt writeoffs that meet regulatory, etc. rules meet tax writeoff rules

IRS’s Large Business and International (LB&I) division has issued a directive which provides that its auditors are to accept charge-off amounts reported by banks and bank subsidiaries for generally accepted accounting principles (GAAP) or regulatory purposes as sufficient evidence of worthlessness. The directive does not apply to small banks that use the reserve method of […]

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No bad debt deduction, or theft or investment loss, for investment gone bad

No bad debt deduction, or theft or investment loss, for investment gone bad

Bunch, TC Memo 2014-177 The Tax Court has held that, where a married couple lent money to an unrelated business which didn’t repay the loan and went into bankruptcy, and the president of the business ultimately pled guilty to fraud for his business activities, the couple couldn’t take a 2006 bad debt, theft or nonbusiness […]

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Advances to new employee weren’t bona fide loans for bad debt deduction purposes

Advances to new employee weren’t bona fide loans for bad debt deduction purposes

Dickinson, TC Memo 2014-136 The Tax Court has found that a taxpayer who advanced funds to a new employee wasn’t entitled to deduct as a business bad debt either the funds that he knowingly advanced or the funds that the employee misappropriated from the business. The Court agreed with IRS that the taxpayer failed to […]

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No bad debt deduction for transfers to trusts; no business loss for indemnifying mother’s losses

No bad debt deduction for transfers to trusts; no business loss for indemnifying mother’s losses

In Alpert v. Commissioner, TC Memo 2014-270, the Tax Court has disallowed an individual’s nonbusiness bad debt deduction for amounts that he transferred to trusts of which he was the grantor; among the grounds for the disallowance was that the moneys transferred were not loans. The Court also disallowed the individual’s claimed business loss for […]

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Fifth Circuit affirms denial of bad debt deduction for payment of related entity’s debt

Fifth Circuit affirms denial of bad debt deduction for payment of related entity’s debt

The Court of Appeals for the Fifth Circuit, in Herrera (CA-5 11/11/2013) 112 AFTR 2d ¶ 2013-5472, affirming the Tax Court, has denied a married couple’s pass-through bad debt deduction from a limited liability company (LLC). The deduction was claimed to have resulted from the LLC’s payments of debt owed by a related entity. However, […]

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Treasury official explains misconceptions and criticisms relating to FATCA

Treasury official explains misconceptions and criticisms relating to FATCA

In a post to the Treasury Department’s website, a Treasury official addressed many of the concerns and criticisms relating to the Foreign Account Tax Compliance Act (FATCA). Among other things, he clarified a number of misconceptions about the effect that FATCA will have on U.S. citizens living abroad, and also explained how Treasury is drafting […]

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Taxpayer denied bad debt deduction for advances to family-owned business

Taxpayer denied bad debt deduction for advances to family-owned business

The Tax Court has ruled in Shaw v. Commissioner, T.C. Memo 2013-170, hat an individual who made a series of advances to a family-owned business couldn’t take a bad debt deduction for them because she neither showed that they were bona-fide loans nor that they became worthless during the tax year. Facts. SRG Corp. was […]

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Meet Paul Raymond

Meet Paul Raymond

Mr. Raymond is a sought after speaker in tax controversy law by many attorney, accountant, and business groups and at the request of the Internal Revenue Service, has presented programs at the IRS Nationwide Tax Forum, attended by tax professionals throughout the United States.

Additionally, he continues to be an active member in the Section of Taxation, American Bar Association, where he was the Past Chair of the Employment Taxes Committee.

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