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Basis

Ninth Circuit affirms: members have no basis in stock acquired in demutualization

Ninth Circuit affirms: members have no basis in stock acquired in demutualization

Reuben v. U.S., (CA 9 1/5/2016) 117 AFTR 2d ¶2016-313 The Ninth Circuit, in a per curiam decision, has affirmed a district court’s holding that stock received pursuant to the demutualization of a mutual insurance company has zero basis and that the holder of such stock owed tax on the entire proceeds from the stock’s […]

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Chief Counsel Advice: Regs on partner’s share of liabilities don’t control whether debt is recourse for other purposes

Chief Counsel Advice: Regs on partner’s share of liabilities don’t control whether debt is recourse for other purposes

Chief Counsel Advice 201525010 In Chief Counsel Advice (CCA), IRS has concluded that, for purposes of determining whether a limited liability company (LLC) taxed as a partnership has either cancellation of debt (COD) income under Code Sec. 61(a)(12) or gains from dealings in property under Code Sec. 61(a)(3) upon foreclosure of its property, the regs […]

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Proposed regs would add carryover basis rules for property inherited from 2010 decedents

Proposed regs would add carryover basis rules for property inherited from 2010 decedents

IRS has issued proposed regs that would incorporate the modified carryover basis rules under now-repealed Code Sec. 1022 into a number of existing regs that in some way involve the basis of property acquired from a decedent.IRS noted that while Code Sec. 1022 was applicable only to decedents dying in 2010, basis determined under Code […]

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Tax Court: Taxpayers never abandoned intent to develop property, so gain from sale was ordinary

Tax Court: Taxpayers never abandoned intent to develop property, so gain from sale was ordinary

Fargo and King, TC Memo 2015-96 The Tax Court has held that a partnership held property for development purposes and not for investment. Accordingly, gain from the sale of the property, which flowed through to the partners, wasn’t entitled to capital gain treatment and was instead taxed as ordinary income.  Click here for the Opinion […]

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Tax Court: No stepped-up basis for gift of shares to nonresident alien spouse

Tax Court: No stepped-up basis for gift of shares to nonresident alien spouse

Hughes, TC Memo 2015-89 The Tax Court has ruled that a purported gift of shares by a retired partner of KPMG, LLP, to his nonresident alien spouse didn’t result in a stepped-up basis of the shares in her hands. Even if a gift had been made, the shares would have had a zero basis because […]

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Partnership didn’t have liability, so partner couldn’t assume it and increase his basis

Partnership didn’t have liability, so partner couldn’t assume it and increase his basis

Coastal Heart Medical Group Inc. et al., TC Memo 2015-84 The Tax Court has upheld IRS’s disallowance of a partner’s claimed loss deduction because he had insufficient basis in the partnership. The taxpayer claimed that his basis should be increased to reflect the contribution of property subject to a liability that he assumed, but the […]

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Partnership had no basis in partner notes contributed to partnership

Partnership had no basis in partner notes contributed to partnership

VisionMonitor Software, LLC, TC Memo 2014-182 The Tax Court has held that a partnership had no basis in unsecured notes payable by partners to the partnership that the partners contributed to the partnership. And, where the partnership’s professional advisor advised the partnership that the notes would have a basis before he actually saw the extremely […]

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Final regs provide that only bona fide shareholder loans to S corporation create basis

Final regs provide that only bona fide shareholder loans to S corporation create basis

T.D. 9682, 07/22/2014; Reg. § 1.108-7, Reg. § 1.1366-2, Reg. § 1.1366-5 IRS has issued final regs that provide that S corporation shareholders may increase their adjusted basis in any indebtedness of the S corporation to them – and thus use that basis to allow them to deduct their pass-through deductions and losses – only […]

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Purchaser’s assumption of decommissioning liabilities not includible in power plant’s basis

Purchaser’s assumption of decommissioning liabilities not includible in power plant’s basis

The Court of Federal Claims has ruled, in AmerGen Energy Co. LLC, (Ct Fed Cl 10/8/2013) 112 AFTR 2d ¶2013-839, that the purchaser of several nuclear power plants could not include plant decommissioning cost liabilities that it assumed on that purchase in its cost basis for the plants because the decommissioning costs did not meet […]

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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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Member CA Bar Member Orange County Bar US Tax Court Attorney