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Capital Gain

Tax Court – sale vs. license characterization not determinable on summary judgment

Tax Court – sale vs. license characterization not determinable on summary judgment

Mylan, TC Memo 2016-45 The Tax Court has denied IRS summary judgment that a certain transaction should be characterized as a sublicense, giving rise to ordinary income, as opposed to a sale, which would give rise to capital gain. The Court found that the agreement between the parties, as amended, was ambiguous, in that it […]

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Aircraft used for business and personal use is single property for like-kind qualification purposes

Aircraft used for business and personal use is single property for like-kind qualification purposes

Chief Counsel Advice 201605017 In Chief Counsel Advice involving an exchange of two aircrafts intended to qualify under Code Sec. 1031, one of which was used by an individual for personal purposes as well as for productive use in a trade or business or investment, IRS determined that the aircraft was a single property, the […]

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Taxpayer with plan to develop property had capital loss in year of foreclosure sale

Taxpayer with plan to develop property had capital loss in year of foreclosure sale

Evans, TC Memo 2016-7 The Tax Court has concluded that the loss from the foreclosure sale of property that the taxpayer intended to develop was a capital loss in the year in which the foreclosure sale took place, and not in the year in which the taxpayer received his share of the proceeds from the […]

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Tax Court applies Code Sec. 356(c) to determine gain and loss in merger transaction

Tax Court applies Code Sec. 356(c) to determine gain and loss in merger transaction

Tseytin, TC Memo 2015-247 The Tax Court has concluded that a shareholder, who purchased a block of stock from another shareholder to effectuate a corporate merger, should be treated as the owner of that block of stock and not merely as an agent or nominee who held the stock for another. Further, in determining the […]

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Employment-discrimination settlement wasn’t entitled to capital-gain tax rate

Employment-discrimination settlement wasn’t entitled to capital-gain tax rate

Duffy v. U.S., (Fed Cir 1/8/2016) 117 AFTR 2d ¶ 2016-324 The Court of Appeals for the Federal Circuit, affirming the Court of Federal Claims, has concluded that the settlement payments from an employment discrimination suit received by an individual—who had owned a consulting business but then became an employee—weren’t capital gain income. The payments […]

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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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Shareholder-employee’s payment in merger included both ordinary income and capital gains

Shareholder-employee’s payment in merger included both ordinary income and capital gains

Brinkley v. Comm., (CA 5 12/16/2015) 116 AFTR 2d ¶ 2015-5520 The Court of Appeals for the Fifth Circuit, affirming the Tax Court, has concluded that payments received by a shareholder-employee and founder of the company in a merger with Google, although nominally for the exchange of his stock, was partly compensation for services rendered. […]

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Taxpayers couldn’t offset annuity income with capital loss or avoid distribution penalty

Taxpayers couldn’t offset annuity income with capital loss or avoid distribution penalty

Tobias, TC Memo 2015-164 The Tax Court has rejected a husband and wife’s arguments that: a) they could offset the income they would otherwise have recognized on an annuity distribution by the capital loss they incurred when they sold securities in order to buy the annuity; b) the wife’s disability created an exception to the […]

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Managers of oil & gas properties were partners and sale of interest resulted in capital gains

Managers of oil & gas properties were partners and sale of interest resulted in capital gains

U.S. v. Stewart, et al., (DC TX 8/20/2015) 116 AFTR 2d ¶ 2015-5159 In a suit by IRS to recover tax refund claims that had been paid, a district court found that the individuals were partners in a partnership and their income was a return from an investment, rather than a commission. The court determined […]

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No gain or loss on converting subs into disregarded entities & distributing assets to parent

No gain or loss on converting subs into disregarded entities & distributing assets to parent

PLR 201452016   In a private letter ruling (PLR), IRS has determined that, as part of a proposed multi-step transaction involving a global group with a chain ownership structure, the conversions of two subsidiaries into disregarded entities qualify as distributions in complete liquidation under Code Sec. 332 , and thus no gain or loss will […]

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US funds differ on managing tax liability as capital gains surge

US funds differ on managing tax liability as capital gains surge

BOSTON (Reuters) – Warning to mutual fund investors: the tax man is coming. U.S. investors in stock funds will take a big tax hit this year on capital gains that could top $300 billion after portfolio managers exhausted most of their loss reserves to offset several years of stock market advances. Even bigger tax bills […]

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Patent holder’s control of corporate transferee defeats long-term capital gain treatment

Patent holder’s control of corporate transferee defeats long-term capital gain treatment

Cooper, (2014) 143 TC No. 10 In a case of first impression for the Tax Court, it has concluded that for purposes of Code Sec. 1235 (which provides long term capital gain for certain transfers of patents to an unrelated party), the retention of a patent holder’s control over a corporate transferee (that was unrelated […]

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The Tax Exclusion on a Home Sale – It’s Typically $500,000 of Profit for Couples; $250,000 for Singles

The Tax Exclusion on a Home Sale – It’s Typically $500,000 of Profit for Couples; $250,000 for Singles

The Tax Exclusion on a Home Sale – It’s Typically $500,000 of Profit for Couples; $250,000 for Singles, as reported in the WS Journal. Q:  My wife and I bought our home more than 30 years ago. If we sold today, we think our profit would be about $500,000. If we do sell, what would […]

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Year-end planning: Careful handling of capital gains and losses can save taxes

Year-end planning: Careful handling of capital gains and losses can save taxes

Individuals who lost money in the stock market in 2014 may have other investment assets that have appreciated in value. As this article explains, these taxpayers should consider the extent to which they should sell appreciated assets before year end (if their value has peaked) and thereby offset gains with pre-existing losses. Capital gain and […]

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Court of Appeals, 11th Circuit Reverses; Developer Who Sold Right To Purchase Land Had Capital Gain

Court of Appeals, 11th Circuit Reverses; Developer Who Sold Right To Purchase Land Had Capital Gain

Long, (CA 11 11/20/2014) 114 AFTR 2d ¶ 2014-5446 The Court of Appeals for the Eleventh Circuit, reversing the Tax Court, has held that a real estate developer who sued a party who backed out of a contract to sell land to the developer, and then sold his rights as a plaintiff to a third […]

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Gains and Losses on Equity Holdings May Be Marked at Fair Value

Gains and Losses on Equity Holdings May Be Marked at Fair Value

The FASB wants publicly traded companies to fair value most gains and losses on equity securities and include them in net income. The board made an exception for equity shares that amount to 20 percent or more of another company that the owner doesn’t control. The FASB voted 5-2 at its July 30, 2014, meeting […]

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The Rules on Deducting Capital Losses -You Can’t Always Use Losses to Offset Capital Gains

The Rules on Deducting Capital Losses  -You Can’t Always Use Losses to Offset Capital Gains

The Rules on Deducting Capital Losses -You Can’t Always Use Losses to Offset Capital Gains, as reported in the WS Journal. Q: Suppose you are thinking of selling your primary residence with a long-term loss in value and at the same time selling some stocks with long-term capital gain. A perfect offset, yes? — W.D.A., […]

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Court holds land sale triggered ordinary income, not capital gain

Court holds land sale triggered ordinary income, not capital gain

Frederic Allen v. U.S., (DC CA 05/28/14) 113 AFTR 2d ¶2014-873. A district court has held that taxpayers received ordinary income, not capital gain, for a payment they received under an agreement to sell land executed years earlier and subsequently modified. Facts. Fredric Allen (Allen) and his wife, Phyllis Allen, brought an action in district […]

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2013 Schedule D forms and Form 8949 contain sale/exchange reporting changes

2013 Schedule D forms and Form 8949 contain sale/exchange reporting changes

IRS has recently released final versions of 2013 Forms 1040 Schedule D, 1120 Schedule D and 8949. The instructions to those forms contain a few changes in how sales and exchanges of capital assets are reported. Click here for 2013 Form 1040, Schedule D, Capital Gains and Losses. Click here for the draft instructions to […]

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Taxpayer had gain, not loss, after his cost basis was reduced on account of relieved debt

Taxpayer had gain, not loss, after his cost basis was reduced on account of relieved debt

The Tax Court has held, in John D. Moore v. Commissioner, T.C. Memo. 2013-249, that an individual who reported his sale of S stock at a loss had to reduce his basis in the stock to reflect a court-ordered reduction of debt he owed the company and that he had used to finance the purchase. […]

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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