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Material Participation

Lawyer’s reconstructed records were sufficient to show material participation

Lawyer’s reconstructed records were sufficient to show material participation

Leland, TC Memo 2015-240 The Tax Court has held that an attorney who owned a farm which was farmed by another party, but for which the taxpayer was responsible for maintaining the infrastructure, established his material participation in the farming activity for purposes of the passive activity rules, despite his not maintaining contemporaneous records of […]

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Tax Court: Taxpayer materially participated in related real estate enterprises; large loss allowed

Tax Court: Taxpayer materially participated in related real estate enterprises; large loss allowed

Lamas, TC Memo 2014-59 The Tax Court has held that a taxpayer that stepped in during the 2008 financial crisis to rescue several related family businesses in which he held interests did so as a material participant, not as an investor. On the facts, the passive activity loss rules of Code Sec. 469 didn’t apply, […]

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Tax Court: Large loss allowed for taxpayer’s participation in related real estate enterprises

Tax Court: Large loss allowed for taxpayer’s participation in related real estate enterprises

Lamas, TC Memo 2015-59   The Tax Court has held that a taxpayer that stepped in during the 2008 financial crisis to rescue several related family businesses in which he held interests did so as a material participant, not as an investor. On the facts, the passive activity loss rules of Code Sec. 469 didn’t […]

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Airplane rental was passive activity where owner failed to show material participation

Airplane rental was passive activity where owner failed to show material participation

Williams, TC Memo 2014-158 The Tax Court has held that a part-time attorney’s rental of an airplane he purchased was a passive activity under the Code Sec. 469 passive activity loss (PAL) rules because he failed to show that he materially participated in the airplane activity. Click here for the Opinion of the Court. Background. […]

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Tax Court Case – Lawyer’s losses from side racehorse activity weren’t passive

Tax Court Case – Lawyer’s losses from side racehorse activity weren’t passive

In Stefan A. Tolin v. Commissioner, T.C. Memo. 2014-65, the Tax Court has held that a lawyer’s losses from a side thoroughbred horse breeding and racing activity (thoroughbred activity) were not passive activity losses and hence were currently deductible. The Court reached this result for the three years at issue because the lawyer showed that […]

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Separate filing wife couldn’t rely on husband’s activities to escape PAL rules

Separate filing wife couldn’t rely on husband’s activities to escape PAL rules

In Julie A. Oderio, TC Memo 2014-39, the Tax Court has held that an individual who filed a separate return could not rely on her husband’s activities to utilize the exception for real estate professionals under Code Sec. 469(c)(7)(B) to prevent her rental loss from being disallowed as a passive activity loss (PAL) under Code […]

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Case Alert: Losses and credits for solar water heater systems disallowed by passive loss rules

Case Alert:  Losses and credits for solar water heater systems disallowed by passive loss rules

Editor’s Note:  in the past few years, the IRS has aggressively been pursuing taxpayers who claim that they are “actively” involved in a business, and as such, are allowed to offset their “active” income from “active” losses.  The type of industry can be real estate, and there are some hoops to jump through in order […]

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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