Tax Law Blog

Section 61 of the Internal Revenue Code establishes that all income, from whatever source derived, is included in gross income. If the income arises from a sale or exchange of property that is not a capital asset or property used in a trade or business then it is taxed as ordinary income.

The IRS recently issued Revenue Procedure 2019-38, which finalizes the safe harbor for rental property under Code Section 199A that was originally provided in IRS Notice 2019-07. The safe harbor treats a rental real estate enterprise as being eligible for the qualified business income deduction under Section 199A, even if it does not meet the definition of a “trade or business” as provided in Treas. Reg. 1.199-1(b)(14). 

There are several ways to respond to a notice from the Michigan Department of Treasury (“Treasury”) regarding an outstanding tax liability or refund adjustment. The options available to individuals and businesses generally include the following:

1. offer in compromise;
2. informal conference and appeals; and
3. alternative dispute resolution.

The concept of “portability” was introduced into the Internal Revenue Code (“IRC”) pursuant to the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. Portability allows a surviving spouse to apply an unused portion of a deceased spouse’s estate tax exclusion amount to his or her own estate tax liability. 

This is the first in a two-part series about the consequences of divorce under the Tax Cuts and Jobs Act of 2017. The first part addresses alimony, child support, and child-related credits. The second part will discuss dividing assets, the marital home, and retirement assets.

Many mature, Employee Stock Ownership Plan (ESOP)-owned companies consider making an S-election, and for good reason.  An S Corporation owned 100% by an ESOP generally pays no federal income taxes.  An S Election instantly boosts cash flow, which the company can use to fund growth opportunities or fund its annual ESOP repurchase obligations.