In Johnson, Inc., the Tax Court held that the amounts paid to the shareholder-employees of a C corporation constituted reasonable compensation deductible under Section 162 and that amounts paid by the taxpayer-corporation to an entity controlled by two of its shareholders was deductible as an ordinary and necessary business expense under Section 162. Facts of […]
In Brinks, the Tax Court once again applied the independent investor test to recharacterize compensation paid by a professional corporation, a law firm, to its shareholder-employees as nondeductible dividend distributions, and held the corporation liable for accuracy-related penalties for mischaracterizing the dividends as deductible compensation. This case should serve as a warning for many mid-size […]
We previously reported on the development of genetically modified citrus trees by IFAS that show enhanced resistance to citrus greening, as well as potentially canker and black spot. While many growers have not replanted groves lost to freeze, hurricanes, citrus canker, and citrus greening due to the ever-looming threat of citrus greening, this new development […]
In Tricarichi,1 the Tax Court held that the sole shareholder of a corporation was liable as a transferee for the corporation’s unpaid tax liability after he sold his stock in a “Midco” transaction, resulting in a tax deficiency of $15,186,570 and penalties of $6,012,777 under Section 6901 and Ohio fraudulent transfer laws. The taxpayer was […]
Earlier today the University of Florida’s Institute of Food and Agricultural Sciences (IFAS) announced that its researchers have developed genetically modified citrus trees that show enhanced resistance to citrus greening. These citrus trees may also have the potential to resist canker and black spot. IFAS noted that the commercial viability of these new citrus trees […]
In Fargo, the Tax Court held that a couple had ordinary income from a property sale by a partnership in which they were partners because the property was sold in the ordinary course of business. The taxpayer, husband and wife, were partners in Girard Development, L.P. (GDLP), an entity subject to the partnership procedures under […]
On 7/17/2015, the IRS issued proposed regulations regarding the Section 83(b) election. Under the general rule of Section 83(a), if, in connection with the performance of services, property is transferred to any person other than the person for whom such services are performed, the excess of the fair market value of the property as of […]
Stephen R. Looney, Shareholder and Chair of Dean Mead’s Tax department, co-authored the article titled, “Compensation Reclassification Risks for C and S Corporations”. The article was published in the Journal of Taxation, May 2015 edition. The full article is provided here: Compensation Reclassification Risks for C and S Corporations.