Author Archives: David L. Silverman, J.D., LL.M. (Taxation)

What is Income?

“Income” in the tax sense does not always coincide with the definition of income for other purposes. Consider a $500 graduation gift. Though clearly one’s bank statement balance would be increased by receipt of this gift, the tax law does … Continue reading

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Imposition of IRS Accuracy Related Penalties

The enactment of the Revenue Reconciliation Act of 1993 has made it significantly easier for the IRS to impose accuracy-related penalties against taxpayers. The penalty for substantial understatement of income tax is one of five accuracy-related penalties found in the … Continue reading

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Income Shifting

The effective rate of income tax imposed on certain individuals may reach 45 percent, or even higher, when the repeal of the Medicare wage-base cap, the limitation on itemized deductions, the phase-out of personal exemptions, and the liability for state … Continue reading

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Significance of IRS Rulings

The Internal Revenue Code, a body of federal law enacted by Congress, is controlling authority in any federal tax dispute. Treasury Regulations, which interpret and expound upon various Code provisions, are also controlling except in the rare circumstance where a … Continue reading

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Taxpayer Rights During an IRS Audit

Pursuant to the “Taxpayer Bill of Rights,” enacted by Congress as part of the Internal Revenue Code, the IRS is required to disclose to taxpayers their rights, and the obligations of the IRS during the audit, appeals, refund, and collection … Continue reading

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Wash Sales

Under Internal Revenue Code  Sec. 1001, gain or loss realized on the sale or exchange of property is the excess of the amount realized over the adjusted basis. If one purchased 100 shares of Exxon in August, 1993, and sold … Continue reading

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Administrative Appeals Within the Internal Revenue Service

At the heart of the Internal Revenue Service procedural engine lies the internal appeal process, whose  function is to resolve taxpayer disputes through the use of negotiation and settlement, without the necessity of litigation. The Appeals office has “exclusive and … Continue reading

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Itemized Deductions

Deductible expenses may be classified as either above-the-line or below-the-line deductions. While above-the-line deductions reduce gross income, below-the-line or itemized deductions reduce adjusted gross income (AGI). For a taxpayer in the 39.6 percent tax bracket, each dollar of above-the-line deduction … Continue reading

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Home Office Deductions

Revenue Ruling 94-24 interpreted the Supreme Court’s 1993 Soliman decision regarding home office deductions. Soliman v. Commissioner, 93-1 USTC ¶50,014 (1993). Largely reinstating an earlier position of the Tax Court, the Court held that home office deductions are statutorily permissible … Continue reading

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Inter Vivos Trusts

As a testamentary instrument, the living trust possesses attractive attributes, especially for elderly testators. For younger persons, the will is generally preferable as a testamentary device. Property placed in a will passes automatically into the probate estate, where it may … Continue reading

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Amortization of Good Will Under IRC Sec. 197

Under new IRC Sec. 197, certain intangible property (defined as “IRC Sec. 197 intangibles”) are amortizable ratably over a 15-year period.  The new law represents a substantial change from the prior law, under which neither good will nor going-concern value, … Continue reading

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Limited Liability Companies

The Limited Liability Company (LLC) is a popular form of business entity. A creature of state law,  virtually all states, including New York, have enacted LLC statutes. The principal allure of the LLC is the liability protection it affords its … Continue reading

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IRS Ruling Blesses New York RLLPs (January 1996)

New York Partnership Law Sec. 121-1500 provides that a professional partnership without limited partners may register as a limited liability partnership (RLLP) by registering with the NYS Department of State. The IRS has ruled that this registration results in seamless … Continue reading

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Asset Protection; Avoiding Fraudulent Transfers

One of the simplest methods of protecting assets from potential creditors is transferring title to the marital home to one’s spouse. Creditors of the transferring spouse will thereby be precluded from making claims against the house. When making large transfers … Continue reading

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Clinton’s Tax Agenda for 2nd Term (May 1996)

President Clinton’s 1996 tax proposal draws significantly from Congress’ 1995 legislation which he vetoed, especially with respect to individuals and pension reform. Mr. Clinton will likely resist long-standing Republicans efforts to enact a capital gains tax cut to 14%, citing … Continue reading

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