Section 461(l) is just bad tax policy. While deductions granted are a matter of legislative grace by act of Congress, in reality Section 461(l) can, as a matter of economic reality, impose income tax on “gross receipts” for a taxpayer actively engaged in business which generate an operating loss in excess of the threshold amount for which the taxpayer is otherwise not subject to any other limitation that Congress did not previously prescribe. Read More

In 3M Companies & Subsidiaries, Inc. v. Commissioner, the Tax Court, in a 9-8 majority decision issued on February 9, 2023, sustained a proposed deficiency in income tax of $3.6 million attributable to the petitioner’s failure to include $23 million in blocked royalty income from a controlled Brazilian subsidiary based on Brazilian law on its consolidated return for 2006. The Tax Court rejected the petitioner’s argument that the regulation was invalid under Chevron U.S.A., Inc. v. Natura… Read More

The Tax Court’s decision in YA Global Investments LP v. Commissioner in November sends a warning to the offshore banking, finance and equity investment industries: an offshore entity is engaged in U.S. trade or business when an offshore lender or investor’s agents render substantial, regular and continuous services in the United States. Those industries are adversely affected by the potential reach of the Tax Court’s decision. YA Global, which has already generated much commentary and… Read More

This article, which will be expanded in the next issue of Corporate Taxation, discusses a recent Tax Court decision that raises the question whether hedge funds and private equity firms segregating large capital investments by non-U.S. persons, foreign countries, and exempt organizations, for investment in the U.S. in foreign feeder groups, are imputed the status of being engaged in one or more U.S. trades or businesses through the activities of their agents. In YA Global Investments, LP, 161 TC… Read More

Jerald David August was highlighted in the Forbes article, “Why Novak Djokovic and Other Top Tennis Stars Choose Monaco as Their Home.” Read the article. Read More

Tax attorney Jerald David August is quoted in a Law360 Tax Authority article discussing recent court rulings that restrict international travel for U.S. taxpayers with tax debts. Read the article. Read More

The IRS recently issued final regulations for Section 199A, which allows a 20 percent deduction from a taxpayer’s ordinary income from certain qualified trades or businesses. There is not currently a clear test to determine whether businesses are separate for purposes of the deductions. Jerry addressed a variety of key issues relating to the 199A deduction in an ALI-CLE National webinar and Tax Notes reported on the webinar in a recent article. Read the full article here and please contact Jer… Read More

Dream of Owning a Plane? This Tax Break Can Help. Growing up in central Connecticut in the 1980s, Joshua Siegel loved everything about flying. He couldn’t afford flying lessons, let alone his own plane, but he kept dreaming. By his 20s, he had achieved some financial success and was able to take advantage of a new tax deduction meant to spur private plane sales in the aftermath of the Sept. 11 terrorist attacks. Using the tax break, he deducted the entire cost of a new Cessna more quickly than… Read More