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The Superior Court in K.J.P. v. R.A.P., 68 A.3d 974 (Pa.Super. 2013) examined losses emanating from a parent’s investment activity apart from his primary employment. In addition to his regular employment as a marketing and product development consultant, Father was engaged in the purchase, renovation and sale of residential properties, owning as many as 20 houses at at time. In order to gain tax advantages, Father testified that he sometimes […]

Over New Year’s Weekend, our Congress passed legislation to avert the “fiscal cliff,” which would have resulted in dramatic income tax increases. The new law has ushered in tax increases, to be sure, but those tax hikes are not as dramatic as what might have occurred if Congress had not belatedly acted. The Fiscal Cliff tax legislation makes changes to the Internal Revenue Code, including the following: The 39.6% tax […]

In Doolittle v. Commissioner, T.C. Summary Opinion 2012-103 (2012), a NON-precedential opinion of the U.S. Tax Court, the taxpayer settled his divorce by entering into a marital settlement agreement, in which he agreed to pay $900 per month alimony until December 31, 2010. The alimony was intended to “help with college costs,” according to the 2003 settlement agreement. The child of the taxpayer and  his former wife would be 23 years […]

Perhaps it comes as no surprise that the IRS generally will not consider divorce as a good excuse for being late in filing income tax returns. In Cayabyab v. Commissioner, T.C. Memo. 2012-89 (2012), the taxpayer did not file his 2006 federal income tax return by the deadline (April 15, 2007). The IRS sent him a letter in September 2009, requesting that he file his 2006 return, which was already overdue […]

When separated spouses file their income tax returns, they generally have a choice of filing jointly or separately. If they file jointly, they may have to decide how to allocate the tax liability or refund. If they file separately, they may have to decide how to allocate itemized deductions, the children’s dependency exemptions, and credits. The advice of a competent tax preparer, CPA or tax lawyer can be most helpful. […]

In July 2011, the IRS changed its policy that once imposed a two year limit on innocent spouses seeking certain forms of relief from tax penalties and interest caused by their spouse’s misreporting on joint tax returns. A recent article from the Washington Post explained: Under the innocent spouse umbrella are three types of relief — the innocent spouse provision itself (a tough enough contention to prove), plus categories for […]