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Tax Controversy Archives

Scams expanding to financial institutions, warns IRS

The Foreign Account Tax Compliance Act went into effect at the beginning of July. FATCA was designed to crackdown of offshore accounts. The Act requires foreign financial institutions to provide the Internal Revenue Service with information on all accounts held by U.S. taxpayers or foreign entities with substantial U.S. ownership interests.

How to decipher between a hobby and a business

You love knitting. In fact, you are so good that you have become known for your little baby bonnet creations. Women in your neighborhood have even paid you to generate custom infant apparel. Therefore, you think the following: "My knitting has become a business, and therefore, any financial losses incurred will be deductible in full against my taxes." Unfortunately, your idea of a trade or business may be incorrect in the eyes of the IRS. Instead, you may just have a crafty hobby. If that is the case, expenses from the activity are limited to profit derived from the particular pastime.

Los Angeles seeks taxes from Airbnb hosts

The sharing economy has added options for travelers through Airbnb.com and Vacation Rentals by Owner. They also provide a way for an owner to make ends meet and offset high California housing costs. However, these services often skirt traditional hotel taxes.

Free lunches at the office: Could you soon owe taxes on the perk?

The Internal Revenue Service is reviewing whether the free gourmet lunches enjoyed by many employees of technology companies in Silicon Valley should be considered taxable benefits. In an article last week, the Wall Street Journal noted that the agency has added the issue to its top tax priorities in the next fiscal year.

Legal offshore: No oxymoron, Swiss banks re-enter US market

Several Swiss banks are again marketing their asset preservation and wealth diversification services to U.S. clients. A chief executive officer of a UBS branch says they are only accepting “clients who have declared all their assets” to the Internal Revenue Service.

Reasonable compensation for corporate shareholders

In a recent blog post, we discussed some tax considerations when incorporating a business. Once a business reaches profitability, an owner or shareholder of an S corporation can take distributions of company profits, which do not require withholdings or payroll taxes.