Tax Law Updates

IRS Thaws Tax Treatment of Cuba, but Embargo Limits Benefits

March 22nd, 2017 by Lapekas Law Staff

post-img-1_360x230 The following was published on SanctionsAlert.com on 3/14/2016

The thawing of relations between the United States and Cuba is also having consequences on the taxes and tax credits of United States taxpayers. Earlier this month, the US Internal Revenue Service ruled that United States taxpayers are no longer prohibited from taking a “foreign tax credit” for income taxes paid or accrued to the Republic of Cuba.

IRS Revenue Ruling 2016-8, issued on March 1, 2016, is consistent with the loosening of U.S. restrictions on travel to Cuba and its efforts to build deeper diplomatic and other relations with the island nation. The IRS Revenue Ruling will come as welcome news to United States companies and investors who are looking to gain or expand a foothold in Cuba. Read the rest of this entry »

Trump’s 15% Corporate Tax Rate Won’t Kick-Start the Economy

March 21st, 2017 by Lapekas Law Staff

post-img-2_360x230 Will Trump’s 15% Corporate Tax Rate Kick-Start the Economy? He Says, “Yes.” History Says, “No.”

Trump’s tax plan calls for cutting the corporate tax rate to 15%. Between the corporate tax rate cut and the cuts to individual taxes, his overall plan would reduce tax revenue by $9.5 trillion over 10 years.[1] But what’s $9.5 trillion when, by “cutting the corporate tax rate to 15%,” America will be able to “compete with the world and win“? [2] Read the rest of this entry »

Considering a Tax-Free Rollover? Take Note of the Tax Court’s Additional Requirement…

September 24th, 2014 by Lapekas Law Staff

Yesterday the U.S. Tax Court added an additional requirement for a distribution from an individual retirement plan (and subsequent contribution to an eligible retirement plan) to qualify as a tax-free rollover. In Bohner v. Commissioner, 143 T.C. 11 (Sept. 23, 2014) the Tax Court essentially held that an “eligible retirement plan” may determine whether an individual’s IRA rollover is tax-free by simply refusing to “accept” tax-free rollovers—regardless of whether the form of the transaction otherwise qualifies as a tax-free rollover. If you read no farther, take note: before you attempt to conduct a tax-free rollover from one retirement account to another, not only must you be sure it qualifies under IRC § 408(d)(3)(A), but you must also be certain the retirement account to which you are transferring the funds accepts rollovers. “Accepts” means that, not only must the IRA accept the deposit, but it must also accept the tax treatment of a subsequent distribution of that deposit. Read the rest of this entry »

Want to complete tax-free rollovers from multiple IRAs this year? 2014 is your last chance!

March 26th, 2014 by Lapekas Law Staff

Pursuant to Section 408(d)(3)(A)(i), generally, the Internal Revenue Code allows for only one non-taxable IRS rollover every 365 days[1]. Up until just last week the IRS interpreted this provision to mean that one rollover per year per IRA was permitted. The Tax Court disagreed in Bobrow v. Commissioner.

Pursuant to the Bobrow opinion, the IRS announced that it will follow the Tax Court’s interpretation. Accordingly, both the IRS and the Tax Court agree that if you make a tax-free rollover from one IRA you will not qualify for another tax-free rollover from any IRA for 365 days.

Fortunately, the IRS indicated that it will wait until January 1, 2015 to apply the Tax Court’s interpretation of Section 408(d)(3)(B). So plan accordingly. What’s allowable this year will not be permitted the next.

[1] Note that the Section 408(d)(3)(B) provides for one tax-free rollover during a 1-year period. Thus, if an individual makes a nontaxable rollover on December 31 of year 1, he may not make other nontaxable rollover until December 31 of year 2.

Dear Kermit: It’s not easy being green, but the Tax Court may be making it cheaper.

August 29th, 2013 by Lapekas Law Staff

When can you deduct as a medical expense “natural” or non-traditional treatments?

Yesterday, an opinion from the United States Tax Court was published which should please individuals using “natural” or non-traditional treatments for medical conditions. Having tried Humphrey v. Commissioner of Internal Revenue, T.C. Memo 2013-198 (August 28, 2013)[1] on behalf of the IRS in November 2012, I was “naturally” (for lack of a better word…) eager to read the opinion as soon as it was published to see if the IRS prevailed on all of the issues. It did not. And this surprised me. Read the rest of this entry »