Federal Taxation and Cutting Horses: It’s Not Just About The Horses

Recently I came across a United States Tax Court memorandum decision dated November 25, 2019 involving a South Dakota farmer with a cutting horse and seed business. The issues in the case that struck me were (1) whether the taxpayer’s cutting horse activity was an activity “not engaged in for profit” within the meaning of Section 183 of the Internal Revenue Code, and (2) whether the taxpayer should be required to pay the accuracy-related penalties under Section 6662(a) of the Internal Revenue Code.

What’s up with the Taxpayer First Act

During this past summer, the Taxpayer First Act (“TFA”) became U.S. tax law. The U.S. Congress’ stated purpose of implementing the Taxpayer First Act was to modernize and improve the Internal Revenue Code of 1986.

Changes to the EB-5 Immigrant Investor Program Coming on November 21, 2019

On Wednesday, July 24, 2019, the Department of Homeland Security published rules that will materially change the EB-5 Immigrant Investor program. The changes go into effect on November 21, 2019.

Remote Sellers Must Register in Texas before October 1, 2019

Remote sellers are required to begin sales and use tax collection on October 1, 2019 on their Texas sales. Remote sellers doing business in Texas must register with the Texas Comptroller of Public Accounts before October 1, 2019 to fulfill their Texas tax responsibilities.

The Earned Income Tax Credit Two Year Band

The Earned Income Tax Credit or EITC is designed to assist working class families with children by putting money in their pockets. The EITC is a tax credit, not, a tax deduction. The difference is huge! A tax credit is a dollar for dollar reduction in the taxes owed.

Taxpayers with Significant Tax Debts Can Lose Their U.S. Passports

Ever heard of the Fixing America’s Surface Transportation (FAST) Act of 2015? Well, under FAST the IRS has the authority to notify the State Department of taxpayers certified as owing the federal government. The FAST requires the State Department to revoke the delinquent taxpayer’s U.S. passport and limit the taxpayer’s ability to travel outside the United States.

FBAR

The 1970 Currency and Foreign Transactions Reporting Act, which is otherwise known as the Bank Secrecy Act requires U.S. residents, citizens and businesses with foreign bank accounts and certain other overseas assets to report those interest to the Financial Crimes Network annually on Form 114 by April 15^th of the following year.

Giving is good! Giving is Subject to Federal Taxation

Giving in the United States creates tax obligations on the giver. Internal Revenue Code Section 2503 defines “taxable gifts” as the “total amount of gifts made during the calendar year, less deductions provided in subchapter C (section 2522 and following).” Under United States federal tax laws, the donor (giver) is taxed on the fair market value of the gift.

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