August 2009 - The Tax Adviser

Costs incurred in a bankruptcy filing can be categorized as either personal or business related. A taxpayer cannot deduct those categorized as personal expenses but can deduct those categorized as business expenses.

Cost segregation is a popular tax planning technique for owners of depreciable real property. While it is a legitimate and sometimes beneficial technique, some taxpayers have adopted it without considering the potential adverse consequences that can occur upon disposition of the property.

The impact of community property laws on tax issues is vast and complex. Advisers must be mindful of this when learning about their clients, whose geographical history may be as important to consider as their financial and business background.

Recent changes to the tax preparer penalty statute expose signing and nonsigning tax preparers of income, estate, gift, and certain information returns to higher monetary penalties and make it vital that they understand who is a preparer under the new rules.