Expenses & Deductions

LB&I Guidance on Benefits-and-Burdens-of-Ownership Analysis Under Sec. 199

The IRS LB&I Division issued guidance to field examiners in determining whether a taxpayer conducting production activities under a contract manufacturing arrangement with an unrelated third party meets the benefits-and-burdens-of-ownership requirement outlined in the domestic production activities deduction rules under Sec. 199.

Guidance on Characterizing Gross Receipts from Telecommunications Services

In Rev. Rul. 2011-24, the IRS provided guidance for determining whether a taxpayer that provides telecommunications services derives gross receipts from services, leasing or renting property, or a combination of the two, for purposes of the domestic production activities deduction under Sec. 199.

Bank Allowed to Deduct Lawsuit Settlement Payments

In a private letter ruling, the IRS allowed a private bank catering to high-wealth individuals to deduct payments it made to settle lawsuits arising from criminally fraudulent activities by one of the bank’s fund managers.

Ordinary Worthless Stock Deductions: Characterizing Subsidiary Receipts

An ordinary loss deduction for worthless stock of an affiliated operating subsidiary generally is permitted as long as more than 90% of the subsidiary’s gross receipts are from active operating income. This item discusses the difficulty of determining whether a subsidiary’s gross receipts qualify as active operating income for this purpose under various circumstances.

Tax Consequences of Transaction Costs

This article discusses the tax consequences of transaction costs in four settings: in general, when acquiring or producing tangible assets, when acquiring or creating intangible assets, and when acquiring a business.

Violation of Public Policy and the Denial of Deductions

Recent events have drawn attention to the disallowance of deductions where allowing the deductions would violate public policy. This article discusses the disallowance of deductions under Sec. 162 and Sec. 165 for public policy reasons.

Rethinking Sec. 199 Based on New Developments

Co-Editors: Michael Metz, CPA; Nick Gruidl, CPA, MBT Beginning in 2006, there is a new deduction available for updating or constructing commercial building property to be more energy efficient. The Energy Tax Incentives Act of 2005 (ETIA), which took four years to pass, added new Sec. 179D. With so many

Energy-Efficient Commercial Buildings Deduction (April 2006)

Beginning in 2006, there is a new deduction available for updating or constructing commercial building property to be more energy efficient. The Energy Tax Incentives Act of 2005 (ETIA), which took four years to pass, added new Sec. 179D. With so many commercial buildings exceeding 15 years in age, many

Energy-Efficient Commercial Buildings Deduction Revisited

Co-Editors: Michael Metz, CPA; Nick Gruidl, CPA, MBT The deduction available for updating or constructing more energy-efficient commercial building property has been previously discussed; see Schuerman, Tax Clinic, "Energy-Efficient Commercial Buildings Deduction,” TTA, April 2006. At that time, little guidance was available on how to take the deduction under new

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2016 Best Article Award

The winners of The Tax Adviser’s 2016 Best Article Award are Edward Schnee, CPA, Ph.D., and W. Eugene Seago, J.D., Ph.D., for their article, “Taxation of Worthless and Abandoned Partnership Interests.”