Individual tax update
This semiannual update surveys recent federal tax developments involving individuals.
Deductions
AICPA recommends QBI improvements
The AICPA recommended in a letter to Senate tax-writing leaders eight ways to improve the deduction for qualified business income under Sec. 199A.
Business meal deductions after the TCJA
This article discusses the history of the deduction of business meal expenses and the new rules under the TCJA and the regulations and provides a framework for documenting and substantiating the deduction.
Sec. 199A and Subchapter M: RICs vs. REITs
Sec. 199A, may create a potential difference in how the same type of income is taxed to shareholders of RICs and REITs and therefore offers an opportunity for fund managers.
‘Restaurant’ defined for 100% deductible business meals in 2021 and 2022
The IRS issued guidance on the temporary rule that allows a 100% deduction for eligible restaurant meals in 2021 and 2022.
Casualty losses related to COVID-19 when there are no physical losses
The COVID-19 pandemic brings taxpayers into uncharted territory with regard to casualty losses without physical damage but where there is still an undeniable impact to the business, especially where property values are permanently reduced due to the pandemic.
IRS says educators may deduct cost of personal protective equipment
Educators who have unreimbursed expenses for personal protective equipment, disinfectant, and other supplies used to prevent the spread of COVID-19 in the classroom can deduct those expenses.
IRS explains which meals qualify for temporary 100% expense deduction
The IRS issued guidance on Thursday on the temporary rule that allows a 100% deduction for eligible restaurant meals in 2021 and 2022.
Final rules determine when fines and penalties are deductible
The IRS issued final regulations on when fines and penalties paid to a government are not deductible by a taxpayer, including defining when a payment counts as restitution, which may be deductible.
IRS issues additional rules on the business interest expense limitation
The IRS issued final regulations containing rules on the Sec. 163(j) interest expense limitation, including rules for specific passthrough entities and regulated investment companies.
Amounts paid for personal protective equipment qualify for medical deduction
The IRS announced that purchases of personal protective equipment used to combat the COVID-19 pandemic qualify for the Sec. 213 medical expenses deduction to the extent they exceed 7.5% of a taxpayer’s adjusted gross income and have not been compensated for by insurance or otherwise.
No deduction for donation of house for deconstruction
Contribution of a house to a charity for deconstruction was not a donation of the taxpayers’ entire interest in the property.
Eligible educators may deduct personal protective equipment expenses
The IRS issued guidance providing a safe harbor under which eligible educators who have unreimbursed expenses for personal protective equipment, disinfectant, and other supplies used to prevent the spread of COVID-19 in the classroom can deduct those expenses as educator expenses.
Refusal to pay court-ordered divorce settlement is not theft
An ex-spouse’s refusal to pay a divorce settlement award is not theft.
Final regs. provide guidance on TCJA changes to entertainment deduction rules
In general, food or beverage expenses paid or incurred while traveling for business are subject to the 50% limitation as well as the substantiation requirements described in Sec. 274(d).
Final regs. govern deductibility of fines and penalties
The IRS issued final regulations on when fines and penalties paid to a government are not deductible by a taxpayer, including defining when a payment counts as restitution, which may be deductible.
Final regs. address certain Sec. 163(j) rules
The IRS issued final regulations containing rules on the Sec. 163(j) interest expense limitation, including rules for specific passthrough entities and regulated investment companies.
Gambler is big winner in Tax Court
The Cohan rule is used to determine the losses of a compulsive gambler.
2021 standard mileage rates decrease
The IRS issued the 2021 standard mileage rates for use in computing the deductible costs of operating an automobile for business, charitable, medical or moving expense purposes. The rates all decreased from 2021 to 2020.
Final regulations on the meals and entertainment deduction
The IRS issued regulations to address the changes made to the meals and entertainment deduction under the TCJA.
