In a letter ruling, the IRS addressed the common concept of credit card companies allowing their customers to request that their credit card rebates be donated to charity.
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TOPICS / INDIVIDUALS
Deductions
Individual Taxation Report: Recent Developments
This article covers recent developments affecting the taxation of individuals, including health care reform and other legislation, regulations, cases, and IRS guidance. The items are arranged in Code section order.
IRS Rules That Mortgages Over $1 Million Can Be Deductible
The IRS has ruled that indebtedness incurred by a taxpayer to acquire, construct or substantially improve a qualified residence can constitute “home equity indebtedness” to the extent it exceeds $1 million, up to an excess of $100,000.
Tax Court Rules on Medical Necessities
The Tax Court has expanded the scope of the medical expense deduction and the definition of what is “medically necessary.” This case establishes the precedent that gender identity disorder is a mental disorder (disease) for purposes of the medical expense deduction.
Per Diem Travel Rates Updated
The IRS issued updated federal per diem rates and procedures for substantiating deductible expenses or employer-paid allowances for lodging, meals, and incidental expenses incurred in business-related travel away from home.
Deducting Success-Based Financial Advisory Fees
The deduction of success-based financial advisory fees related to business transactions has been, and continues to be, an area of significant taxpayer uncertainty.
Tax Treatment of Expenses Incurred by Individuals Temporarily Out of Work
This article examines the tax treatment of expenses incurred by individuals who are temporarily out of work.
Tax Benefits for Education
An array of tax benefits are available to taxpayers, including income exclusions for educational assistance, scholarships, and distributions from qualified tuition plans and educational IRAs, as well as credits for tuition and certain education-related expenses and a deduction for tuition payments.
A Little-Known Tax Benefit: The Gift of Inventory
Tax incentives are available for contributions of inventory for the care of the ill, needy, or infants, but many taxpayers may be unaware of them. This item outlines the current rules for an increased deduction and analyzes events leading up to the current rules.
Final Regs. Govern Deductibility of State Legislators’ Deemed Living Expenses
The IRS and Treasury released final regulations on the availability of a special deduction for deemed living expenses of state legislators (T.D. 9481).
Tax Court Allows Medical Deduction for Sex Change Operation
In a case of first impression, the Tax Court has held that a taxpayer can take a medical expense deduction for the costs of her sex change operation (O’Donnabhain, 134 T.C. No. 10).
Individual Taxation: Digest of Recent Developments
This article covers recent significant developments affecting taxation of individuals, including legislative changes, cases, regulations, and other IRS guidance.
IRS Memo Allows Taxpayer to Deduct Interest on $1.1 Million Mortgage
The IRS Office of Chief Counsel has issued a memorandum in which it reinterprets the definition of “acquisition indebtedness” to allow a taxpayer to deduct interest on the first $1.1 million of his or her mortgage instead of the usual $1 million limit.
Charitable Contribution of Qualified Conservation Easement
The Tax Court held that a conservation easement of air space over an historic structure that was donated by a taxpayer to a nonprofit organization did not meet the requirements to be considered a qualified conservation easement.
New Rules Seek to Clarify Allocation and Reporting of Mortgage Insurance Premiums
The IRS recently issued temporary regulations that explain how to properly determine the deductible amount of mortgage insurance premiums.
Deducting Donated Services and Out-of-Pocket Expenses
A taxpayer who has limited resources but wants to make a deductible charitable contribution has limited options. While a deduction is not allowed for the value of charitable volunteer work, unreimbursed expenses may be deductible.
Individual Taxation Report
This article covers recent significant developments affecting taxation of individuals, including cases, IRS guidance, and legislative changes.
Deductibility of Bankruptcy Costs and the Origin of the Claim
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.
New Car Buyers in States with No Sales Tax Can Still Take Sales Tax Deduction
The IRS announced that new car buyers in states with no sales tax are entitled to take the new car sales tax deduction under Sec. 164(b)(6).
Leasing Business Autos
Automobile leases have certain advantages. They require a minimal investment and are convenient if the customer replaces the car every two or three years. With a lease, there is no hassle with selling or trading in the car. Instead, the lease customer simply drops it off at the end of the lease and arranges another lease for a new one.
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2025 tax software survey
AICPA members in tax practice assess how their return preparation software performed during tax season and offer insights into their procedures.
