Broker Check

August 31, 2017


Taxing Employment Discrimination

          The Tax Court ruled that a man who was fired from his job while recovering from injuries sustained in a car accident unrelated to his job had taxable income.  He filed a lawsuit alleging employment discrimination based upon disability.  The parties settled and he received a payment.  Since no portion of the proceeds were for physical injury or illness, the settlement was taxable.  Rajcoomar, TC Memo 2017-129.

Paris v. NYC

          A man who moved to Paris and kept his NYC apartment was not domiciled in NY for tax purposes according to the NY Division of Tax Appeals.  The taxpayer first lived in Connecticut and raised his family there with his first wife.  He later divorced and purchased an apartment in NYC in order to be closer to work.  Soon after, he met his second wife, who lived in France with her teenage son.  He retired and moved to Paris, where the couple bought a home.  New York claimed he was still domiciled in NYC since he kept his apartment and spent some time there.  But after weighing all the factors, the State court disagreed.  Patrick, NY Division of Tax Appeals.

          If you are planning on changing your residence, please contact us in order to help plan your exit to avoid the expensive litigation to which you could be exposed.

Pre-Commencement Costs Are Non Deductible

          Costs incurred before a company commences business are not deductible.  The Tax Court confirmed where an engineer deducted $50,000 of initial research costs for a start up venture, he had no sales, clients or marketing offerings even though he spent time and money, the business had not yet begun.  Carrick TC Summary Opinion 2017-56.  Note that once business begins, the company can make an election to deduct $10,000 of the preopening costs and amortize the balance over 180 months (15 years).

Property in a Trust Might Note Defeat IRS Lien

          A married couple saddled with federal income tax debt and other liabilities transferred title of their home to a trust.  The couple continued to live in the house and paid all expenses for the property’s upkeep from a trust owned checking account that they funded and controlled.  The IRS started foreclosure proceedings on the house to satisfy the debt.  The court said since the trust held title to the residence as a nominee for the couple the IRS could foreclose on the property.  Balice DC NJ.

          If you are contemplating such a move, you should approach us first in order to structure a way by which the house remains out of the IRS’s reach.

NJ Thanks Us Veterans

          New Jersey thanks our military veterans (of which I am a proud former member of the US Coast Guard) by, effective in 2016, creating a special designation for display on your driver’s license or non-driver’s ID card.

          You may request your permanent imprinted veteran’s designation driver’s license or non-driver’s ID at no charge by either appearing in person at the MVC agency or by mailing in documents.  Visit the Motor Vehicle Commission website for details.

          This should help those who want discounts at establishments such as Home Depot and cannot show the Home Depot requested ID card, which is really a Veteran’s Administration ID card, showing you are eligible for medical benefits.

          As always, if you have any questions about these or any other matters, do not hesitate to call us.

           Remember, We’re Here For You!