What happens when you run a ranch at a loss for 14 years and use it against your profitable S-Corp? Sometimes, you get caught. We run through the 9 factor test used by the courts to determine if your weekend getaway qualifies as legitimate business expenses or an expensive hobby! Check out the Plug on YouTube for the video!

A BIG win for taxpayers who deferred $30 million(!!!) in gain on real estate via a Tenancy in Common (TIC). We get into what is a 1031, what is a TIC, and why I think this is one of the coolest cases I've done an episode on. Enjoy!

$3 million for a lodge that has bats and mice living in the walls. Another $4 million to sue the builder and architect who built it all. And all the taxpayer gets in the end is lost deductions and a 20% penalty which could have been avoided. Today is all about classifying streams of income - passive, active, or capital - and how that can seriously change your tax owed. Enjoy.

How did we get here? You can learn all the strategy tips you want, but how did our current framework come into existence? Over the last 150 years of our country, layers of tax law and reform have passed. In this episode, we take a broad overview of the major pieces of tax reform - through the lens of small business and their owners. From our country's first income tax in 1861, to repeal, to constitutional amendment all the way to Trump 1.0 and 2.0. Hope you enjoy it.

What happens when your accountant does your accounting AND signs the audit report? Nothing good. In this case, the taxpayer overpaid tax on $7+ million of income and nearly lost the ability to get a deduction for the correction! We take a deep dive into inside baseball of public accounting, accounting for mortgage originators, and how the taxpayer won this case. Enjoy!

Valuations gone wild - a $26 million Chinese art piece + Udder Covers LLC for $18 million. How does the IRS think about valuations? What methods do they accept? What makes a good valuation stand out from a bad one? When do you need valuations? Gifting, donating? How do you time these tax events well? We take down all of these and more - enjoy.

Midwit meme meets Tax Court. How a taxpayer used one-sided journal entries to reduce income and inflate expenses to the tune of $200,000+. bUt ThE wOrK iS wOrTh sO MuCh mOrE! is a common reply when I tell people they can't write off X, Y, or Z as "donations" when they didn't pay tax on the income.

After the 9/11 Terror Attacks, millions of dollars in business aid flowed from various government agencies. This case walks us through some of the more common arguments of what is taxable and not taxable income - even when it was in the form of disaster relief grants. We also work through some of the other common types of ways people receive cash but don't have to include it in income.

Did someone say HoldCo? What happens when your HoldCo crushes it and now you want money out of it? If it's a C-Corp it's tricky. Today's case walks through to common issues: - Getting money out without being double taxed - Shielding income via accelerated depreciation Have a listen and enjoy!

The Tax Court refuses to subsidize "poor investment decisions" of the taxpayer. When Mr. Weston invested $2.1 million of his own life savings into real estate in Indiana that went belly-up, he takes a buckshot approach to try to deduct it. (1) Business Expense (2) Business Loss (Worthless) (3) Theft All fell on deaf ears of the Court and Mr. Weston got stuck having to delay the deductions as basis or losses in later years. A great episode on where and how business expenses can and should be deducted. Enjoy!

2 for the price of 1 - Langlois v. Commissioner and Clark v. Commissioner Langlois was a power line worker who dabbled in landscaping and a hair salon side hustles. But the IRS disallowed like $100,000 in deductions for essentially bad recordkeeping. Clark was a movie memorabilia seller who tried to sneak one past the IRS by not paying self employment tax on his income. It didn't work. Enjoy - and drop a rating for the show!

One of my favorite topics - Operating Agreement tax allocation language! Maybe one of the biggest things to get right when talking about partnership tax returns is the allocation of income and loss. It's not as straight forward as many think it is. In Ogden v. Commissioner (from 1985), the taxpayer had the majority of her loss taken away after the Court saw the operating agreement didn't have the right language. Enjoy!

A sheriff in Alabama gets caught "embezzling" from inmate food funds. But the argument is made that she only made a bad investment (she did) - and she avoids paying tax on the majority of the money taken. A wild story with few twists and turns - enjoy!

A desperate LinkedIn accounting job posting + a 40 year old treasure box + mall kiosks = a wild story. This case highlights how IRS auditors approach auditing small businesses, and what not to tell an IRS agent to get every entity in the org. chart audited. It winds up with a $3.8 million income hit to the taxpayers.

Our first landmark court case to review: the Business Purpose Doctrine. Gregory set up a separate company and shifted assets just to avoid tax. This case is commonly referenced in tax court cases dealing with entity and transaction structuring. We also run through other types of "grey areas" like sale-leasebacks, contingent liability planning, and TICs.

A retirement plan fiduciary embezzles $5 million of other people's retirement assets.  He wastes it on home renovations, cars, Costco trips, and trying to buy a golf course. He gets convicted of wire fraud and sentenced to jail - but now has a $3.7 million tax bill he is fighting. We cover the backstory and what kind of income is taxable and not.

Deducting $1 million in renovations on a 15k sqft second home - what could go wrong?   A lot. Witasick was an attorney who mostly served Arizona clients. He bought this 56 acre monster home and for two years renovated it - while deducting a majority of the costs as business expenses.   The Court called it fraud and he served jail time. We dig into repair and maintenance, business / personal use, and unreimbursed partner expenses.

S-Corps gone wild. A taxpayer forms more S-Corps than he needs and loses out on millions of dollars in deductions from: - S-Corp basis limitations - Bad record keeping - Missed tax elections

Buy here pay here car dealership, bad accounting record access, and an aggressive IRS agent all combine for a few million dollars in tax assessed. But the good guys get a win in this case and Aboui gets major tax relief mostly from some IRS missteps. We talk about: - Cohan rule (what happens when accounting is bad) - S-Corp taxation on distributions - Types of audit techniques the IRS will use

On Episode 1, we get into 7 US Tax Court cases from 2024 with some solid lessons learned: Parkway Gravel v. Commissioner - 3:07 - real estate options, C-Corps, partnership, related parties Schnackel v. Commissioner - 16:09 - cheating husband, disallowed business deductions for cheater Foradis (Warren) v. Commissioner - 28:15 - Real Estate Pro status blown up Maggard v. Commissioner - 37:02 - S-Corp income allocation, embezzlement, Operating Agreement rant Schwarz v. Commissioner - 49:09 - bad accounting, conglomerate of activities, losses disallowed as hobby Huffman v. Commissioner - 1:01:17 - stock options subject to gift tax, personal goodwill as C-Corp play Strom v. Commissioner - 1:12:06 - dot com bubble crash, $100MM W2, sham tax structuring