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Federal Tax Law Research Papers

The Treatment of Trees: Like-Kind Exchanges of Timber Rights

Timber, logging and forest picture by Photo by Ales Krivec on Unsplash

A new research paper by Brooklyn Law School professor Bradley T. Borden looks at the treatment of like-kind exchanges of timber rights.

In general, timber rights do not qualify for Section 1031 recognition, which allows for the postponement of tax on property sales if the proceeds are reinvested in similar property as part of a qualifying like-kind exchange.  Continue reading “The Treatment of Trees: Like-Kind Exchanges of Timber Rights” »

Federal Income Tax

IRS takes professional golfers to court

Golf photo by Lukáš Opekar via Unsplash.

Spanish golfer Sergio Garcia recently litigated a $1.7 million tax case arising out of a major endorsement contract with TaylorMade, a golf equipment manufacturer.

At issue in the case is how Garcia should characterize the income that he received from the endorsement deal. The income could be classified as personal services, royalties, or a combination of both. (As a Swiss resident, Garcia would only have to pay U.S. taxes on royalty income.)

In a note from this spring’s Tax Lawyer, Georgetown Law student Jay Tymkovich argues that Garcia’s case “exemplifies the convoluted rules surrounding the allocation of income by nonresident alien athletes.”

Tymkovich calls for a standard income allocation for nonresident alien athletes after reviewing Garcia’s tax litigation and a nearly identical case involving a TaylorMade contract with South African golfer Retief Goosen. Continue reading “IRS takes professional golfers to court” »

Case Summaries S Corporations

A Texas landfill goes to Tax Court

Landfill photo by Celestine Ngulube via Unsplash.

A Texas couple recently won a novel U.S. Tax Court case involving tax deductions for landfills.

The married couple operate a landfill outside of Austin using an S corporation which they co-own with relatives.

The IRS disallowed deductions that the couple’s company took for future cleanup costs because the company is a cash-method taxpayer and the IRS contends that the deductions are only available to accrual-method taxpayers.

The tax court disagreed. Continue reading “A Texas landfill goes to Tax Court” »

Basics S Corporations

S Corporation basics

Man at office building by Chris Davis via Unsplash

Note: This is a general information “basics” article. For more information, see FAQ #4.

S Corporations Overview

An S corporation is a business corporation with a limited number of shareholders whose income is taxed through its shareholders rather than the corporation itself.

S corporations are defined in the Internal Revenue Code (26 U.S. Code § 1361) which also provides an extensive list of requirements for eligible types of shareholders. S corporations are often run by families, so there are special rules involving the treatment of related individuals. Continue reading “S Corporation basics” »