Year-End Individual Taxation Report

Year-End Individual Taxation Report

EXECUTIVE
SUMMARY

  • Litigation over restricted stock-based compensation focused on the proper date of the stock’s market valuation and the effect of company and SEC restrictions on disposition of the stock.
  • Several actions by Congress and the IRS aimed to reduce improper claims of the earned income tax credit by increasing preparer penalties and due diligence procedures.
  • The Tax Court applied the IRS’s recent practice of allowing professional gamblers to deduct ordinary and reasonable nonwagering business expenses over their gambling winnings, overturning a 1951 case holding.

  • The Tax Court also held that limited partners of a limited partnership who perform services for the partnership in their capacity as partners may be liable for self-employment taxes despite a general statutory exemption from self-employment income for limited partners’ income.

This article covers developments from the past year affecting taxation of individuals, including last year’s tax relief, health care, and small business legislation, regulations, cases, and IRS guidance. The items are arranged in Code section order.

Source: AICPA Tax Advisor

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