“My conscience has compelled me to come to the floor today to voice concerns I have with the influence Grover Norquist, the president of Americans for Tax Reform, has on the political process in Washington,” Wolf read from a statement on the floor of the House of Representatives today. Wolf listed a series of associations that he said undermines Norquist’s credibility as a policy advocate. Among them, he cited a relationship Norquist had with former lobbyist and convicted felon Jack Abramoff. “Mister Abramoff essentially laundered money through ATR and Mister Norquist knew it,” Wolf said. [Bloomberg]
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UBS and IRS Probably Have a Deal, No Toblerones Involved
- Caleb Newquist
- July 31, 2009
UBS is going to name names, albeit not all of them, bringing us to ever so close to the bitter end of the whole IRS/UBS standoff.
All the gory details are expected to be released on August 10th, when hopefully everyone will kiss and make up officially.
The focus of the settlement will be around 7,000 or so accounts that are associated with offshore companies and trusts that are possibly tied to some financial shenanigans. Under the potential settlement, UBS won’t turn over any names until after September 23rd, which is the last day for offshore account holders to confess their sinful ways.
Deal Reached in UBS Tax Battle [WSJ]
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Tax Court Rules That Feng Shui-Inspired Business Plan Made Couple Professional Gamblers
- Caleb Newquist
- July 21, 2010
There are plenty of businesses out there that simply don’t have a plan. They may have a sign in the window, products on their shelves and a room full of “keepers” but not much else.
Trieu Le and Baymone Thongtheposmphou, on the other hand, had a plan. When Le’s company moved to Costa Rica in 2005, he opted to turn his focus towards professional gambling.
Sure, there are plenty of people out there that claim to be professional gamblers that would probably be better described as “degenerates” but not Le and Thongtheposmphou. They would use the principles of Feng Shui to focus their wagering efforts on their “lucky days,” increasing their wagering, foregoing sleep and possibly unnecessary food or bathroom breaks in order to maximize their luckiness.
Things were going on swimmingly for the couple until, at some point in 2007, they realized they were 200k in debt, having “withdrawn money from their retirement funds and borrowed against various assets to finance their attempt to make a profit.” These two were obviously committed to their idea and their plan.
TL and BT filed their losses (not to the exceed their winnings, of course) on a Schedule C to be included on the 1040. Unfortch, the IRS wasn’t buying the notion of this “professional gambling” and called bullshit:
Respondent treated petitioner’s winnings as not being from a business (i.e., that petitioner was not in the business of gambling) and accordingly determined that his losses should have been reported on Schedule A, Itemized Deductions, as an itemized deduction rather than a business deduction. The income tax deficiency respondent determined arose from the inclusion of the gambling winnings in income and the resulting increase of the limitations on miscellaneous itemized deductions claimed on Schedule A.
The tax court decided to boil this down to the facts. That being, these two people had a plan – to gamble based on Feng Shui principles. Was this a bad business plan? Certainly not the best but far from the worst. Was it harebrained? Maybe. But was the tax treatment correct? The tax court says yes!
We find that petitioner’s gambling activity was a trade or business that was pursued in good faith, with regularity, and for the production of income, and that it was not merely recreation or a hobby.
[…]
Respondent also argues that petitioners’ approach was not businesslike and that it was irrational. The standard, however, requires only that the profit objective be actual and honest. It would be difficult to find on the record before the Court that petitioner’s approach to making a profit was irrational. For example, if someone’s investment in a stock or a business were based on Feng Shui or some other cultural judgment, that would not per se be “irrational”. Petitioners used their best judgment and successfully tested their business approach. Ultimately, the fact that their approach was unsuccessful does not make it irrational.
So take heed degenerate gamblers with crackpot business plans! As long as you’re using your best judgment and have some semblance of an “business approach” you too can take on the IRS (these two were pro sese, no less). Good luck!
[h/t TaxProf]
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After Filing Snafu, H&R Block Making It Up to Customers in Most Superficial Way Possible
- Caleb Newquist
- April 25, 2013
Kinda like a thoughtless relative or friend who completely forgot your birthday: “H&R Block appreciates that […]