The IRS has specific rules regarding the level of substantiation required for charitable contributions depending on the amount contributed and the nature of the contribution. Taxpayers failed to adequately substantiate most of their claimed charitable deductions.
Taxpayer, a security investor, could only deduct his expenses on his Schedule A, not as business expenses on Schedule C. Losses incurred by security investors and security traders are not ordinary losses but capital losses limited to a maximum of $3,000 each year.
Contribution to the clean election fund made by Taxpayers’ wholly owned LLC, at their direction and which was accounted for by the LLC as a distribution to Taxpayers, constituted a payment by Taxpayers within the meaning of A.R.S. § 16‑954(B).
Expenses incurred in the process of purchasing property are capital expenses that may not be deducted as either business expenses or as expenses incurred for the production or collection of income. Such expenses must be capitalized.
Taxpayers could not maintain a claim for refund for tax years closed by a closing agreement. The closing agreement took the form of two letters, an offer by the Department and the acceptance of the offer by the taxpayers.
To take an alimony deduction for payments, the obligation to make payments must necessarily stop on death of the other ex-spouse. Allowance a deduction in prior tax year does not prevent the Department from assessing tax on payments made in a later tax year.