New case: A taxpayer without legal title to a property deducted the mortgage interest and property taxes. The Tax Court examined the contract to see if it transferred the benefits and burdens of ownership to the taxpayer. The court ruled that an option to buy the property, absent the legal obligation to exercise the option, doesn’t constitute such a transfer. (Jones, TC Memo 2006-176)
Related note: An equitable or beneficial property owner may deduct real-estate taxes paid to protect his or her ownership interest.
2. Couple relies on bad IRS hotline advice. Can you rely on hotline advice from the IRS? In a new case, a couple calling the toll-free IRS hotline received erroneous information from an IRS rep about the deadline for filing amended returns. As a result, the couple missed the filing deadline and could not benefit from several tax breaks they would’ve been entitled to claim. The Federal Claims Court said they are not entitled to any tax relief. (Katz, Fed. Ct. Claims, 7/25/06)
Tip: Obtain a private letter ruling for critical tax advice. The results apply only to the taxpayer requesting the ruling.
- Small Business Tax Deduction Strategies No matches