Tuesday, June 5, 2018


* A belated happy anniversary to fellow tax blogger Professor Annette Nellen of 21st CENTURY TAXATION.  Her 991st post - “11th Blog Anniversary - Still Aiming for Improved Tax Policies - Modern Entrepreneurship”.

Keep up the good work AN – here’s to 11 more years.

* In a guest post at the TAXPROF blog Bryan Camp gives us a “Lesson From The Tax Court: A Tax Truism”.

The tax truism – “never take tax advice from the person selling you the deal.”

And to go a bit further, here is what I have been saying for years is the best tax advice I can give to anyone - do not accept tax advice from anyone other than a professional tax preparer!

* Over at FORBES.COM TaxGirl Kelly Phillips Erb warns “Don't OrderThe Lobster Just Yet: New Tax Law Complicates Business Travel”.

The one word I hate to see in relation to tax law is "complicates".  But the idiots in Congress insist on complication when simplification is called for.

The TaxGirl is correct when she says “there is a great deal of confusion under the new law” regarding the deductibility of business meals.  Actually, about a lot of provisions of the Act (because it was written so hastily and without proper thought and discussion).

Kelly goes on to say -

Some tax pros believe that the language in the TCJA completely eliminates the deduction for meals with clients, customers, and potential referrals. Others take the position that meals are deductible, but meals that tied to nondeductible entertainment (think dinner at a show or lunch during a ballgame) might not be. Still, others believe that if you can easily separate the two for accounting purposes, meaning that you can carve out the meals from the entertainment, the meals are deductible.”  

I fall into the third category.

In the past I would meet with a self-employed client at his home office to discuss individual and business tax and accounting related topics.  After the initial meeting we would drive into NYC to see a matinee and have dinner in the city after the show where we would continue the business discussion.  The client would pick up the entire tab.  Under the new law the cost of the theatre tickets will not be deductible as a business expense on the client’s return, but, in my opinion, the cost of the meal after the performance would, as long as it contained a substantive business discussion.  The same as it would if there was no “entertainment” before the meal. 

I do believe that if instead of a matinee we went to a ball game the cost of hot dogs and beer at the game would not be deductible.

We tax pros are all waiting for specific IRS guidance on this and many other GOP Tax Act related items.

Two items to remember – NEVER ignore a notice from the IRS or a state tax agency, and NEVER assume a notice from the IRS or a state tax agency is correct.  If you receive a notice from Sam or any other “Uncle” contact your, or a, tax professional ASAP.  

* More from the politicians are idiots (especially in NJ) file.  NJ.COM reports “Phil Murphy signs law protecting Obamacare from Trump with N.J. mandate to have health insurance”.

The law (S1877) gives the state the authority to impose the individual mandate and collect a fee from people who do not buy insurance.”

I have always said that the ACA, aka “Obamacare”, had good, bad and ugly in it.  And the main “ugly” was the “shared responsibility” penalty.  I was glad that the GOP Tax Act repealed this penalty on the federal level for 2019 and beyond.  It looks like the NJ penalty will take effect with calendar year 2019.

*RECOVER TAX tackles the question “Can Two People Claim Head of Household At Same Address?”. 


If politicians in highly-taxed states were truly concerned about the tax liabilities of residents, instead of merely trying to look good by passing ridiculous scams that try to “get around” the new federal limits they would work on rewriting their state tax laws so residents are not hit with increased state tax bills resulting from the GOP Tax Act. But when have politicians ever really cared about anything other than getting re-elected?

Many residents of states like NY and CA that follow the federal return will pay more state income tax due to the federal Schedule A changes. Which, I am sure, the politicians in these states are looking forward to. They do not have to take the blame for “tax increases” – they can put the blame on Washington.


No comments: