Tom Talks Taxes - December 25, 2020

Tax books you should have on your shelf

Dec 25, 2020

For those who celebrate — have a wonderful Christmas!

Consolidated Appropriations Act, 2021

I did a 1 CE course to give an overview of the essential tax provisions in the pending bill. You can access it here through Compass Tax Educators.

Books I Recommend

If you want to treat yourself this holiday season to some light tax reading, these books taught me much and are “go to” reference items on my shelf.

The Logic of Subchapter K: A Conceptual Guide to the Taxation of Partnerships, 6th Edition by Noel and Laura Cunningham

An essential primer on partnership taxation

Life and Death Planning for Retirement Benefits, 8th Edition by Natalie Choate

Incredibly detailed information on every aspect of the taxation of retirement accounts and benefits. You can download supplemental information from the author on changes from the SECURE Act and the CARES Act.

Practical Guide to U.S. Taxation of International Transactions, 12th Edition by Robert Misey, Jr. and Michael Schadewald

An easy-to-understand overview of international taxation issues

1040NR? or 1040? U.S. Income Tax Returns for Visa Holders + International Organization and Foreign Embassy Employees, 7th Edition by Jean Mammen, EA

A practical book on preparing individual tax returns for those with international tax issues

This is not a book, but do yourself a favor and subscribe to the Procedurally Taxing blog. You’ll learn a lot from it, even if you do not regularly do tax controversy work.

Last-Minute Business Expense Planning

As you work with clients in this last week, don’t forget to keep these rules in mind about when a taxpayer using the cash method of accounting deducts a business expense:

A taxpayer deducts an expense paid in cash on the date given to the recipient. Of course, the taxpayer needs documentation - I recommend a signed and dated acknowledgement and get the data to issue a Form 1099-NEC, if required.
A taxpayer deducts an expense paid by check on the date of mailing, regardless of when the recipient cashes it, provided the bank eventually honors and pays the check. The recipient will recognize income when he or she receives the check due to constructive receipt of the funds. Proof of mailing is key! (Vanney Associates, Inc. v. Comm., T.C. Memo 2014-184)
A taxpayer deducts an expense charged on a credit card on the date of the credit card transaction, regardless of when the taxpayer pays the credit card bill. (Revenue Ruling 78-38)
A taxpayer can pre-pay and fully deduct a business expense as long as the benefit does not extend beyond the earlier of:
- 12 months after the first date the taxpayer realized the right or benefit of the payment, or
- The end of the tax year following the tax year in which the taxpayer makes the payment. (Treasury Regulation §1.263(a)-4(f))
To claim bonus depreciation or §179 expensing before the end of the tax year, the taxpayer must purchase and asset and place it into service in the trade or business. “Placed in service” is a facts-and-circumstances determination but it generally means “placed in a condition or state of readiness and availability for a specifically assigned function.” (Treasury Regulation §1.167(a)-11(e)(1)(i))