TAX PRO PLUS LA

Last Minute IRA Reminders

It is just a little over a week until the close of the 2011 tax year. But before the year ends, there may be some outstanding IRA issues that may require your immediate action. Here are a few December 31st deadline topics to consider:

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Is It a Business or a Hobby?

The distinction between a business activity and a hobby is not a black-and-white issue but instead comes in various shades of grey, which makes it a frequent topic in tax court.

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Game Show Winners and Taxes

If you like to watch game shows and enjoy all the excitement that goes with watching contestants win prizes, then you can add another element to your viewing pleasure by considering how the contestants will handle the IRS Form 1099 they receive for the value of the items they won. You may not have thought much about it, but the contestants must pay federal and applicable state income tax on the cash and the value of the goods they win on game shows.

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Timeshare Rental Losses and Travel Expenses Denied

The Tax Court has held that a married couple could not deduct losses from their timeshare rental activity because: (1) they did not engage in the activity with the bona fide profit objective as required under the Code Sec. 183 hobby loss rules, (2) they failed to meet the ordinary and necessary requirements of Code Sec 162 for their travel expenses, and (3) they did not meet the strict expense substantiation rules of Code Sec 274.

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Year-end Capital Gains Strategies

2011 has produced some significant gyrations in the financial markets that have had an impact on everyone’s portfolios. But for tax purposes, gains and losses are not measured by the increased or decreased value of your portfolio, but by gains and losses recognized from the sale of capital assets during the year. So you still have until the end of the year to structure your gains and losses to suit your particular tax situation.

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