21 Mar 2023
I’m at a Loss: Tax Treatment of Individual Taxpayer Losses
The Internal Revenue Code imposes a variety of limitations and obstacles to individual taxpayers’ ability to deduct certain types of losses. There are generally three different types of losses covered in this practice note: casualty and theft; net operating; and investment. While all three are important, the rate at which taxpayers have claimed casualty losses has been exacerbated by natural disasters and other weather-related events in recent years. Notably, the U.S. experienced 18 separate weather and climate disasters in 2022 at a cost of $165 billion (businesses and individuals). Learn more about the different types of losses and your ability to deduct them.
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Learn more about the elements required for a sale of property to constitute a capital transaction. This practice note provides best practices for your client by describing proper classification of property items as capital assets. It also reviews the requirements for a transaction to qualify as a sale or exchange and examines the different rules for individuals and corporations governing the carryover of unused capital losses.
- Pass-Through Entities Taxation
See how flow-through is the word. Many business structures are partnerships and LLCs, or S-corporations, which permit pass-through of losses and income items, to create tax efficiencies for their owners.
Practical Guidance Updates
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- Tax Key Legal Developments Tracker (Federal)
- Individual Income Tax. IRS issues fact sheet, noting that money received through "crowdfunding" may be taxable and that taxpayers should understand their obligations and the benefits of good recordkeeping.FS-2022-20
- Exempt Organizations. IRS announces it is suspending issuance of several notices generally mailed to tax-exempt or governmental entities in case of delinquent returns. Due to the pandemic, the IRS hasn't yet processed several million returns filed by individuals and entities. The suspension of notifications will help avoid confusion when a filing is still in process. IRS Exempt Organizations Update.
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