News



Lack of rollover documentation costs Lockheed Martin employee

  A Lockheed Martin employee who participated in the company’s retirement plan was ordered to pay tax on distributions because he couldn’t provide documentation that he had rolled over the account in time. Balvin A. McKnight was required to include in income two early distributions from his qualified retirement plan because he could not...

New York couple hit by tax benefit rule

  A New York couple who had received an enterprise zone credit for property taxes were required to pay taxes on the amount because of the tax benefit rule. Yigal and Bonnie Elbaz were required to include in income $54,507 received in 2008 from a refund of New York state income taxes as a result of the tax benefit rule. The entities...

When can you deduct your elderly parent as a dependent?

  To deduct your elderly parent as a dependent on your income tax return, you must first meet four tests. The tests are: 1. "Not a qualifying child" test 2. Member-of-household or relationship test 3. Gross income test 4. Support test The first test is the easiest to meet. By definition, a qualifying child is a son,...

Actual purchase necessary to claim first-time homebuyer credit

  A Florida woman was denied a first-time homebuyer credit of $7,500 because the U.S. Tax Court determined that she had never actually purchased the home. On Jan. 22, 2007, Ada Mae Pittman entered into a lease contract with an option to buy with James Piotrowski Jr.  Pittman was required to meet certain conditions to exercise the option...

Court denies half of bonus as deductible compensation

An eye surgeon who had received a $2 million bonus in 2007 was told by the U.S. Tax Court that half of it was unreasonable compensation. Dr. Afzal Ahmad was president and 100 percent shareholder of Midwest Eye Center, an ophthalmology surgery and care center practice with four locations. The center, organized as a C corporation for tax...

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