Charles J. Ladd Law Blog

General Rule

In 2009
financial institutions wrote-off $200 Billion in consumer mortgages,
and wrote-off $33 Billion in other consumer debt. Cancellation of Debt
normally produces taxable income for the debtor. (See Section 61(a)(12)
of the Internal Revenue Code). Your clients may have to pay tax on part
of those write-offs.

Conventional
Individual Retirement Accounts have been with us since 1974. IRAs can
be funded up to certain limits annually. The limits currently are $5,000
per year for people under age 50, and $6,000 per year for people over
that age (up to the amount of the taxpayer’s earned income). If the
taxpayer either doesn’t have another retirement plan, or his income is
under certain limits, the... Read More

Divorcing
people find themselves very interested in several sections of the
Internal Revenue Code. Where one spouse has substantial retirement
benefits, the parties should examine the rules for a Qualified Domestic
Relations Order, or QDRO, which can divide the retirement benefits
between the parties. If one party will be making payments to the other,
the parties are allowed to determine which of... Read More

If you
don’t agree with the results of a tax audit, appeal! The Appeals
Division is the only place to appeal audit results within the Internal
Revenue Service.  The Appeals Division’s  job is to reduce the number of
unagreed cases. Move to Appeals, and you will get several chances to
improve  or correct the findings of the audit.

Your
tax return was selected for an income tax audit? IRS audits one tax
return out of every hundred it receives. How could you be so lucky?

Selection of returns for examination

Internal
Revenue examines a shockingly small percentage of tax returns filed. A
few years ago the stated goal was to... Read More

A
separate article discusses increases in Medicare Part B Premiums due to
the income levels of insureds Medicare Part B Premiums--High Income
Individuals.

An
interesting wrinkle in the Social Security Act protects beneficiaries
from having their net monthly benefits reduced by increases in Medicare
Part B premiums. This... Read More

In 2009
Congress passed the “Making Work Pay Tax Credit”. This is a credit
available in tax years 2009 and 2010 to taxpayers with earned income
(income from jobs or from self-employment). The credit is calculated at
the rate of 6.2% of earned income, until the credit reaches $400 for
single taxpayers, or $800 for joint returns. The credit phases out for
single taxpayers having adjusted gross income above $75,000, and joint
filers... Read More

Medicare
is the government program to provide medical services generally to
seniors. Medicare Part B is the part of Medicare that pays doctors and
other medical service providers. Part A pays hospitals and other medical
facilities. Part A is provided for everyone who has worked enough to be
fully covered by Medicare. No premium payment is required from
insureds. About 25% of the cost of Medicare Part... Read More

Two
components of the Michigan Business Tax apply to most businesses, the
Business Income Tax and the Modified Gross Receipts Tax. The first test
for whether a business is subject to the Michigan Business Tax applies
to both components, that test being whether the company has sufficient
contact with Michigan to be subject to its jurisdiction. A second test
applies to the taxpayer to determine... Read More

The
Michigan Business Tax is applied to all businesses having even a very
modest contact with Michigan. (See the topic “Nexus”.) The tax base is
then allocated to Michigan and other states according to the sources of
the company’s revenue.

I. Apportionment

A
taxpayer whose activities are subject to... Read More