Gray Reed Partners Austin Carlson and Cleve Clinton will be speaking at TXCPA Houston’s CPE by the Sea continuing education event on June 12, 2024, at the SouthShore Harbour Resort & Conference Center. Austin’s session at 2pm will  provide a top ten rundown of tips and traps related to 1031 exchanges. This will cover the basic rules all the way to complex strategies. As a business lawyer and CPA, Austin brings unique skills and perspectives to every area of his practice, which includes corporate and tax counsel on M&A deals, complex corporate and tax planning for domestic and ..read more

Intellectual property (“IP”) is typically monetized either by sale or (royalty generating) license agreements. The Code[1] often allows sales to be taxed at preferential capital gains rates[2] while simple royalties are ordinary income.[3] At present the maximum capital gain versus ordinary income rate differential for non-corporate taxpayers – without more[4] – is seventeen percent[5] which is not immaterial. From a pure federal income tax perspective, monetizing parties thus have a tax incentive to structure sales or exchanges.[6]  Consistent with that theme, this post will explore sele ..read more

In addition to being developed in-house, intellectual property (“IP”) can obviously be acquired from third parties. IP acquisitions may be more germane now than in the recent past as developers race to create and monetize artificial intelligence (“AI”) tools.  But, while AI platforms might be the shiniest and most interesting objects in the current IP arena, acquirers still have to deal with much older (and mundane) tax questions like: (i) what is being acquired and (ii) how is its cost recovered? This post explores general federal income tax[1] principles applicable to the acquisition of ..read more

Gray Reed Partner Austin Carlson will be speaking on a panel webinar hosted by the Enterprise Europe Network, the world’s largest business service provider. Scheduled for April 18, 2024, at 4 pm CST the FREE webinar will focus on the tax implications for European companies entering the US market and will provide insights into: Tax system in the USA for corporations (corporate tax rate, taxable income, tax credits, alternative minimum tax (AMT), double taxation, state taxes, tax reporting, tax planning and compliance) Entity choice – tax implications of investing through a corporation, partner ..read more

In a recent Tax Court decision, the court reviewed the activities of the Huffman family as it pertained to corporate dealings involving the family aviation business (Infinity Aerospace Inc. which the court refers to by its previous name of “Dukes”), making findings with regards to reasonable cause, valuation of personal goodwill, correct reporting of capital gains and dividends, and the necessity of gift tax returns on a part of 2 generations of couples. The court highlighted two primary issues in these consolidated cases: (1) whether Patricia and the Estate of Lloyd Huffman made a taxable gif ..read more

Gray Reed Partner and Dollars & Sense Editor Joshua Smeltzer will be speaking at Convergence 2024, TXCPA Dallas’ premier continuing professional education event. Scheduled for May 10, 2024, at the Sheraton Dallas Hotel (Downtown), Joshua’s session “Protecting Confidentiality: The Crucial Intersection of Attorney-Client Privilege and CPA Practice” will provide invaluable insights into navigating the complexities of attorney-client privilege in the context of CPA practice. Joshua brings a wealth of expertise to this topic. Board Certified in Tax Law by the Texas Board of Legal Specialization ..read more

Co-author Caleb O’Donnell* A recent U.S. Tax Court decision provides clarity to what the Internal Revenue Service (“IRS”) considers a limited partner for purposes of the ‘limited partner exception’ to the Self-Employment Contributions Act (“SECA”) tax under Code Sections[1] 1402(a)(3) and 1402(a)(13) (the “Limited Partner Exception”). The Tax Court held in Soroban Capital Partners LP v. Commissioner[2] that “a functional analysis test” is required to determine whether limited partners qualify for the Limited Partner Exception. SECA ensures that self-employed individuals contribute to Social Se ..read more

The IRS’s ERC voluntary disclosure program has drawn concern from tax attorneys due to uncertainty around entering into the program and still being subjected to criminal prosecution.  Extensive disclosure is required as part of the program, however, the IRS does not provide any assurances related to the possibility of post-disclosure investigations, which raises significant questions and concerns. In addition, processing delays and impending deadlines could precipitate an uptick in refund suits. Despite additional funds, uncertainties persist regarding the Justice Department’s capacity fo ..read more

By law, the IRS certifies taxpayers with “seriously delinquent” tax debts to the Department of State affecting passport status and renewal when certain conditions or thresholds are met. The IRS will send a Notice called a CP508C when a certification has been made. Despite this, many taxpayers are unaware of this potential consequence until they find themselves unable to apply for or renew their passport. Section 7345 of the IRC, which was enabled by the FAST (Fixing America’s Surface Transportation) Act, requires that the Department of the Treasury notify the Department of State if a certifica ..read more

Intellectual property (“IP”) is hugely important to businesses. Given that importance, IP owners must occasionally litigate against the unauthorized use of their technology. The costs of such litigation and appurtenant settlements implicate a host of federal income tax issues. Some IP litigants do not consider those tax issues at all, while others aggressively overplay their hand. This post provides insights regarding federal income tax issues related to IP (mainly patent[1]) litigation and settlements so that companies can know when they might have a tax issue and seek appropriate advice. Tax ..read more