Keeton decision: U.S. Tax Court denies a bad debt deduction – Treats advances as equity and not debt

by | Mar 30, 2023

ARTICLE | March 30, 2023

The Keeton v. Comm’r decision is yet another reminder of the importance of properly documenting debt and understanding the risks associated with not doing so. In this case, the Tax Court denied the taxpayers a bad debt deduction due to the lack of documentation proving the advances were true debt. This case highlights the need for taxpayers to ensure cash advances between related parties are documented as debt in order for it to be treated as such for tax purposes.

Taxpayers should understand the risk they take on when they fail to properly document and substantiate amounts. It is important to consult with a tax professional at the outset in order to avoid any potential issues down the line.

Read the full article here…

Questions or Want to Talk?

Call us directly at 972.221.2500 (Flower Mound) or 940.591.9300 (Denton),
or complete the form below and we’ll contact you to discuss your specific situation.

Two Estate Planning Strategies to Help Protect Wealth

A goal of estate planning is to maximize the wealth that is passed on to one’s heirs. In this video, we’ll discuss how a Spousal Lifetime Access Trust and an Irrevocable Life Insurance Trust may help you minimize estate taxes and protect wealth.

IRS Announces ERC Withdrawal Process

The Internal Revenue Service (IRS) has established guidelines concerning the withdrawal of an Employee Retention Credit (ERC) claim for those employers who now believe they may not qualify. These guidelines, detailed on the IRS’s official website, outline the necessary steps a taxpayer must take to withdraw a claim for the ERC, under certain conditions.

Why the Cost of Customer Acquisition Is So Important

For any business, understanding and effectively managing the cost of customer acquisition is crucial for success. In this video, we’ll explain what it is, how it’s calculated, and how it affects a business’s profitability, cash flow, and overall growth.

IRS releases guidance on Roth catch-up contributions under SECURE 2.0

The Internal Revenue Service (IRS) has recently released guidance on Roth catch-up contributions under SECURE 2.0 Act. This guidance, outlined in Notice 2023-62, provides important information for individuals who are age 50 or older and participating in a retirement plan that allows deferral contributions.

Estate Planning after a Business Sale

After selling a business, it is crucial to update your estate plan to align with your new financial situation. This article provides and overview of common strategies to consider.