I read of a young girl who won her case regarding the amount of her allowable standard deduction. She was a dependent of another and had $4275 in wages and a business loss of $3703 from cutting grass and some interest income. IRS proposed to reduce her standard deduction because her business loss reduced her earned income. She argued that the CODE stated that a business loss is disregarded and therefore ONLY her wages were taken into account in determing her standard deduction. My tax software calculates her standard deduction as did IRS. She won the case. Allyson C. Briggs, TC Summary Opinion 2004-22.
-
-
Interesting summary opinion. I have not come across it before. It is my understanding that Tax Court Summary Opinions may not be treated as precedent for any other case. Believe cite is Sec 7463(b) however have not looked at it recently and it may have changed... If not maybe a good advocate could still get it in anyhow.Last edited by jimmcg; 08-12-2006, 03:19 PM. -
SoftWare Calc
Interesting.
My software calculates the self employment loss and her AGI as $572.00 The standard dedcution is not altered.Last edited by RLymanC; 08-13-2006, 01:50 AM.Confucius say:
He who sits on tack is better off.Comment
-
More than meets the Eye
Somehow, I think there are missing pieces in the story which may favor the IRS if fully disclosed. Maybe IRS went after the tax return instead of the facts and circumstances.
The argument from the standpoint of the tax return is intact, and it's no wonder the girl won.
How can a dependent girl have a $3700 loss mowing yards? Oh yes, it's possible, but highly improbable and probably belies the truth. By borrowing large amounts of money for equipment? By purchasing equipment and depreciating it such that depreciation exceeds proceeds?
A reality check here. Who really OWNS the equipment, or what line items constitute such a loss? Is a bank going to loan thousands of dollars to a dependent girl?Comment
Comment