“It looks like Congress is serious about avoiding the scheduled expiration of trillions of dollars’ worth of tax cuts that some believe would risk pushing the tentative U.S. economy over a “fiscal cliff.”

The IRS announced an expansion of the “Fresh Start” initiative to help struggling taxpayers by taking steps to provide new penalty relief to the unemployed and making installment agreements available to more people.

So, you’ve purchased QuickBooks with the expectation that it will solve all of your bookkeeping problems, right? Then, you find out you don’t even know where to begin!

In a recent court case (TC Summ OP. 2011-17) the Tax Court allowed an interest deduction for a house that was never built. A married couple took out a loan and bought a beachfront home, tore it down and planned to build a new house on the site. However, they could not do so until a state environmental agency granted them a permit. That process dragged on for two years. By that time, the local real estate market had crashed and the couple couldn’t get a loan to cover the construction costs, so they sold the land at a loss.

The IRS Office of Chief (legal) Council provided a clarified interpretation of income tax debt discharged in bankruptcy. The IRS and the courts have determined that tax debts may be discharged in bankruptcy in the past, but in this determination, they held that individual income tax debts do not qualify for discharge.

In these difficult financial times and declining home values, we have helped numerous clients navigate the tax issues of Cancellation of Debt (COD). A COD is created when a taxpayer sells their home in a short sale (sales price is less than the mortgage amount), has a property foreclosed upon, or settles a credit card debt for an amount less than the current balance.