The IRS lost a key battle in its long-running fight to limit tax
deductions that can be taken by investors in small businesses in a case
that could have wide implications for entrepreneurs.
The Tax Court decision would allow investors in certain kinds of
businesses to deduct losses against salary and investment income. Right
now, investors often can only deduct losses in a business against
future profits from that business, which in some cases prevents
taxpayers from getting to use the deductions at all.
The case, which involved Nebraska farmers seeking to deduct losses
from their chicken and pig operations, can still be appealed by the
IRS, but makes loss deductions much easier to obtain for some investors. The ruling should be broadly applicable, says Carolyn Turnbull of
Moore, Stephens & Tiller, an Atlanta certified public accounting
firm. "This decision was about hog and egg operations, but it could
just as easily have been about a tech start-up, restaurant or
manufacturer." Tax advisers across the country will likely tell their
clients to begin taking these deductions based on the Tax Court ruling. Read the full (free!) article at http://online.wsj.com/article/SB124698320557906557.html
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