What the IRS Hobby Loss Rules Are and Why They Matter The so-called “hobby loss rules” refer to Internal Revenue Code Section 183, which limits deductions for activities not engaged in for profit. If the IRS determines that your activity is a hobby rather than a business, the agency will restrict or disallow losses; this
Scope of the WARN Act and Who It Covers The Worker Adjustment and Retraining Notification (WARN) Act requires many private employers to provide advance written notice before certain workforce reductions. In practice, the statute applies to business enterprises with 100 or more full-time employees, or 100 or more employees whose regular weekly hours in the
Understanding the Reverse Morris Trust and Up-C Combination A Reverse Morris Trust is a complex corporate reorganization technique that allows a parent corporation to divest a business on a tax-deferred basis by combining a tax-free spin-off under Section 355 with a merger of the spun entity into a third party. An Up-C structure involves a
Understanding Which Registrants Must File and Why the Scope Is Broader Than It Appears Under Rule 13p-1 promulgated pursuant to Section 1502 of the Dodd-Frank Act, any issuer that files periodic reports under Sections 13(a) or 15(d) of the Exchange Act must assess whether tin, tantalum, tungsten, or gold (often referred to as 3TG) are
Understanding the Difference Between IRS Subordination and Discharge Taxpayers and even seasoned lenders often conflate subordination, discharge, withdrawal, and release in the context of a federal tax lien. These are distinct legal outcomes with different statutory standards and practical effects. A subordination does not remove the federal tax lien. Rather, it permits a specified creditor’s
Understand What Triggers Broker-Dealer Status Many well-intentioned companies assume a casual “introduction fee” or a one-page finder agreement is benign. In reality, the United States securities laws define broker activity broadly, and seemingly simple referral arrangements can trigger broker-dealer registration requirements under Section 15(a) of the Securities Exchange Act of 1934. You are at higher
Understanding Declaratory Judgment Jurisdiction in Tax Court A petition for declaratory judgment in the United States Tax Court is a specialized proceeding that seeks a judicial declaration regarding a specific tax status or qualification, rather than a determination of a tax deficiency. Unlike a typical deficiency case, which involves a Notice of Deficiency and a
Understanding What Legally Constitutes a Franchise Across Borders Before offering opportunities abroad, it is essential to determine whether your model is legally considered a franchise in the target jurisdiction. Many founders assume they are licensing a brand or providing distribution rights, only to discover that local law treats the arrangement as a franchise because it
Defining a “Signing Bonus” That Vests Over Time: Why Terminology Dictates Legal Outcomes Employers often label inducement payments as a “signing bonus” while staggering payment over time or conditioning payment on continued employment. That label is rarely dispositive. In many jurisdictions, a “bonus” paid for work performed or as consideration for accepting an offer can
Understanding the Section 1042 Roll-Over in ESOP Transactions A Section 1042 roll-over allows certain business owners to sell stock to an Employee Stock Ownership Plan (ESOP) and defer recognition of capital gain by reinvesting the proceeds in qualified replacement property. In plain terms, Congress created a pathway for owners of closely held companies to achieve
What the IRC Section 965 Transition Tax Actually Is IRC Section 965 imposed a one-time tax on certain deferred foreign earnings of specified foreign corporations, generally measured as of the last taxable year of the foreign corporation that began before January 1, 2018. The law effectively required many U.S. shareholders to include accumulated post-1986 earnings
Understanding the Foreign Earned Income Exclusion and Who Qualifies The Foreign Earned Income Exclusion (often referenced as the FEIE) allows a qualifying U.S. citizen or resident alien living abroad to exclude a specified amount of foreign earned income from U.S. taxation each year. The exclusion threshold is adjusted annually for inflation and applies only to
Understanding a “Complete Liquidation” of an S Corporation A complete liquidation of an S corporation is not simply closing the doors and distributing cash. It is a legally significant sequence of steps under the Internal Revenue Code, state corporate law, and often loan covenants and contractual arrangements. For federal tax purposes, a complete liquidation occurs
Understanding the Meaning of “Covered” Versus “Non-Covered” in Healthcare The distinction between “covered” and “non-covered” activities is not a single, universal classification. It is a layered concept that depends on the specific legal regime at issue. For some providers, “covered” refers to services reimbursable by Medicare, Medicaid, or commercial payors, subject to payer contracts and
Competitor Coordination Risks Hidden in “Joint Marketing” Labels When competitors contemplate a joint marketing agreement, they often assume that promotional activity is “safe” because the collaboration focuses on brand awareness rather than prices or output. That assumption is dangerously incomplete. Under Section 1 of the Sherman Act and Section 5 of the FTC Act, even
Understand the Purpose and Scope of a Nexus Study A proper nexus study is a disciplined, methodical evaluation of where a business has created sufficient connection to a state or locality to trigger tax registration, collection, remittance, and filing obligations. It is not a single checklist. It is a cross-functional assessment that combines legal analysis,
Understanding What Real Estate Flipping Means for Tax Purposes Real estate flipping is often described casually as buying, improving, and quickly reselling property for profit. From a tax perspective, however, flipping is not a casual concept. The Internal Revenue Code treats repeated purchase-and-resale activity as a trade or business, and the seemingly simple act
What an Excess Cash Flow Sweep Really Does in a Credit Agreement In commercial credit agreements, an excess cash flow sweep is a contractual mechanism requiring the borrower to prepay term debt with a specified portion of cash generated by the business that exceeds agreed thresholds. It is often described casually as a “share of
FORT MYERS, Fla. and DALLAS, Nov. 10, 2025 /PRNewswire/ — Cummings & Cummings Law, a multi-state business and tax law firm led by attorney and CPA Chad D. Cummings, announced today a marked acceleration in the number of small and mid-sized businesses transferring from New York and Virginia to Florida and Texas in the aftermath of recent
Understanding Hybrid Entities And Their Role In International Tax Planning Hybrid entities are legal vehicles that are treated differently for tax purposes across jurisdictions. For example, a company may be regarded as a corporation in one country but as a flow-through or disregarded entity in another. This mismatch in characterization, while seemingly straightforward, produces complex
